What To Know About A Reverse Mortgage

Everything You Need to Know About a Reverse Mortgage

How To Make It Work for You

reverse mortgage premier tucson homesHave you heard the term “reverse mortgage”? Wonder what it is?

Anyone that has bought a home knows what a mortgage loan is. It is money you borrow from a “lender” to buy a home. Ok, if you have lots of cash you don’t have to borrow money to buy a home. But most folks do.

The lender requires the homeowner to make regular payments to pay off the “mortgage” over time. Usually, 30 years. The payments reduce the amount of the mortgage and pay the lender “interest” on the loan.

Reducing the mortgage, increased the amount of “equity” the homeowner has in their home.

So, What Is a Reverse Mortgage?

As the term implies, it is the opposite of a mortgage. With a reverse mortgage, the lender sends you money. A lump sum, monthly or other scheduled payment.

As a homeowner receives the money, the reverse mortgage loan increases. And with increasing mortgage debt, the equity in the home declines. Interest isn’t paid on a reverse mortgage but added to the loan balance.

A reverse mortgage is a loan against the equity in a home. No equity, no reverse mortgage.

Now here is the fun part. If you don’t make the mortgage payments on a “regular” mortgage you can lose your home. But with a “reverse mortgage” you won’t. Why?

You don’t make payments on a reverse mortgage.

Who Can Qualify?

The requirements to qualify for a reverse mortgage are set up for “senior” homeowners. People that own their home clear of any debt or encumbrances. The reverse mortgage borrower must.

– Be a single homeowner at least 62 years old.

– For a couple, one person must be at least 62 years old. For a couple with only one person being 62 or older, the reverse mortgage money borrowed will be less.

– You must own your home and have no debt against the home.

– The home must be the borrower’s principal home. That means you have lived in the home for more than 6 months a year.

– The home must be a single-family home, a 2 to 4 unit building or an approved condominium. A planned-unit development will also qualify. And last, a mobile home with a foundation meeting HUD guideline also qualifies.

– The borrows’ financial situation must meet the lenders’ rules. Lenders will look at your credit history, income and expenses. There must be enough free cash to pay property taxes and home insurance.

How Much Money Can You Get?

Well, that depends on a couple of things.

reverse mortgage home equityThe reason a person would want one is to get their hands on the money from the equity in their home. Without equity, there isn’t a reverse mortgage.

The amount received depends on the home’s worth, the age of the borrower, interest rate and lender fees. Remember, there can be no debt on the home. The proceeds from the reverse mortgage can pay off any debt first. But that will reduce the balance of the reverse mortgage for future use.

With that in mind, the most cash is available for older borrowers living in homes with the greatest value. And the lower the interest rate charged the greater the amount of money available.

Another big factor in the amount of cash you receive from a reverse mortgage is how you receive it.

Receive Monthly Payments

Most people need a monthly income to live on. That makes a monthly payment is a popular option.

It can make a set payment amount for a specified number of months. Or it can make a set payment for as long as you live in your home. Or for life.

The longer the period of time to received payments, the lower the amount of the payment will be.

Used It as A Line of Credit

An alternative to monthly payments is to create a line of credit. Using a line of credit means you only draw money from the reverse mortgage when you need it.

And the interest isn’t charged until you use the money. That means you only pay interest on the money used. And that will make the balance of the reverse mortgage last longer.

This option a better way to access funds if your financial goal is to limit the equity you pull from your home. The size of the line of credit will be set at the time you close on your loan but may increase over time.

Get A Lump Sum Amount

Another option is a lump sum payment. It is the least beneficial to most people. A lump-sum payout only makes sense when you have an immediate need for a large amount of cash.

Or Mix and Match Payments

This option might work if you need a large chunk of money up front and a regular monthly income.

It is a combination of the preceding three programs. And some reverse mortgage lenders will allow you to alter the payment structure as time goes on.

Another big factor in the amount of cash you receive from a reverse mortgage is how you receive it.

When Is a Reverse Mortgage Repaid?

Here are the conditions under which you need to repay the loan:

When the last surviving borrower dies, sells the home, or moves away. In this context, “moves away” means that they haven’t lived in the home for 12 consecutive months.

The reverse mortgage may need to be repaid if-

– Property taxes aren’t paid.
– Home insurance isn’t maintained
– The home falls into disrepair

In these situations, the lender may be able to make more cash available to resolve the problem. Note the word “may”. It is not a sure thing.

At the end of the day, reverse mortgage borrowers are homeowners. And are responsible for insurances, taxes and maintenance of the home.

What Do You Owe?

The total amount you will owe at the end of the loan will be-

– All cash received
– All interest incurred

It is important to understand that you can never owe more than the value of your home at the time the loan is repaid.

A true reverse mortgage is a non-recourse loan. That means that in getting repaid the lender only has your home. They cannot take your income, other assets or your heir’s finances.

Will A Reverse Mortgage Effect Your Government Sponsored Benefits?

Social Security and Medicare benefits aren’t affected by reverse mortgages. But Supplemental Security Income (SSI) and Medicaid are different.

Reverse mortgages will affect these and other public benefit programs under certain circumstances. So, if you are receiving SSI and/or Medicaid talk with an attorney or financial adviser.

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.

Answering Mortgage Questions

Getting Answers To Mortgage Questions

The First Is “How Big Of A Mortgage Can I Afford”

Mortgage QuestionsMortgage rates are at all time lows and homes are selling fast. Along with that, Getting a mortgage has gotten easier.

Many of our clients are buying their “perfect” home as a place to retire or a winter get away. But many haven’t purchased a home in over 20 years.  Over that time, the “rules and processes” have changed.

Getting the answer to the mortgage question, “How much can I afford?” is key to everything else.

And understand this! Buying a home in Arizona REQUIRES the buyer to be pre-qualified to buy the home. And the pre-qualification form goes with the offer to buy a home.

Find Your Dream Home In Tucson Arizona

This means the buyer needs to contact a mortgage lender and answer some questions in order to be pre-qualified.

Here is a quick video explaining the steps to getting a mortgage for your new home.

There’s More

Interest rates vary every week and the mortgage interest rate you pay will be in effect once you have an executed contract on the home you want to buy and the lender of choice has a “loan lock“.

Also, there are three types of mortgage lenders. Banks, Mortgage Banks, and Mortgage Brokers. So, another mortgage question is; “which of these three home financing options is best for me?”

Well, in this case, the answer is in the details. Rates are very similar across each of these three lenders. However, some are easier to work with and better at meeting the buyer’s timelines.

Take time to understand how the mortgage lender works and will they commit to meeting your schedule.

Answers To Frequently Heard Mortgage Questions

 

The above information will hopefully answer many of the mortgage questions you may have. If it doesn’t, please contact us so that we may help you get the answers to your mortgage questions.

Considering A Home In Tucson, AZ?

Are you thinking of buying a home in the greater Tucson area? Finding the right home can be a challenging process. But we can make the process much less stressful for you.

We have been Tucson Realtors since 2002. We know Tucson and the Tucson Real Estate market. As a top Realtor duo, we invest the time to understand your home buying interests and desires.

At our first meeting, we will review the current real estate market with you. Show you the market data and then walk you through the Arizona home buying process.

Why? We want you to know what to expect. And what to plan for.

Interested in new construction? We’ll brief you on buying a new construction home. And what’s unique about the process.

For us, you are not another real estate transaction. You are a client and, future friend. We strive to create a relationship that continues long after you move into your home. Review our profiles. Check out our backgrounds, education, and certifications.

We are here to help you “know what you need to know” to buy a home in Tucson, AZ. We provide you information on Tucson events, places to shop and restaurants. Our resources include contractors, electricians, and home services.

We will also help you get deals on tile and paint to make the home you buy yours. Our professional service backgrounds mean we put you first!

Thinking About Selling Your Home In The Greater Tucson Area?

Selling a home requires more than listing it in the Tucson MLS system. It’s about marketing. Marketing through multiple online channels.

To no one’s surprise, 80% of home buyers start their search on the internet. Homes must be visible on multiple internet channels. The more visible a home is, the faster it will sell.

And the photos on the mls make a difference. You can spend lots of money on home staging. But if that effort isn’t correctly show in the MLS photos, you are not getting the full benefit.

We use multiple online marketing channels to showcase your home. We will build a stand-alone website built to show your home. Our marketing program targets key cities in the U. S. based on the season.

For luxury listings, our drone service provides video of your home and neighborhood. This video along with professional photos helps the online buyer see and feel your home. Their “new” home.

To learn more about how we can help you sell your Tucson home, call us – 520-940-4541 – to arrange a meeting. We will visit your home and prepare a comparative market analysis.

Then we will meet with you to review our analysis. We will go over our Comparative Market Analysis for your home in detail. And the review our marketing program to “get your home sold!”

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients say that, not us.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541. We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor duo in Tucson, AZ since 2002. Read our client testimonials. Give us a call. We look forward to making your home buying or selling a home an enjoyable experience for YOU!

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

MIP Tax Deduction

Tips On The MIP Tax Deduction

Get Your Tax Deduction – Effective Through 2013

MIP Tax DeductionThe MIP Tax Deduction was part of the American Taxpayer Relief Act of 2012 (effective through 2013), MIP tax deduction was recently passed. There are 7 points to keep in mind:

1 – The deduction applies to “qualified residences,” as defined in the Internal Revenue Code. Generally, that includes the borrower’s primary residence and a non-rental second home.

2 – As with mortgage interest, borrowers can deduct mortgage insurance premiums paid on both their primary residence and one other qualified residence each year. Investor loans are not eligible.

3 – Households with adjusted gross incomes of $100,000 or less will be able to deduct 100% of their MI premiums.

4 – The deduction is reduced by 10% for each additional $1,000 of adjusted gross household. Income, phasing out after $109,000. Details in link below.

5 – Married individuals filing separate returns who have adjusted gross incomes of $50,000 or less will be able to deduct 50% of their MI premiums.

6 – The deduction is reduced by 5% for each additional $500 of adjusted gross income, phasing out after $54,500. Details in link below.

7 – The deduction is not restricted to first-time home buyers.

Further information on the MIP Tax deduction can be found at MGIC’s site: http://www.mgic.com/ordering-mi/tax-deductible.html.

We have provided this information to make our clients aware important home buying issues. If you are interested in buying a home in Tucson, we can help.  We suggest you contact your tax adviser to learn how the MIP Tax Deduction might affect your specific tax filing.

Another key piece of the mortgage process is the Good Faith Estimate provided by the lender. It provides detail of all the costs related to obtaining a mortgage.

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.

FHA MIP

For FHA MIP Means Mortgage Insurance Premium

New Rules That May Impact Tucson Home Buyers

FHA MIPFHA MIP rule changes beginning April 1, 2013. The FHA Mortgage Insurance Premium (MIP) will increase to 1.35% on 30-year amortized loans with 3.5% down. Please note that this is in addition to the monthly mortgage payment.

FHA News Update – FHA Lowers Mortgage Insurance Premiums Beginning January 2015READ NOW

This will not have a huge impact on buyers qualifying

The bigger change in FHA MIP comes effective June 3, 2013.  On June 3, FHA MIP will be for the life of the loan! In the past, once a home’s principal balance reached 78% of the original sales price after being paid for 5 years, the MIP would drop off. How much of an impact does this have on a loan?

To put this in perspective, with a purchase price of $175,000 and a 3.5% down payment, the loan amount would be $168,875. Adding the 1.75% “up front FHA MIP”, the total loan amount would be $171,830. (Remember: FHA charges MIP on two levels – up front, which is financed into the loan AND annually which is paid monthly.)

A Quick Example

 

MIP CANCELATION

CURRENTLY 78% OF ORIGINAL LOAN

AFTER 6/3/13

LIFE OF LOAN

Cumulative Premium

$19,190.00

$40,969.00

Example with 4% loan rate 30-Year term – ARP=5.017%

 

For the homeowner who intends to live in the home less than ten years, this does not have a significant financial impact. However, if you plan on living there longer you may want to consider refinancing into a conventional loan. This would eliminate the FHA MIP.

Other considerations would be the 3% down conventional loan. This program comes with it’s own set of more restrictive guidelines. For more on FHA Loan rules and FHA MIP go to the FHA Website.

Conclusion

FHA rules change frequently. Consult a mortgage lender to understand the rules when you are considering buying a home.

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.

Mortgage Recast

What Is a Mortgage Recast?

How Does It Work? – How Much Will It Cost?

Mortgage RecastA mortgage recast is when you make a lump-sum payment toward the principal balance of your loan. Your lender will then re-amortize your mortgage — your loan will now have a new (lower) balance.

The result is a lower monthly mortgage payment, but your interest rate and term remain the same.

This is often done when a home buyer purchases a new home but hasn’t sold their old one. When the old home sells the homeowner can use the proceeds to reduce the mortgage on their new home.

A recast can also works should a person receive a large amount of money. For example, a homeowner receives an inheritance or a large bonus from work.

They use the “windfall” cash to reduce their home mortgage and have the mortgage “recast”.

How Does Mortgage Recasting Work?

The specifics can vary by lender, but here are the steps you can expect:

Make a payment. You’ll need to make a large lump-sum payment to a lender – at least $5,000. But check on the minimum amount with your lender. The money goes toward your loan’s principal balance and reduces the amount you owe.

The lender re-amortizes the balance over the remaining term of the loan.

Most lenders charge a servicing fee for loan recasting. But the good news it is not a lot of money.

Again, recasting only lowers the amount you pay each month, it doesn’t reduce your mortgage term.

How Do I Qualify For Mortgage Recasting?

Not all lenders offer mortgage recasting and not all types of mortgages are eligible

You can’t recast an FHA, USDA or VA loan under the current government rules. Most jumbo loans are also excluded from recasting.

You’ll need to refinance your loan if you’re looking to change the terms of these types of mortgages.

Keep in mind that individual standards can vary by lender, so it’s best to check to see what you can qualify for.

Considering A Home In Tucson, AZ?

Are you thinking of buying a home in the greater Tucson area? Finding the right home can be a challenging process. But we can make the process much less stressful for you.

We have been Tucson Realtors since 2002. We know Tucson and the Tucson Real Estate market. As a top Realtor duo, we invest the time to understand your home buying interests and desires.

At our first meeting, we will review the current real estate market with you. Show you the market data and then walk you through the Arizona home buying process.

Why? We want you to know what to expect. And what to plan for.

Interested in new construction? We’ll brief you on buying a new construction home. And what’s unique about the process.

For us, you are not another real estate transaction. You are a client and, future friend. We strive to create a relationship that continues long after you move into your home.

Review our profiles. Check out our backgrounds, education, and certifications.

Our goal is to provide insight, advice and the highest level of professional services to you and be proud to recommend us to your family, friends and acquaintances.

We are here to help you “know what you need to know” to buy a home in Tucson, AZ.

We provide you information on Tucson events, places to shop and restaurants. Our resources include contractors, electricians, and home services.

But most important, our professional service backgrounds mean we put you first!

Selling Your Home in The Greater Tucson Area?

Selling a home requires more than listing it in the Tucson MLS system. It’s about marketing. Marketing through multiple online channels.

To no one’s surprise, 80% of home buyers start their search on the internet. Homes must be visible on multiple internet channels. The more visible a home is, the faster it will sell.

And the photos on the mls make a difference. You can spend lots of money on home staging, but if the photos aren’t great it doesn’t matter. Staging and stunning photos make it all come together.

We use multiple online marketing channels to showcase your home. We will build a stand-alone website built to show your home. Our marketing program targets key cities in the U. S. based on the season.

For luxury listings, our drone service provides video of your home and neighborhood. This video along with professional photos helps the online buyer see and feel your home. Their “new” home.

To learn more about how we can help you sell your Tucson home, call us – 520-940-4541 – to arrange a meeting. We will visit your home and prepare a comparative market analysis.

Then we will meet with you to review our analysis. We will go over our Comparative Market Analysis for your home in detail. And the review our marketing program to “get your home sold!”

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.

Home Loan

Tips On Getting a Tucson Home Loan

  6 Things to Know When Looking for A Mortgage

 

Home LoanSix Things To Know About Getting a Home Loan

1. Make sure you get the right home loan – For YOU!

You’ve found your dream house in Tucson AZ. Now all you need is a home loan. Make sure you get a loan you can afford. That means get pre-qualified BEFORE you start your home search. The process of being pre-qualified will answer a key mortgage question – “What mortgage can I afford?”

2. You can bargain for a better rate on home loans

The average mortgage rate is usually the focus of the bargaining. But wait. What about the costs associated with getting the home loan. Loan origination fees, appraisal fees and processing cost are topics for negotiation.

These “loan costs” are usually rolled into the loan principle. That means you pay them and the interest on them. Consider paying for them instead of financing them.

3. The APR on home loans may not mean what you think it does

Lenders advertise their loans and highlight their annual percentage rates (APR). When it comes to home financing the APR is supposed to help you compare loans. It combines the fees and points with a year of interest charges. The “idea” is to show the “true” annual cost of the home loan.M

Most lender’s APR policies differ. Some include their application fees in the APR, some don’t. So, two home loans from different banks may have different APRs even though they have identical rates and points.

4. Review the total costs of the home loan

Lenders are required to give you a good faith estimate of your closing costs when you submit your home loan application. Any extra costs are a violation of the law. (RESPA)

Always ask for an itemized list of your estimated closing costs item for home loans. The details are required by law.

When you receive the final loan documents for signature,check the amount shown as “amount financed” on your settlement papers.

If it is not the same as the principal, you are borrowing understand why.

5. Know the mortgage insurance obligations

You will need to purchase mortgage insurance if your down payment is less than 20% of the loan amount. Your lender may suggest it’s no big deal. Once your equity grows to 20% you won’t have to pay the mortgage insurance payments.

However, that may not be the case. The Homeowners Protection Act of 1998 requires lenders to automatically remove the mortgage insurance when home’s equity reaches 22% of the home loan amount. it’s the lender’s prerogative.

So be sure to understand the mortgage insurance obligations before you close your loan. Know what conditions you have to fulfill before you can stop paying for mortgage insurance.

6. “Which Is Better” Pre-qualified OR “Pre-approved”?

Being pre-qualified helps you understand the home loan amount you can “likely” afford. But it doesn’t mean you are approved for a loan in that amount. Being pre-approved does.

Getting pre-approved will require a lot more financial information be given to the lender. Based on your timing and objectives consider a pre-approval over pre-qualified loan status. Keep in mind, that in today’s home loan world, even pre-approved status is not a lock.

If you are moving to Tucson for a new job, winter get away or just interested in seeing if Arizona is the right place for you to retire too, we can help!

Considering A Home in Tucson, AZ?

Are you thinking of buying a home in the greater Tucson area? Finding the right home can be a challenging process. But we can make the process much less stressful for you.

We have been Tucson Realtors since 2002. We know Tucson and the Tucson Real Estate market. As a top Realtor duo, we invest the time to understand your home buying interests and desires.

At our first meeting, we will review the current real estate market with you. Show you the market data and then walk you through the Arizona home buying process.

Why? We want you to know what to expect. And what to plan for.

Interested in new construction? We’ll brief you on buying a new construction home. And what’s unique about the process.

For us, you are not another real estate transaction. You are a client and, future friend. We strive to create a relationship that continues long after you move into your home. Review our profiles.

Check out our backgrounds, education, and certifications.

We are here to help you “know what you need to know” to buy a home in Tucson, AZ. We provide you information on Tucson events, places to shop and restaurants. Our resources include contractors, electricians, and home services.

But most important, our professional service backgrounds mean we put you first!

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.

PMI Or Private Mortgage Insurance

Useful Tips to Turn the Tables On PMI

Private Mortgage Insurance Required with Less Than 20% Down – Or Is It?

Considering buying a home? Do you have the cash for a 20% down payment?

PMI Private Mortgage InsuranceIf you don’t, you will need to factor PMI – Private Mortgage Insurance – into the cost of a mortgage. But here are tips on PMI and mortgage loan choices.

There is no reason you cannot buy a home with less than 20% down. A lot of people do it.

But when you do, lenders of conventional loans will add PMI to the loan payments. And PMI is also required if you refinance your mortgage with less than 20 percent equity.

PMI is a layer of protection for lenders, but an added expense for borrowers.

Conventional loans are the most popular type of mortgages. But they are not insured by the government. That is why lenders require the Private Mortgage Insurance. Should you default, the private mortgage insurance pays the lender.

If you default on your loan, PMI makes sure lenders get their money. So a conventional loan with PMI will cost you a bit more. But having PMI can help you qualify for a mortgage.

Especially if you don’t have a 20 percent down payment. But not everyone can get a conventional loan. Why? Their credit score isn’t high enough to qualify.

Can you get out of private mortgage insurance?

The answer is YES!

You can –

  • wait until the lender or servicer automatically cancels it
  • contact the lender or servicer once the principal balance reaches 80% of the original home value
  • refinancing

How Do You Pay For Private Mortgage Insurance?

PMI fees will be around 0.3 percent to about 1.5 percent of the original loan amount per year. This depends on the size of the down payment and the borrower’s credit score.

Mortgage insurance remains tax-deductible. But tax code changes could make it non-deductible at some time in the future.

Payment options for PMI include –

Monthly. Most PMI policies use monthly payments. The “mortgage insurance” will increase your monthly mortgage bill.

One large payment. Some lenders want all the PMI paid in full at the time of closing. If that is the case with your lender, ask to have the payment added to your loan.

Both. This case would be similar to making a down payment. Some of your PMI is paid up front and the rest paid in your monthly mortgage payment.

How do you know if you will be required to have PMI?

Getting private mortgage insurance is typical with conventional loans. But you might not need to get it. Consider all your options before incurring the cost of PMI.

Shop around. Don’t settle for the first lender that approves you for a mortgage. You might end up paying more in interest and insurance. Understand your options for getting a mortgage before “signing” up.

Bump up your down payment. Remember that 20 percent, eliminates PMI. In some cases this can be difficult. But if you have some extra cash, consider it. Consider how much you will save on your monthly payment. How long will it take to “re-coop” the extra down payment? Can you wait that long to get the cash back?

If you can, great. If not, make the PMI payments and get the home you want.

Consider other loans. While conventional loans are the most popular, they aren’t the only kind. Look at FHA, VA, or other types of home loans to make sure you’re getting the right one for your situation.

Considering A Home in Tucson, AZ?

Are you thinking of buying a home in the greater Tucson area? Finding the right home can be a challenging process. But we can make the process much less stressful for you.

We are a top Tucson Realtor team since 2002. We know Tucson and the Tucson Real Estate market and invest the time to understand your home buying interests and desires.

At our first meeting, we will review the current real estate market with you. Show you the market data and then walk you through the Arizona home buying process.

Why? We want you to know what to expect. And what to plan for.

Interested in new construction? We’ll brief you on buying a new construction home. And what’s unique about the process.

For us, you are not another real estate transaction. You are a client and, future friend. We strive to create a relationship that continues long after you move into your home.

Review our profiles. Check out our backgrounds, education, and certifications.

Our goal is to provide insight, advice and the highest level of professional services to you an be proud to recommend us to your family, friends and acquaintances.

We are here to help you “know what you need to know” to buy a home in Tucson, AZ. We provide you information on Tucson events, places to shop and restaurants. Our resources include contractors, electricians, and home services.

Best of all, our professional service backgrounds mean we put you first!

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.

Self Directed Real Estate IRA

Using A Self-Directed Real Estate IRA To Buy a Home

Tips On Setting Up and Using a Self-Directed Real Estate IRA 

Self Directed Real Estate IRASelf-Directed Real Estate IRA may make sense again. Once a popular investment option. The housing decline took a lot polish of the idea. As the real estate market improves, a Self-Directed Real Estate IRA may again find favor.

What does it take to do it? First, talk with your accountant or financial adviser to evaluate your situation. Needless to say, there are risks.

Here are the basic action steps to create a Self-Directed Real Estate IRA.

 

Action Steps

Action 1: Set Up A Self Directed Real Estate IRA: The first step is to establish an Unlimited IRA. This will be done using a registered self-directed custodian. This is the foundation that will permit an IRA to do real estate investments. Your Accountant or Financial Adviser will be able to do this for you.

Action 2: Fund Transfer: The custodian will request, track and direct the transfer for funds from your prior IRA holder(s) into the new self-directed account. This might take 2 to 3 weeks depending upon your prior IRA custodian’s to transfers funds.

Action 3: Establish A Limited Liability Company (LLC): A key component of the process is to create a Limited Liability Company (LLC) for your Self-Directed IRA. The LLC will provide the means to invest.  The LLC is the tool that provides self-direction.

Action 4: Funding the LLC: With the self-directed IRA funded and the Limited Liability Company in place, you can capitalize the LLC. Once done, your Self-Directed Real Estate IRA will control the LLC. The LLC will hold the cash in the LLC checking account.

Action 5: Purchasing Real Estate: Your IRA, through the LLC, will now be able to invest in Real Estate. You will control your IRA and be able purchase Real Estate by simply writing a check from the LLC.

Its Do Able

This may sound challenging. However, with the right professional assistance it is really straight forward. A Self-Directed Real Estate IRA Investing isn’t for everyone. Discuss the idea with your accountant or financial adviser. Assess the risks and rewards. There are opportunities in many cities. Tucson Real Estate has been improving. It may provide you a great opportunity!

What more information on Self Directed IRA’s? Here is a quick video.

Search the Tucson MLS to find A Self Directed Real Estate IRA Investment

Considering Real Estate Arizona Tucson OR Tucson homes for sale? We can help!

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.

203K Loan

203K Loan for Buying and Renovating a Home

Making A Fixer Upper Your Dream Home

203k loan Is a 203K loan or Rehab loan right for you? Well, like many things, it depends.

But if you are planning to buy a home in a “low inventory” market, the 203K loan gives you extra buying power.

Here’s why!

A 203K Real Estate Loan is a cost-effective way for buyers to buy a home and finance home repairs and improvements.

Home buyers looking for a “fixer upper” should call their mortgage lender to explore this type of loan.

Using a 203K rehab loan means there is ONE loan. One loan to buy and RENOVATE a home. The FHA 203K loan is also useful when refinancing an existing home that needs updating.

And the 3.5% down payment makes getting it a lot easier.

Quickly See ALL Fixer Upper Homes In The Tucson MLS

The beauty for the renovation loan program is it It saves time and money. One loan, one loan approval and no extra closing costs.

And the rehab costs are in the mortgage not coming out of the buyer’s pocket after closing.

How does it work?

The process is similar to regular home buying loans, with some modifications:

  • Apply?
  • Get Approved?
  • Find A Contractor?
  • Get Bids?
  • Close the loan?
  • Complete Repairs?
  • Move in

Receiving a final approval involves lining up contractors. That means getting quotes, receiving bids, and selecting vendors.

Yes, there are more “hoops” to jump through. But don’t get stressed. The 203k lender drives the process and will guide you through the process.

A knowledgeable Realtor is also key. They will be able to discuss what modifications to a home add the most value. You’re not on your own!

2 Types Of 203K Loans

The 203K Rehab Loan comes in two types – Standard and Streamline.

The Streamlined 203K addresses cosmetic repairs and updates. The smallest amount financed is $5,000.

A Standard 203K Rehab Loan program addresses repair costs over $35,000. Structural changes, adding rooms, new electrical, and a host of other items.

Streamlined FHA 203K Loan.

“Structural repairs” are not allowed under a Streamlined 203K. In fact, making any structural items is not considered to be minor by FHA/HUD.

And the repairs included in the rehab loan must increase the marketability and value of the home.

All repairs and improvements must meet HUD’s Minimum Property Standards. And all work must meet all local building, zoning and other codes.

Minimum repairs include any health and safety repairs. For example, peeling lead paint or replacing missing railings.

Whether you want those items included or not.

Any health and safety issues are first. Smoke detectors need to replace if missing.

Type Of Work That Can Be Included in The Streamlined FHA 203K Renovation Loan

The Streamline 203k loan program is most popular. Simply because there is less red tape and costs. Again, repairs must be less than $35,000. And no structural changes can be made. Renovations can include kitchens, baths, windows and flooring.

  • Repair, Replace or Upgrade
  • Roof, gutters, downspouts
  • Existing HVAC systems
  • Plumbing and electrical systems
  • Flooring
  • Painting
  • Appliances
  • Weatherization
  • Repair, replace or add exterior decks, patios, porches.
  • Basement waterproofing
  • Window and door replacement and exterior siding
  • Septic and/or well repair or replacement
  • Improvements for accessibility
  • Lead-based paint stabilization or abatement of lead-based paint hazards.

What can’t you do? Ineligible improvements under the Streamlined 203(k):

  • Major structural repairs
  • New construction (adding a room)
  • Repair of structural damage
  • Repairs requiring detailed plans and specs.
  • Any repair taking more than 6 months to complete.
  • Repairs that would need more than 2 draws.
  • Luxury items that are not a permanent part of the real estate
  • Granite, marble countertops, jacuzzi tubs, hot tubs, pools, etc

Standard FHA 203K Rehab Loan

If you have a larger project the Standard FHA 203K loan may work for you. The Standard Renovation Loan will address a home that needs a full gut job. Even added rooms fall under the Standard Renovation Mortgage.

This is what we refer to as the “full blown K”.

A “full K” allows you to make “structural” changes. Even the need to enlarge a house, build a new home on an existing foundation and even take an existing house and move it.

So, you can imagine that the process is a bit more involved.

Think of it as a mini construction loan program. And your contractor can ask for as many as 5 draws. But each draw request needs to have an inspection to ensure the work has been completed.

Because it is more involved than a standard loan, there are more costs involved.

Type of work for a Standard 203(k)

  • Structural alterations and additions
  • Garage
  • Attached unit (new)
  • Remodeled kitchen and baths
  • Changes to eliminate obsolescence and reduce maintenance.
  • Modernize plumbing, heating, A/C and electrical systems.
  • Install or repair well or septic systems.
  • Roofing, gutters, downspouts
  • Flooring, tiling and carpeting
  • Energy conservation improvements
  • Major landscaping
  • Improvements for accessibility
  • New free-standing appliances
  • Interior and exterior
  • Swimming Pool repairs
  • Other improvements that are a PERMANENT part of the real estate

And as indicated before, luxury items are NOT permitted in the project.

What is different from the Streamlined K and the full FHA 203K Renovation Loan?

The full 203K rehab loan requires a HUD Consultant (selected from HUD’s approved consultant list). And you pay for the consultant.

The HUD consultant understands the program and what can “fit” into the renovation loan.

They will come to the property to review your anticipated improvements.

They will inspect the property for any health and safety issues. These items must by included in the project. The consultant will prepare a “Work Write-up” for the project based on the work you would like to have done.

Because the rehab project is bigger and includes a HUD consultant it takes longer. A lot longer.

Here are a few additional items to consider.

First, there are a lot of other rules in the 203K loan program. So, find a Realtor and a Lender who has understands them.

Its an FHA mortgage for a primary residence only with a 30-year term. The maximum 203K renovation loan is limited to $295,000 in PIMA County. The maximum varies by state and county.

A 203k loan will require a longer close of escrow. Usually between 45 and 60 days. Think 90 days plus for a Standard 203K renovation loan.

And remind your Realtor to notate on the appropriate line of the Arizona Residential Purchase Contract: “Buyer obtaining a FHA 203K Rehab Loan; terms & conditions apply.” Most will not know it needs to be done.

Considering A Home In Tucson, AZ?

Are you thinking of buying a home in the greater Tucson area? Finding the right home can be a challenging process. But we can make the process much less stressful for you.

We have been Tucson Realtors since 2002. We know Tucson and the Tucson Real Estate market. As a top Realtor team, we invest the time to understand your home buying interests and desires.

At our first meeting, we will review the current real estate market with you. Show you the market data and then walk you through the Arizona home buying process.

Why? We want you to know what to expect. And what to plan for.

Interested in new construction? We’ll brief you on buying a new construction home. And what’s unique about the process.

For us, you are not another real estate transaction. You are a client and, future friend. We strive to create a relationship that continues long after you move into your home.

Review our profiles. Check out our backgrounds, education, and certifications.

We are here to help you “know what you need to know” to buy a home in Tucson, AZ. We provide you information on Tucson events, places to shop and restaurants. Our resources include contractors, electricians, and home services.

Most important to you, our professional service backgrounds mean we put you first!

Selling a home in the Tucson area?

Selling a home requires more than listing it in the Tucson MLS system. It’s about marketing. Marketing through multiple online channels.

To no one’s surprise, 80% of home buyers start their search on the internet. Homes must be visible on multiple internet channels. The more visible a home is, the faster it will sell.

We use multiple online marketing channels to showcase your home. We will build a stand-alone website built to show your home. Our marketing program targets key cities in the U. S. based on the season. For luxury listings, our drone service provides video of your home and neighborhood. This video along with professional photos helps the online buyer see and feel in your home.

To learn more about how we can help you sell your Tucson home, call us – 520-940-4541 – to arrange a meeting. We will visit your home and prepare a comparative market analysis. Then we will meet with you to review our analysis and our marketing program to “get your home sold!”

Conclusion

203K Rehab Loans are having a return in our marketplace! As home listings have declined, buyers are rationalizing why a “fixer” should be in their Tucson home search. But, find out if are eligible for a 203k real estate loan before starting you home buying search.

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

For more information on the FHA 203k loan program, visit the HUD website.

BACK to the ANSWERING MORTGAGE QUESTIONS page.

Mortgage Loan Process

What You Need to Know About the Mortgage Loan Process

5 Top Credit Tips to Prepare You for A Mortgage

Credit Score and the Mortgage Loan Process

Mortgage Loan ProcessYour credit score and debt to income ratio are the two key facts lenders use in the mortgage loan process. These two items are the primary factors to qualify someone for a home mortgage loan.

In some cases, a good credit score may offset some “close” calls on the debt-to-income ratio for some borrowers.

What Is A Credit Score

A credit score is a numerical value based on the analysis of a person’s credit history. The credit score rating ranks the credit worthiness of the person wanting to borrow money. Credit scores use credit information received from credit bureaus.

Three primary agencies report credit scores to lenders: Equifax, Experian, and Transunion. Often times these agency credit scores vary from one another.

What’s A Good Credit Score?

Credit scores range from 300 to 850. A 850 credit score is the highest. Lenders will have different credit scores tailored to their line of business.

Mortgage lenders consider excellent credit score to be at 720 or higher. However, a credit score in the mid to upper 600’s may qualify for a home loan with specific circumstances.

Get “pre-qualified” before Starting Your Home Search

The Arizona Real Estate Purchase Contract includes a Pre-Qualification form. Pre-qualification is the initial step in getting a mortgage. The potential mortgage lender wants to know the overall picture of your financial situation. To be pre-qualified for a home loan, a lender will want information regarding income, assets and any debt. A pre-qualification form must be included with an “offer to purchase” that is given to the seller when buying a home.

Pre-approval is the next step in the mortgage lending process. This step usually completed after the purchase offer on a home has been accepted by the seller.

The pre-approval process requires more information than the pre-qualification.

Tax returns, W-2’s or pay stubs along with the details of any “other income” and assets that will be used to purchase a home. All debts must be identified, and payment terms disclosed.

Summary

Getting through the mortgage loan process isn’t a difficult task if you prepare for it. And part of the preparation is getting your credit score as high as possible. While a high credit score is always better, less than perfect credit may still qualify you for a mortgage loan.

So, don’t give up without contacting a mortgage lender to discuss your credit score and debt to income ratio.

Getting through the mortgage loan process may be easier than you think.

Considering A Home in Tucson, AZ?

Are you thinking of buying a home in the greater Tucson area? Finding the right home can be a challenging process. But we can make the process much less stressful for you.

We have been Tucson Realtors since 2002. We know Tucson and the Tucson Real Estate market. As a top Realtor duo, we invest the time to understand your home buying interests and desires.

At our first meeting, we will review the current real estate market with you. Show you the market data and then walk you through the Arizona home buying process.

Why? We want you to know what to expect. And what to plan for.

Interested in new construction? We’ll brief you on buying a new construction home. And what’s unique about the process.

For us, you are not another real estate transaction. You are a client and, future friend. We strive to create a relationship that continues long after you move into your home. Review our profiles.

Check out our backgrounds, education, and certifications.

We are here to help you “know what you need to know” to buy a home in Tucson, AZ. We provide you information on Tucson events, places to shop and restaurants. Our resources include contractors, electricians, and home services.

But most important, our professional service backgrounds mean we put you first!

Conclusion

Thank you for visiting www.premiertucsonhomes.com! It’s one of the top real estate websites in Tucson. Our clients tell us that.

Our website provides information on communities and neighborhoods in the greater Tucson area. Want more? Give us a call – 520-940-4541.

We are ready to answer your questions and help you get the information you are looking for.

We are a top Realtor team in Tucson, AZ since 2002. Take a few minutes to read our profiles and client testimonials.

Are we the Tucson Realtors you have been looking for?

Sign UP to receive daily HOME TRACKER UPDATES - OR - Our Monthly NEWSLETTER. And get regular updates on the Real Estate Market and events in Tucson, AZ.

Questions about the Tucson Real Estate Market or Tucson Homes for Sale? Call Us - 520 940 4541 OR complete the - CONTACT FORM - and we will get right back to you!

 

BACK to the ANSWERING MORTGAGE QUESTIONS page.