They're Back - 100% LTV

Well, I can tell we are all slowly getting back on proverbial real estate "horse".  It was not too long ago that I could get a young professional into a 500K home without any downpayment.  Yep, that went away with the financial meltdown. To steal a term from the beloved Arnold Schwarzenegger - "I'll be back".

As a real estate professional I surely can remember thinking "Boy, those were the days!".  Welp, strap on your bootstraps cowboys.  I found a 100% conforming professional mortgage for up to 500K!  I know, us conservative folk say that was not then, and is not now, a prudent decision.  I do not personally disagree with that sentiment in general.  However, the key word in this mortgage description  is professional.  Are you a resident doctor?  If you are, then IMO you are professional that may need this type of product.  In my PC opinion...give me a call  (I am not a loan officer nor a mortgage professional) I will be happy to connect you to those in the know!

Reverse Mortgages - Saving Homes

Reverse Mortgage - What is it? Simply put - If you owe 100K on your home that appriases for 200K and you refinance with a "Reverse Mortgage" your loan balance may (most likely will) go up! When you sell your home, later in life, your loan balance will be higher than what it was when you took out the loan.

Why? You don't have to pay any monthly payments! Yep, go ahead, refinance your 100K loan through a "Reverse Mortgage" and you might be able to NEVER PAY MONTHLY PAYMENTS AGAIN. Even if you live to a ripe old age of 120.



What's the "Catch"? You have to be 62 years or older. You have to have significant equity in your home. YOU MUST USE A HECM FHA PRODUCT (in my opinion)! What does that mean? A Home Equity Conversion Mortgage insured through FHA NOT a traditional "Reverse Mortgage".


Talk to a licensed Financial advisor for details. Make sure you mention that this is not the traditional "Reverse Mortgage". The bank will not take your home if you live too long!

Pros: You have a lot of equity in your home...That equity is great but it does not buy bread or support to you or a loved one...You can get some of your equity out of your home and put it to work for you. You can pay any amount of payments per month (including zero)! If your principal and interest exceeds the amount your home sells for when you die. FHA will pay back any losses to the lender.

It is a gamble from the banks perspective - FHA and the bank are in it to make money. They do hope you dont live to be 120. But, we hope you do...In the mean time...No more mortgage payments plus a possible "cash out" option on your equity to do with as you please.

Cons...Your loved ones may not be able to inherit the equity in your home. True..but, if they or you need money now...What does it matter?

Remember - I am not a financial advisor. I just feel as though this may be an attractive benefit and option for many people that are having trouble paying for their mortgages in the tight economy. Royal United Mortgage - Indianapolis Based - has an entire department working on HECM loans. Dont be scared - get information!

IHCDA ZERO interest home loans for forclosed properties

Here is another example on how "Obama Bucks" are reaching our community! Can you believe it? If you buy and live in your first home (in three years) for ten years, and it is a foreclosed property you can get an $8,000 tax credit, a $15,000 gift check from the IHCDA, and another $10,000 zero interest loan from Federal Home Loan Bank of Indianapolis. That's $33,000 dollars!!!

Lt. Governor Becky Skillman and the Indiana Housing and Community Development Authority (IHCDA) is offering up to $25,000 in zero-interest, non-amortizing loans for Hoosiers to purchase foreclosed homes. Hoosiers who buy foreclosed homes to use as their primary residence can qualify for a $15,000 loan from IHCDA's Market Stabilization Fund. The Federal Home Loan Bank of Indianapolis has committed to supply matching loans of up to $10,000. The money comes from HUD's Neighborhood Stabilization Program (NSP), which allocated $84 million to IHCDA. The state will use $33 million of that allocation for the Market Stabilization Fund. Assistance from this fund will be made available to income-qualified individuals and families who choose to purchase foreclosed homes in areas of the state in greatest need of assistance. Indiana is the only state using NSP money in a statewide program to help people buy foreclosed homes.


Quickly, one of the best benefits is that this loan may NOT HAVE TO BE REPAYED!! There is way too much information about this to put in this blog. However, click here for more information from MIBOR (Metropolitan Board of Realtors). Now, for first time homebuyers lets couple the tax benefits along with this and really make a great deal!

I wanted to get this information out to my clients and blog visitors. I have been asked about this program quite often. Here is a quick link to more information from the State.

Prehistoric Lending - Extinct Careers

We are all too familiar with professions that have faced extinction - one hour photo developers, VHS tape manufacturers, and yes the all mighty United Airlines Mechanic. Most of these jobs went through years of phasing out. This "natural selection" gave a lot of time for most to see the writing on the wall and find other careers.

I have to give it to the Mortgage Broker. I don't know if you realized it or not, however, these folks woke up on one Monday morning in 2008 to find that someone had taken away their "wares". Relate it to a shoe salesman who went to work one day to find that someone had taken away all his shoes. What does he do now? Can you imagine the shock? Many of these salesmen worked for years and decades building up reputable businesses throughout our area only to have been told, "go away" from the same people they faithfully made lots of money for - the lenders.

Well, for those brokers still out there - "The next drink is one me"! Brokers are getting cut out of the lending arena. If you use a broker on a conventional program that requires PMI (you are putting less than 20% down), you may get declined based on the fact that you are working with a broker. Not because you have bad credit, insufficient income, or a lack of documentation , you may get decline merely because you are using a broker instead of a bank. Hmmmmm - something is rotten in the woodpile!

Thinking of buying a new home? Call me, there are a few brokers out there that I simply trust implicitly. They are priceless and the banks, in large part, are not worthy of their knowledge and commitment to their industry. But wait a minute - if they can't sell shoes I guess they will have no other choice but to work at the bank. In my opinion it is a sad story indeed. Don't fret - there are also men and women at banks that I have found equally knowledgeable and trustworthy - most of them came from the prehistoric broker period. Ironically, I feel that most of the blame from the subprime meltdown should be pointed at these same lenders who funded the loans in the first place (different topic different blog).

QUICK QUESTIONS TO ASK YOURSELF:

Do I have a 680 or higher score? If you don't you better think FHA.

Do I have a 620 or higher credit score? If you don't you better think Apartment.

Do you have a debt ratio of 45% or higher? Yes? Well you best renew the lease.

Are you buying your home in a declining market as labeled by Fannie Mae? If you are buying in the Indy Metro Area you are. This means you better butter up your lender and put the shocks on the car; you may have a rough ride ahead of you no matter what your credit is like!

Do you have a Realtor? I typically try to stay away from this personal plug, but, here goes - it is a "maze of mess" out there and you better find some good help!

Special Thanks to Mike Senn for enlightening me on some of these issues today! He's a great lender (yep he works for a Credit Union) and friend.