ARAMCO Report - The Mother of ALL Mortgage Blogs!

Housing affordability crunch worsens in Q1

Posted by The Aramco Group on Thu, May 24, 2018 @ 14:05 PM

The average wage earner in 68 percent of the U.S. cannot afford the median home price in their county according to a new report. This affordability crunch is the continuation of an ongoing quagmire in the housing market where a chronic imbalance between supply and demand is driving prices continuously higher.

According to U.S. Census Bureau statistics analyzed by ATTOM Data Solutions of 446 U.S. counties, 304 had median home prices beyond affordable levels for locals. As a result, the study found, a growing number of people are migrating away from high-prices, less affordable markets like Los Angeles. Rather, populations are growing in suburbs like Riverside and other parts of the Inland Empire where prices are more affordable.

Likewise in San Diego where it currently takes an annual salary of $139,000 to afford a median priced home in the County.

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 4.625 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

The cost of moving

Posted by The Aramco Group on Wed, May 23, 2018 @ 14:05 PM

You've paid the deposit, escrow is closing and now it's time to pack. The period before a move is often the most exciting but for some, the transition period itself can be daunting. Getting your belongings from point A to point B can be as simple as loading up a truck but that is easier said than done.

According to research by online real estate site Zillow, the cost of moving can vary depending on many factors. Will you hire movers or do it yourself? Are you moving across town or across the country? How many boxes will you need? Putting together a plan can help those relocating formulate a budget.

The experienced also know that the best way to save money when moving is to move fast. Truck rentals, professional movers, storage costs and overlapping rent and mortgage payments can add up each day.

Today, conforming no-point 30-year fixed mortgage rates are averaging 4.625 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Does a Reverse Mortgage Impact Social Security, Medicare, and Other Benefits?

Posted by The Aramco Group on Wed, May 23, 2018 @ 09:05 AM

Senior couple discussing finances with advisorAre you enjoying your retirement to the fullest?

If you’re 62 or older, a reverse mortgage loan could help you tap into your home's equity to cover your golden years — but as with any financial solution, it’s important to understand how it would work with your lifestyle.

Unlike other mortgages, a reverse mortgage does not require monthly payments. A reverse mortgage allows you to access the equity from your home as either a line of credit or a lump sum. Of course, that begs the question: does this additional income mean you have to give up other helpful financial programs?

From social security to Medicare and Medicaid, read on to find out which benefits are impacted by a reverse mortgage and why, so you can manage your retirement finances more effectively.

Benefits That Aren’t Affected by a Reverse Mortgage

Financial schemes that are not based on income don't change when you take out a reverse mortgage. This includes government-based programs like Medicare coverage and social security benefits, as well as most pensions.

Social security benefits take into account the money you and your spouse paid into the system while in employment — not your assets and income in retirement. Your social security benefits will be unaffected by a reverse mortgage, although you may find that getting a reverse mortgage increases your social security benefits. That’s because a reverse mortgage may provide you with enough money to avoid claiming social security benefits until the latest date possible, which is when they’re at their highest value.

In most cases, a reverse mortgage won't affect your pension, either. Your pension will have already been established with your employer or in an investment portfolio, so a reverse mortgage will have no negative impact on these benefits. In fact, a reverse mortgage allows you to hedge against problems with your investment portfolio — like a down market — and helps protect your long-term wealth.

Benefits That May Be Affected by a Reverse Mortgage

The proceeds of your reverse mortgage won't count as taxable income, because the money comes from a loan that eventually needs to be repaid. Having said that, social service programs that determine eligibility based on your income and assets could be affected if you take out a reverse mortgage.

Programs with countable asset limits include:

  • Medicaid
  • Supplemental Security Income (SSI)
  • Food Stamps
  • Temporary Assistance for Needy Families (TANF)
  • Wartime Pensions

Whether you receive your reverse mortgage payment in one lump sum or save up payments in your bank account, you could exceed the income limits for these programs. But that doesn’t mean you can’t regain your eligibility once you’ve taken out a reverse mortgage.

If you take out your reverse mortgage payment in one lump sum and use all the money immediately, you could find yourself back within the income limits. This is not an advisable move unless you need the line of credit to pay off a large amount of debt or another home.

If your reverse mortgage payments have accumulated in your bank account, you could do a "spend down." This involves spending the excess amount of money on non-countable assets, such as home repairs or medical equipment that would not be covered by your health benefits. It’s important to find out what qualifies as a non-countable asset in your state, as spending down on the wrong assets can endanger your eligibility for some programs.

Another way to stay within the income limit for benefits is to arrange an adjustable rate reverse mortgage. By setting monthly payment amounts or accessing a line of credit, you can ensure you aren’t pushed over the income limits each month. Before proceeding with any of these strategies, however, it’s essential to understand the exact requirements for each financial program, and always seek advice from a benefits specialist.

Which Benefits Can You Keep?

While a reverse mortgage doesn’t automatically mean the end of your benefits, you should speak to a Certified Reverse Mortgage Professional (CRMP) before moving forward with a reverse mortgage. A CRMP will be familiar with the latest benefit requirements and can accurately review your unique case.  

Contact ARAMCO and schedule an appointment with one of our certified reverse mortgage professionals to see if you could benefit from a reverse mortgage in your retirement.

Topics: Reverse Mortgage

Living in paradise comes with risks

Posted by The Aramco Group on Tue, May 22, 2018 @ 14:05 PM

The Kilauea volcano continues to spew lava, prompting Hawaii's governor to declare a state of emergency and the evacuation of thousands of residents. Several residential communities remain at risk of damage. This is just the latest crisis in the state. Last January a false alert of an incoming ballistic missile attack from North Korea sent residents and tourists into a panic.

Living in the Hawaiian Islands with its tropical weather and world renewed beaches is worth a little risk according to many of the Aloha State's residents. Purchasing a home in a subdivision near a volcano can often come with steep discounts. Although median single-family home prices in April were near or above $750,000 in Oahu and Maui, a 1-acre lot at Leilani Estates near Kilauea volcano goes for around $20,000.

While insurance companies do not provide lava coverage, many homeowners can utilize their homes fire insurance policy should any damage occur.

Today, conforming no-point 30-year fixed mortgage rates are averaging 4.625 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

April housing report brings mixed news

Posted by The Aramco Group on Mon, May 21, 2018 @ 14:05 PM

A look back at the first month of the spring home buying season shows California's housing market is in a classic conundrum with both good news and bad news.

First the good news: after three years of declines, statewide active listings finally reverse course, rising 1.9 percent in April. Active listings or the supply of homes on the market, had been falling by double digits since 2016 but are trending upwards in recent months. Currently, the statewide unsold inventory index climbed to 3.2 months in April according to the California Association of Realtors.

The bad news is that home sales cooled last month as prices continued to climb. CAR reports sales of single-family homes in California fell 1.7 percent in April from the prior month.

Today, conforming no-point 30-year fixed mortgage rates are averaging 4.625 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

When Does It Make Sense to Use a Reverse Mortgage in Retirement?

Posted by The Aramco Group on Wed, May 16, 2018 @ 09:05 AM

A couple speaks with their financial advisor

Many homeowners look forward to the day when they can make their final mortgage payment and own their home outright. But, during retirement, it can often help to tap into your home equity, rather than leave it sitting untouched.

A reverse mortgage is a type of loan designed for homeowners over the age of 62. Insured by the federal housing administration, it transfers equity into cash — without the stress of monthly mortgage payments. You can receive your equity either as a line of credit or a lump sum, so you can spend your money in a way that suits your retired lifestyle.

While a reverse mortgage may not be the right option for all senior homeowners, below we’ve outlined circumstances where it can make sense to use this financial vehicle to your advantage.

1. You Need Some Budget Breathing Room

Once you’re retired, you live on a fixed income which has to cover your day-to-day expenses. When unexpected medical bills and significant home improvements suddenly come your way, it can be difficult to find the extra financial cushion you need to cover these costs.

Reverse mortgages can free up your budget by eliminating your monthly mortgage payments (of course, you still must make your property tax and insurance payments). What’s more, because reverse mortgages provide you with a lump sum, you have money to use as and when you need it. This gives you peace of mind that you can deal with any future surprises.

2. You Have an Investment Portfolio

If you have a portfolio of investments that's not yet performing as well as it should, or there are downward fluctuations in the real estate and stock markets, a reverse mortgage can help.

Because this financial solution gives you access to your home equity, you have money to spend during down-market years. This means you won’t be forced to sell your investments before you’re ready, allowing you to build up a stronger retirement portfolio and strategically sell when the market is favorable for you.

3. You Want to Pay off Your Debt

Nobody wants to spend their golden years constantly worrying about debt. Unfortunately, if you’re finding it hard to sustain normal living standards on your fixed income, you may struggle to get rid of leftover debt at the same time.

A reverse mortgage can help you consolidate some of the high-interest debts that might leave a burden on your family after you pass away. This saves money on loan payments, and ensures you have access to enough cash to enjoy your retirement instead of focusing on how to make ends meet.

4. You Want to Upgrade Your Home

If you’re hoping to leave your home to your family, you may want to address any problems on your property to ensure that it’s in top condition. A reverse mortgage can help you make any necessary changes without accessing a high-interest loan.

Even if you don't want to leave your home to anyone, upgrading certain aspects of your property could be a great way to give yourself a better quality of life during retirement. From renovating your kitchen and bathroom to installing a chair lift, you can make your home easier to get around and more enjoyable to live in with a reverse mortgage.

Is a Reverse Mortgage Right for You?

If you’re still not sure whether a reverse mortgage is right for you, ask yourself the following questions:

  • Would it be helpful for me to pocket my monthly mortgage payments?
  • Would it benefit me to access the equity in my home without selling it?
  • Do I have medical expenses or debts I need to pay off?
  • Would I feel financially secure with more cash in my budget?
  • Would I feel better if I leave my family with a non-recourse loan, rather than excess debt?

If you answered yes to any of these questions, then it may be helpful to explore your options with a reverse mortgage.

Contact ARAMCO to schedule an appointment with one of our Certified Reverse Mortgage Professionals (CRMP), and find out whether this financial solution could work for you.

Topics: Reverse Mortgage, Retirement

Smart homes are the new luxury

Posted by The Aramco Group on Sun, May 13, 2018 @ 14:05 PM

It used to be granite countertops and jacuzzi baths, but homebuilders are convinced that smart home technology may be the new thing that catches a buyer's eye. In a new partnership announced this week, Amazon and Lennar are teaming up to create "Amazon Experience Centers". These will be newly constructed model homes that contain built-in Alexa-controlled appliances and services.

Models are already available for viewing by the public across the country, with two flagship homes in California – one in Irvine and the other in Vallejo. The homes are outfitted with smart TVs, buttons that can reorder products from Amazon, automatic shades and door locks as well as camera systems and video doorbells.

Competitors to Amazon's Alexa, including Google and Apple, have also teamed with homebuilders to create similar immersive experiences with their respective robot assistants being imbedded into homes.

Meanwhile, conventional conforming no-point 30-year fixed mortgage rates are averaging 4.5 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Buyers battle it out for limited number of homes available

Posted by The Aramco Group on Sat, May 12, 2018 @ 14:05 PM

Prospective home buyers can expect to go to war this home-buying season. Robust demand for homes combined with chronically low inventories is leading to an increase in the number of offers sellers are receiving for their homes. According to data from the National Association of Realtors, the occurrence of bidding wars is rising. In March, 37 percent of properties sold at or above the list price – up from 35 percent a year ago. This is partly due to buyers working to outbid one another to have their offer accepted.

"Buyer demand continues to outpace the supply of homes being listed for sale in the market, sustaining the upward pressure on home prices," the NAR reports on its Economists' Outlook blog.

On average, sellers received 2.5 offers on their homes before closing. Of the homes that went for a premium in March, 87 percent sold at 101 to 110 percent of their list price. In a market where prices are already at a premium, bidding wars can make it more difficult for first-time buyers to get a foothold in the market.

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 4.5 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Australian gov't offers reverse mortgages to all seniors

Posted by The Aramco Group on Fri, May 11, 2018 @ 14:05 PM

In an unprecedented move the 2018 federal budget of Australia will include funding to provide every senior citizen in the country a reverse mortgage. As in the U.S., the elderly population of Australia maintains high levels of equity in their home while struggling to live on a fixed income in retirement.

According to the plan, homeowners will be able to use their home's value as a source of wealth and eliminate monthly mortgage payments. Reverse mortgages in the U.S. allow those 62 or older to tap their home's equity to fund their longevity. Income from such a program can be realized in the form of a lump sum, monthly payout or a line of credit.

The Australian government has dubbed the plan, "More Choices for a Longer Life" and also expands social services to seniors like in-home care and physical fitness initiatives.

Today, conventional conforming no-point 30-year fixed mortgage rates are averaging 4.5 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.

Calif. becomes first state to mandate solar panels on new homes

Posted by The Aramco Group on Thu, May 10, 2018 @ 14:05 PM

The California Energy commission approved new regulation this week that will require solar panels on all new homes beginning in 2020. This is the first such measure taken by any state in the nation although some California cities, like San Francisco, already have similar requirements in place.

The Commission approved the policy in a unanimous 5-0 vote, which some critics say will only make already pricey homes even more expensive due to increased construction costs. But proponents say that it will all pay-off over time. The Commission estimated that mortgage payments will go up by about $40 per month, but that people will save $80 per month on utility bills.

In a statement, the state described the measure's effect on greenhouses gases as the "equivalent to taking 115,000 fossil fuel cars off the road."

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 4.5 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.