So much attention has been paid lately to the travails of short-term homeowners that longer-term homeowners probably feel a bit left out. "What do I care?" you grumble. "Why don't you cover something that affects me, dagnabbit?"
All right. How about getting that private mortgage insurance premium off your monthly mortgage bill?
Private mortgage insurance, for those of you short-termers and renters following along, is something homebuyers need if their down payment on a non-government loan is less than 20 percent of the property value. Lenders insist on it to protect them if you go into foreclosure.
It's in an effort to avoid this bill that many buyers opted for two mortgages during the housing boom. Now, an increasing number of new borrowers are finding their way back to PMI -- by choice or default.
The Mortgage Insurance Companies of America, an industry trade group, said the number of new PMI policies increased nearly 40 percent last year.
Not sure whether you're paying for private mortgage insurance? Check your monthly mortgage bill, or look at the "HUD1" form with the paperwork you signed to close the loan. (Or call your lender.)
If you have it, there are three ways you can qualify to cancel: Make enough payments, raise the value of your property with home improvements or (rarer and rarer nowadays) live in an area that's seeing strong gains in sales prices. One or more of those options can get your loan balance down to 80 percent of the value of the home when you got the loan.
There's a checklist about next steps at Mortgage Insurance Companies of America's website, with a more detailed Q&A HERE. Here's what the association says:
--Contact your loan servicer. You should be able to find the contact information on your monthly mortgage bill. Be prepared to provide your Social Security and loan numbers.
--Tell the servicer you'd like to cancel your private mortgage insurance and ask about its requirements to do so. That could mean gathering additional information and paying for an appraisal. (Let the servicer arrange for the appraisal, the insurer association says, so you don't end up on the hook for two bills.)
--After you've jumped through the necessary hoops, send in a written request to cancel.
Katie Monfre, a spokeswoman for Mortgage Guaranty Insurance Corp., says your private mortgage insurance will generally get canceled automatically once your payments equal 22 percent of the original home value. (Federal law requires it for most loans taken out by borrowers after July 29, 1999.)
But now you know how to move things along sooner if you think you qualify -- or get the ball rolling if you suspect it's long overdue.
Click HERE for a calculator that helps you figure out when you might be able to cancel.
http://weblogs.baltimoresun.com/
Wednesday, February 20, 2008
Consider a reverse mortgage
NEW YORK (CNNMoney.com) -- Mortgage payments sucking you dry? Boomers short on retirement savings may have another option: reverse mortgages. Can these complicated products fill the gap?
Know the process
Reverse mortgages are exactly that. Instead of paying the bank, the bank pays you. It's a type of loan where your equity is converted into cash.
These mortgages are designed for people 62 and older. And you can get this cash in a few ways: Either you can get it all in a lump sum, a monthly payment or a line of credit that you can tap into when you need it.
The loan doesn't need to be repaid if you continue to live in the home. But if you move, the debt must be repaid - with interest. If you die, your heirs can elect to sell the house to repay the loan.
While the payment doesn't usually affect social security or Medicare, it may affect Medicaid according to Peter Bell of the National Reverse Mortgage Association.
You will also be responsible for property taxes and any repairs on the home.
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
Consider your Candidacy
The older you are, the more likely you are to benefit from a reverse mortgage according to AARP.
First, you'll probably have built up more equity in your home. And lenders calculate the payout based on your age and your expected lifespan. Reverse mortgages are most beneficial if you own your home or have a small amount left to pay on the original mortgage that can be paid off at closing with the proceeds from the reverse loan, according to HUD.
Reverse mortgages are also best for people who want to remain in their home for the long-term. If you're looking to move in two or three years, a reverse mortgage may not be right for you.
Weigh the Downsides
Fees on home equity conversion mortgages can be high. For a $300,000 loan, a person who is 74 years old can expect to pay $15,000 in upfront fees according to AARP. There is an origination fee, appraisal fee, title fee, escrow fee, recording fee, a monthly servicing fee and an ongoing mortgage insurance premium.
Bell says the total of these fees are about 5% of the home's value. They can be included in your loan balance, if there is enough equity available.
Remember - a reverse mortgage is a loan with rising debt and falling equity. So, if you get a lot of cash over the years, there will be little, if any, left over for your heirs according to AARP.
Do your homework
Reverse mortgages, while only one percent of the mortgage market, are on the rise. There were less than 7,000 reverse mortgages in 2000. Last year, over 107,000 reverse mortgages were sold according to AARP.
There are a lot of nuances you should consider before buying a reverse mortgage. In fact, you are required to get counseling before buying this product.
You can contact the Housing Counseling Clearinghouse at 800-569-4287 to find a lender in your area. Your bank should give you a list of counselors in your area that can help you. Be wary of lenders that try to get you to buy more products, like long term care insurance or annuities.
http://money.cnn.com/2008/02/20/pf/saving/toptips/
Know the process
Reverse mortgages are exactly that. Instead of paying the bank, the bank pays you. It's a type of loan where your equity is converted into cash.
These mortgages are designed for people 62 and older. And you can get this cash in a few ways: Either you can get it all in a lump sum, a monthly payment or a line of credit that you can tap into when you need it.
The loan doesn't need to be repaid if you continue to live in the home. But if you move, the debt must be repaid - with interest. If you die, your heirs can elect to sell the house to repay the loan.
While the payment doesn't usually affect social security or Medicare, it may affect Medicaid according to Peter Bell of the National Reverse Mortgage Association.
You will also be responsible for property taxes and any repairs on the home.
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
Consider your Candidacy
The older you are, the more likely you are to benefit from a reverse mortgage according to AARP.
First, you'll probably have built up more equity in your home. And lenders calculate the payout based on your age and your expected lifespan. Reverse mortgages are most beneficial if you own your home or have a small amount left to pay on the original mortgage that can be paid off at closing with the proceeds from the reverse loan, according to HUD.
Reverse mortgages are also best for people who want to remain in their home for the long-term. If you're looking to move in two or three years, a reverse mortgage may not be right for you.
Weigh the Downsides
Fees on home equity conversion mortgages can be high. For a $300,000 loan, a person who is 74 years old can expect to pay $15,000 in upfront fees according to AARP. There is an origination fee, appraisal fee, title fee, escrow fee, recording fee, a monthly servicing fee and an ongoing mortgage insurance premium.
Bell says the total of these fees are about 5% of the home's value. They can be included in your loan balance, if there is enough equity available.
Remember - a reverse mortgage is a loan with rising debt and falling equity. So, if you get a lot of cash over the years, there will be little, if any, left over for your heirs according to AARP.
Do your homework
Reverse mortgages, while only one percent of the mortgage market, are on the rise. There were less than 7,000 reverse mortgages in 2000. Last year, over 107,000 reverse mortgages were sold according to AARP.
There are a lot of nuances you should consider before buying a reverse mortgage. In fact, you are required to get counseling before buying this product.
You can contact the Housing Counseling Clearinghouse at 800-569-4287 to find a lender in your area. Your bank should give you a list of counselors in your area that can help you. Be wary of lenders that try to get you to buy more products, like long term care insurance or annuities.
http://money.cnn.com/2008/02/20/pf/saving/toptips/
Thursday, February 7, 2008
NAB buys $1b of RHG mortgages
NATIONAL Australia Bank (NAB) said it had acquired about $1 billion of mortgages originated by RHG at net asset value.
RHG owns the closed mortgage book of the former RAMS Home Loans Group.
RAMS sold its brand and distribution business and all the business it wrote from November 15 to Westpac Banking Corporation last year for $140 million.
"Further to the RHG Ltd announcement today and as advised to the market on November 21, National Australia Bank today confirmed it had acquired approximately $1 billion of mortgages originated by RHG Ltd at net asset value,'' NAB said.
At 10.46am AEDT, RHG shares were 4 cents, or 17.39 per cent, higher at 27 cents. NAB was 74 cents stronger at $33.55.
RHG announced earlier today it had successfully refinanced $5.5 billion in short-term debt.
RHG said one of two US extendable commercial paper (XCP) facilities had now been fully repaid.
The remaining XCP facility is intended to be repaid in full during New York business hours today, RHG said.
The two XCP facilities needed to be refunded by a February 11 deadline.
To fund them, RHG said it used, or expects to use, funds from warehouse facilities with an aggregate commitment of $3.5 billion; a $750 million issue of residential mortgage-backed securities and the $1 billion reaped from the sale of mortgages to NAB.
Following the repayment of both XCP programs, RHG will have two warehouse facilities worth $1.9 billion and $725 million due to mature in May.
Another $970 million will mature in June and another $1.5 billion will mature in October.
Two more facilities worth $2 billion and $1.5 billion will mature in December.
Westpac last year promised to provide RHG with $1.5 billion in funding if it could form a syndicate of lenders.
NAB said the residential mortgages it bought were prime, seasoned Australian mortgages, which were all mortgage insured.
http://www.news.com.au/business/story/0,23636,23179734-462,00.html
RHG owns the closed mortgage book of the former RAMS Home Loans Group.
RAMS sold its brand and distribution business and all the business it wrote from November 15 to Westpac Banking Corporation last year for $140 million.
"Further to the RHG Ltd announcement today and as advised to the market on November 21, National Australia Bank today confirmed it had acquired approximately $1 billion of mortgages originated by RHG Ltd at net asset value,'' NAB said.
At 10.46am AEDT, RHG shares were 4 cents, or 17.39 per cent, higher at 27 cents. NAB was 74 cents stronger at $33.55.
RHG announced earlier today it had successfully refinanced $5.5 billion in short-term debt.
RHG said one of two US extendable commercial paper (XCP) facilities had now been fully repaid.
The remaining XCP facility is intended to be repaid in full during New York business hours today, RHG said.
The two XCP facilities needed to be refunded by a February 11 deadline.
To fund them, RHG said it used, or expects to use, funds from warehouse facilities with an aggregate commitment of $3.5 billion; a $750 million issue of residential mortgage-backed securities and the $1 billion reaped from the sale of mortgages to NAB.
Following the repayment of both XCP programs, RHG will have two warehouse facilities worth $1.9 billion and $725 million due to mature in May.
Another $970 million will mature in June and another $1.5 billion will mature in October.
Two more facilities worth $2 billion and $1.5 billion will mature in December.
Westpac last year promised to provide RHG with $1.5 billion in funding if it could form a syndicate of lenders.
NAB said the residential mortgages it bought were prime, seasoned Australian mortgages, which were all mortgage insured.
http://www.news.com.au/business/story/0,23636,23179734-462,00.html
OFHEO Questions Mortgage Proposal
A federal regulator yesterday suggested that a measure that would allow Fannie Mae and Freddie Mac to take on jumbo mortgages could divert loan money from less expensive housing.
Funding one $600,000 mortgage takes as much capital as funding three $200,000 loans, James B. Lockhart III, head of an agency that oversees the federally chartered mortgage companies, told the Senate Banking Committee.
The economic stimulus package passed by Congress last night would temporarily permit District-based Fannie Mae and McLean-based Freddie Mac to buy or guarantee mortgages 25 percent higher than an area's median home price -- to a maximum of $729,750, up from the current limit of $417,000.
The increase would allow the companies to fund bigger mortgages in areas with high housing costs, such as the Washington area, where the median price is $450,000, according to the National Association of Realtors. Advocates have argued it could provide relief to housing markets.
Lockhart, director of the Office of Federal Housing Enterprise Oversight, testified that the change would push the companies deeper into some of the riskiest real estate markets, including parts of California.
Chartered by the government to bring affordability and stability to the housing system, Fannie Mae and Freddie Mac package mortgages into securities for sale to investors, promising to pay the loans if the borrowers default. They also buy mortgages themselves.
Fannie Mae and Freddie Mac have long sought the freedom to fund larger mortgages, and some lawmakers have argued that a uniform limit of $417,000 doesn't make sense given the variation in housing prices across the country.
Until recently, it appeared that any increase in the limit would be coupled with long-stalled legislation giving regulators more power over Fannie Mae and Freddie Mac, such as a bill approved by the House last year.
The downturn in the housing sector and growing concern about the economy could hand them a major legislative victory -- the opportunity to expand their business without new regulatory constraints.
The change "will be a significant and profitable new business" for the companies, said Sen. Charles E. Schumer (D-N.Y.), a member of the Banking Committee.
Freddie Mac chief executive Richard F. Syron countered that setting up new systems to handle the larger loans will cost his company a lot of money and will be "kind of a bear to do."
Lawmakers from both parties have been saying the companies need stricter regulation at least since 2003 and 2004, when multibillion-dollar accounting scandals revealed that Fannie Mae and Freddie Mac had dysfunctional internal controls.
http://www.washingtonpost.com
Funding one $600,000 mortgage takes as much capital as funding three $200,000 loans, James B. Lockhart III, head of an agency that oversees the federally chartered mortgage companies, told the Senate Banking Committee.
The economic stimulus package passed by Congress last night would temporarily permit District-based Fannie Mae and McLean-based Freddie Mac to buy or guarantee mortgages 25 percent higher than an area's median home price -- to a maximum of $729,750, up from the current limit of $417,000.
The increase would allow the companies to fund bigger mortgages in areas with high housing costs, such as the Washington area, where the median price is $450,000, according to the National Association of Realtors. Advocates have argued it could provide relief to housing markets.
Lockhart, director of the Office of Federal Housing Enterprise Oversight, testified that the change would push the companies deeper into some of the riskiest real estate markets, including parts of California.
Chartered by the government to bring affordability and stability to the housing system, Fannie Mae and Freddie Mac package mortgages into securities for sale to investors, promising to pay the loans if the borrowers default. They also buy mortgages themselves.
Fannie Mae and Freddie Mac have long sought the freedom to fund larger mortgages, and some lawmakers have argued that a uniform limit of $417,000 doesn't make sense given the variation in housing prices across the country.
Until recently, it appeared that any increase in the limit would be coupled with long-stalled legislation giving regulators more power over Fannie Mae and Freddie Mac, such as a bill approved by the House last year.
The downturn in the housing sector and growing concern about the economy could hand them a major legislative victory -- the opportunity to expand their business without new regulatory constraints.
The change "will be a significant and profitable new business" for the companies, said Sen. Charles E. Schumer (D-N.Y.), a member of the Banking Committee.
Freddie Mac chief executive Richard F. Syron countered that setting up new systems to handle the larger loans will cost his company a lot of money and will be "kind of a bear to do."
Lawmakers from both parties have been saying the companies need stricter regulation at least since 2003 and 2004, when multibillion-dollar accounting scandals revealed that Fannie Mae and Freddie Mac had dysfunctional internal controls.
http://www.washingtonpost.com
Subscribe to:
Posts (Atom)