ARAMCO Report - The Mother of ALL Mortgage Blogs!

ARAMCO Report - Thursday June 12, 2014

Posted by Mehran Aram on Thu, Jun 12, 2014 @ 19:06 PM

While the number of Americans who filed for unemployment benefits rose slightly last week, according to the U.S. Department of Labor the economy still managed to add 217,000 jobs in May, marking the first four-month stretch of job creation above 200,000 since the late 1990s. Meanwhile, the bond market continues its sideways movement with 30-year fixed rates remaining at around 4.25% and 15-year rates averaging 3.25%.

And now for something completely different: This summer marks the 20th edition of the renowned World Cup, a tournament that has been played worldwide every four years since 1930 with the exception of 1942 and 1946 when it was cancelled due to World War II.

For more information on a home purchase, refinance, or a reverse mortgage, visit our website at Aramco.Biz or call me at (877) 700-0942.

This is Mehran Aram with today's ARAMCO Report.

Ask Mehran Aram

Topics: Reverse Mortgage, Aramco Report, and now for something completely different, Mehran Aram, unemployment, U.S. Department of Labor, unemployment benefits, World Cup, Soccer, bond market, 30 year fixed rates, Mortgage Market, adjustable-rate reverse mortgage, WWII, World War II, economic data

10 Benefits of Owning Your Own Home

Posted by The Aramco Group on Fri, Sep 13, 2013 @ 08:09 AM

Homeownership is a rite of passage many of us dream of. Owning a home means putting down roots and having a space that is truly yours. It’s a significant moment of your life when you finally own a home.

But owning a home can be daunting because of the responsibilities and obligations that come with it, combined with the initial process it takes to get there. When done properly, though, buying and owning a home is a process that limits your financial risk, increases your investment power, and saves you tons of money over the long term—and it can even save you money immediately.

Renting has little to no ROI. Renters don’t have to worry about maintaining a residence or paying the mortgage. But if you’ve been renting long term, chances are you’re already performing home maintenance on some level and you’re at your landlord’s mercy when it comes to major repairs. And when it comes to paying the mortgage, there are many advantages over rental payments, which don’t provide any return on investment beyond securing a place to live through the end of the month or lease.

How much is rent actually costing you? Consider the amount one pays over a 10-year period. A $1000/month rental payment adds up quickly to a whopping $120,000 over 10 years, when the same amount of money could have gone toward reducing 1/3 of the debt on a 30-year home mortgage by essentially making the payments to yourself instead of a landlord. Wow!

Here are 9 more benefits to owning your own home:

1. Homeownership is an investment. Unlike a car and many other purchases that decrease in value, a home is a purchase that appreciates over time. While each local market has its own unique factors, the national median home price goes up each year, even in times of recession. As you pay your mortgage each month, your debt amount goes down, while the value of your home continues to rise. This creates the buying and reinvestment power better known as equity.

2. Gain equity. When it comes to homeownership, investment and equity are directly related. As you make mortgage payments each month, part of the payment goes toward the interest, while the rest pays down the principal balance. Equity can be better defined as the part of the principal balance you’ve already paid, or the percentage of your home you already own. Paying the principal is like depositing money in the bank, because that money becomes available for reinvestment in the home itself or a new home.

3. Take advantage of tax benefits. The federal government encourages homeownership (which in turn encourages economic growth) by offering tax incentives for homeowners. The biggest one is the option to deduct interest from mortgage payments on your income tax return, especially at the start of a mortgage when most of the payment is applied to the interest. Payments on private mortgage insurance (PMI) and certain home-related purchases also qualify for tax benefits.

4. Stabilize your housing costs. A fixed-rate mortgage means you’ll have the same mortgage payment for the term of the loan (usually 30 years), while monthly rental payments will continue to climb. And even adjustable-rate mortgages (ARM) have a fixed cap on them. Homeownership also stabilizes other home-related expenses like utilities and gives you more control over your ability to make investments in your property that keep those expenses down.

5. Gain control over your living space. Renting doesn’t usually come with a lot of options for modifying your living space to better suit your needs. Renters with changing needs must also deal with changing residences. Homeownership means you can make improvements to your home, and home improvements usually lead to increased home value, both financially and in daily home life. The power of equity can give homeowners the extra financing they need to reinvest in their homes when cash funds aren’t an option.

6. Increase your own sustainability. Homeownership can help you create a sustainable future in many different ways. Long-term renters lack sustainability because a high percentage of their income usually goes toward housing expenses that are constantly increasing. Locking yourself into a mortgage payment helps level out living expenses, so when income goes up it can be budgeted elsewhere. Paying off a mortgage allows homeowners a long-term plan to significantly reduce their living expenses as they move toward a retirement budget.

7. Stop moving. Homeownership increases sustainability and stability. Moving from rental to rental is a major inconvenience and a financial and emotional burden. Renting can mean that you never really know where you’ll be living next or what your expenses will be. Staying in the same home allows a financial and emotional investment in both your living space and your community.

8. Social benefits. Staying put for longer periods of time also creates social benefits that range from friendships with neighbors to community involvement and consistent educational opportunities for children.

9. Use your investment to make another investment. The equity that comes from paying a mortgage is what allows many individuals and families to make future investments in the same home, a higher-valued home, or second home. A home equity line of credit helps homeowners use the part of their home that’s already paid off to obtain financing for investments apart from the home itself, such as purchasing a boat or RV.

Homeownership comes with a bevy of benefits; these are only a handful. What other benefits have you experienced with homeownership? What makes you want to own your own home?

Topics: Aramco Financial, home prices, Aramco Mortgage, Home Equity Conversion Mortgage, home ownership, adjustable-rate reverse mortgage

Can an Adjustable-Rate Reverse Mortgage be Beneficial to You?

Posted by The Aramco Group on Tue, Apr 30, 2013 @ 14:04 PM

Previously, seniors had an option in choosing which type of a home equity conversion mortgage (HECM) they desired, either a fixed-rate mortgage or benefits, adjustable-rate reverse mortgage, an adjustable-rate mortgage. They still do, but as of April 1st, the standard fixed-rate lump-sum option has been suspended by the Federal Housing Administration. The options for the payout of the loan proceeds are either receiving a line of credit, lump-sum amount, or monthly payments with a term or tenure option.

Naturally, a fixed-rate mortgage would have offered more stability, however there are other benefits with an adjustable-rate option. With an adjustable-rate option you have the flexibility to choose on how you may receive your loan payout. 

The first option is a lump sum payment in which you will receive the entire loan amount up front. Imagine being able to rid yourself of a mortgage that has been a burden on your income for so long. With the lump sum payout, you can feel a sense of relief and eliminate a substantial monthly expense from your budget. Maybe you need the money to make a major renovation or other repairs to your home or maybe take an extended vacation that you haven’t been able to take in a long time. 

A second option would be to receive monthly payments. This is a good option for those who need to supplement their existing income. Perhaps social security is not enough to fulfill a quality of living that you desire. Maybe the extra amount of monthly income that a reverse mortgage provides you can help you reach that quality of living you so greatly deserve. Also with the monthly payment option you have the ability to choose either term or tenure payments. Under the monthly term option you will be given a structured payout over a specified period of time, whereas the monthly tenure option will give you payments for as long as you live in your primary residence. 

Your third option is receiving a line of credit. This is your most flexible option to choose from. You may pull money from the credit line whenever you deem necessary as well as choose how much you would like to take out each time. It’s great to use as a “safety-net” to hold onto just in case there are some unforeseen costs down the road.  Another plus for the line of credit option is that it includes a growth rate, which allows the available amount of credit to grow as your age and the value of your residence increase. There are no monthly mortgage payments even after the rate rises. Remember, as the interest rate increases so does the rate of growth of the available line of credit. 

One concern that arises from the adjustable-rate mortgage is that because it is a variable rate and it is tied to market conditions, the interest rate on the loan may reach a very high level possibly causing some seniors a sense of uneasiness. However, because it is tied to market conditions, the interest rate on the mortgage may also decrease as well. There are certain precautions built in to protect the borrower. The lender is limited to how much they can adjust the interest rate for the duration of the loan. Within one calendar year the lender cannot increase your rate by more than 2 percentage points and no more than 10 percentage points above your start rate for the life of the loan. 

As you can see, the adjustable-rate reverse mortgage when compared to the fixed-rate offers much more flexibility with less constraint. Its numerous options allow you to choose a payment plan that can fit your lifestyle accordingly. Let us at The Aramco Group help you find a way to access the equity in your home that would be beneficial to you. Mehran Aram, a Certified Reverse Mortgage Professional, would be more than happy to sit down with you and discuss your options and help put you on a path to financial freedom. Contact him today!!

Topics: Reverse Mortgage, HECM, Aramco Financial, Mehran Aram, senior citizen, adjustable-rate reverse mortgage