Monthly Archives: April 2016

How to Quickly Set Up an Advertising Review Checklist for an Adjustable Rate Mortgage Loan

download (13)Every lender who is creating mortgage ads should have checklists available to use to confirm compliance with applicable rules and requirements. So what about a checklist for an adjustable rate mortgage advertisement? What should be in that check list? Here’s some ideas about what should be covered in your ARM mortgage advertisement checklist.

First, note that the majority of these rules come from Regulation Z and are discussed in the section of the law that covers the advertisement of mortgage loans. The ARMS we are discussing here are covered in the closed end credit section of the advertising rules in Regulation Z.

Your checklist should include information about the start rate for the advertisement. For example, you should say the start rate is 3.75%. You should also immediately show the APR adjacent to the interest rate in same font color and same font size. So APR on this example will show at 3.99%. Next you should say how long the initial rate will stay in effect.? If it’s a five year ARM, the answer is five years.

Next, you should state what the loan amount is and your checklist should identify the interest rate. So your checklist would show a Loan Amount of $200,000 and a lien position of “first”. After the lien amount, you should consider showing the amount of the finance charges in dollars. Lets say its $2300. This is not required but is good to consider. Another thing to consider is to mention the number of discount points if any so the consumer knows a bit more of the costs to receive this advertised rate.

The other required disclosure is to describe the index. In this case, we are advertising a LIBOR Arm loan. What’s left after that, use a rate available as of date (let’s say May 1, 2016) and refer to the margin on the loan (3.25%). Also, don’t forget to mention the term of the loan which in this case is 30 years.

So what else is needed? Regulation Z says you need to give the consumer more information about what the payment will be at the end of the initial fixed rate period. You can do this by describing the rate will be calculated using the margin plus the index subject to certain caps. There is a cap that limits the amount of the rate change at the first change, and a cap that limits subsequent rate changes. There is also a “life cap” that limits the maximum rate increase over the term of the loan.

 

Collateral Loans – Pros and Cons

download (11)These are also referred to as secured loans. When taking out a collateral loan there are many pros and cons, which a person should consider before taking out such a loan. There is no risk to the lender because if the borrower does not pay back the loan the lender has the collateral that the borrower used. Many times with a collateral loan you can get a lower interest rate and a longer period of time to repay the loan. Before applying for a loan figure out how much money you are going to need. You should avoid taking out excessive collateral loans because in the end you will paying back more money. To get an idea of how much you can borrow you should calculate your monthly expenses and monthly income and then decide after seeing how much you have left, how much of a monthly payment you can afford.

Next you will decide what you will offer as collateral because many times what you offer as collateral will help to determine what the rate will be for your loan. A collateral loan can be used to consolidate a debt, home improvements, vacation, or major purchase. When applying for this loan the loans that the bank or lender will give you against collateral will usually be percentage of the estimated market value. For example, if you are using a car that is worth twenty thousand dollars the lender would most likely offer you a collateral loan of seventeen thousand dollars, or approximately eighty-five percent of the value of your collateral.

Pros

• It is an easy loan to get and usually is quickly approved
• The borrower can usually borrow more money that they could with an unsecured loan, which is the type of loan that you would need a good credit score, steady employment, good income to get it.
• If you are turned down for an unsecured loan many times a person can get a secured loan.
• There is not a cap on how much a borrower can borrow.

Cons

• What the borrower used as collateral is at risk if they cannot pay the loan back in the time agreed upon.
• A collateral loan is not available to just anyone as you will need to own a vehicle, house, or another piece of property that can be used as collateral and if you do not have any of the three you cannot get this type of loan.

As you can see there are more pros than cons when considering a collateral loan but do make sure that you do not borrow more than you can pay back.

 

A Few Things You Must Know About The Probate Process

download (10)Probate is becoming an increasingly important term, which is also commonly heard of these days. Therefore, it is definitely something that you must essentially know.
So, here is this article we shall discuss a few things about probate.

• Death – Following the death of a loved one, when you have grieved and paid your respects, it is the administering the property that must be concentrated on. You can hold off any legal process until you get the death certificate. But, once you receive the certification of death from the respective doctor or hospital, then you must begin to take care of administering the property.

• Get the papers in order – Once you are done with the funeral, it is imperative that you get the papers and the will of the deceased in order. This will help you and your estate planning attorney to set things in motion. The executor of the will shall require all such documents to carry on further with the process.

• Title to the real property – In case the deceased owned any property, then that property cannot be put up for sale until and unless the probate court appoints an executor. However, even if the process of sale cannot begin, the executor can start the process of retaining a specialist that deals with probate realty matters.

• The death certificate – As already mentioned, obtaining the death certificate allows one to begin with the legal procedures. Administering of a state is a complicated process and it is better to appoint a probate attorney for the same. You must have the will of the deceased if there is one. You must also carry necessary documentation like financial statements, a copy of the deed of the property, etc.

• File a petition for probate – The next thing that you must do is file a petition for probate in the court which is in the country of the deceased. Normally, a hearing schedule is within thirty to forty five days from the date of filing. The main reason as to why a period of about a month is given is to ensure that all people having an interest in the property are duly informed and can make the necessary arrangements.

• Sale of other items – Forms of any personal belongings of the deceased such as furniture, art, jewellery, etc can be carried out by the family members without any formality. However, if the will of the deceased states that certain items must be passed on to certain individuals, then that must be carried out in a proper manner.

So, now that you have read this article, you are more capable of handling probate matters should the need ever arise.

 

Can I Get a Reverse Mortgage If My Spouse in Under 62

images (2)Reverse mortgages are becoming integrated as a staple in the long term financial plans. Used in a comprehensive plan, reverse mortgages make retirement funds last longer. Unfortunately, there is still a lot of confusion for those couples with notable age gaps. Generally, reverse mortgages take place when all borrowers are over 62.

It is possible for a couple with one spouse who is under 62 years of age to get a reverse mortgage loan? Is it a smart financial move in this scenario?

Yes You Can! Make an informed decision.
The key is that all borrowers must be 62 years old, or older at the time of taking out the loan. The younger spouse must not be on title at the time of the loan closing.

Spouses under age 62 should have questions about this scenario. The key is to study your situation and see if entering into a reverse mortgage makes financial sense. HUD has recently made policy changes to protect younger spouses.

If the other spouse dies before the younger spouse, the younger spouse may inherit the home. The reverse mortgage repayment date defers for the lifetime of the younger spouse. This deferral period must be applied for. There are specific aspects of a reverse mortgage when there is a younger spouse (under age 62). Let’s take a closer look.

The Aspects
· The couple need to be married at the time of closing the reverse mortgage. (Common-law spouses are recognized as legal in the state where the borrower lives. This applies to same sex couples if recognized as legal in their state.)

· The younger spouse must not be on title at the time of closing.

· The reverse mortgage proceeds are calculated on the younger spouse.

· The non-borrowing spouse may not receive any remaining loan proceeds after the death of the other spouse.

· The non-borrowing spouse must establish legal ownership of their home within 90 days of the death of their spouse to qualify for the repayment deferral.

· The non-borrowing spouse must maintain their home as their primary residence.

· The non-borrowing spouse must pay property taxes, insurance, association dues and maintain their home.

· The reverse mortgage debt is only attached to the house. It is not a personal debt of the surviving spouse.

· If a reverse mortgage borrower marries after a reverse mortgage is in place, the borrower will need to refinance to add the new spouse on title or to qualify for a repayment deferral.

Providing they do the above, the surviving younger spouse may be able to continue to live in the home for their lifetime. The loan will continue to gain interest. They will not receive any more loan proceeds money. But the loan repayment is deferred for their lifetime. The exception is if there were repair funds in escrow. When those repairs are completed during this ‘deferral period’. Those funds are released.

When Does it Makes Sense to Get a Reverse Mortgage with a Younger Spouse?
The above aspects means that this plan may not be for everyone. So who does it make sense for, and when?

This strategy may make sense for couples desiring being mortgage payment free.

Proceeds may deliver a lump sum of money, regular monthly payments, or act as a flexible credit line.

It’s important to create a lifetime budget. Be sure to take into account any income changes when one spouse dies before the other. Life insurance, cash flow businesses and having other assets may be helpful.

The surviving spouse may not want to stay in the home. The property can be sold if they would like to downsize or go live with family.

Cash taken out earlier can be used to get a smaller home or condo. The guidelines require the borrower and non-borrowing spouse participate in HUD approved 3rd party counseling as a safety measure in protecting consumers. This occurs before any contract is signed.

Summary
In conclusion; it is possible for couples to take a reverse mortgage, even if one spouse is less than 62. It is important to look at the big picture, and whether this is the optimal strategy for your situation. For many it will be the best move.

It is vital for homeowners to understand the loan agreement in its entirety. Know the rules now, make your plan.