ARAMCO Report - The Mother of ALL Mortgage Blogs!

San Diego senior population expected to double by 2030

Posted by Mehran Aram on Fri, Sep 6, 2019 @ 08:09 AM

There were approximately 375,000 senior citizens living in San Diego County as of 2015, according to San Diego Magazine – a figure that is expected to double to 724,000 over the next 12 years. While this is hardly surprising given San Diego’s status as one of the top places to retire, it presents challenges for those living on a fixed income.

San Diego is one of the most expensive housing markets in the nation with average home prices topping well over $500,000. Yet, social security income for a single retiree in San Diego is less than $20,000 per year.

Fortunately, those looking to relocate to San Diego in their golden years may find benefit in a H4P or HECM for Purchase. H4P is a type of home loan that is insured by the FHA and provides those 62 or older an opportunity to combine their down payment with loan proceeds from a reverse mortgage. Most appealing is that the loan requires no monthly mortgage payment.

Today, conventional conforming no-point 30-year fixed mortgage rates are averaging 3.625 percent and 15-year rates are near 3.125 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.

Topics: Reverse Mortgage, San Diego County, senior citizen, Retirement, Seniors, Reverse Mortgage for Purchase, Mortgage rates, HECM for Purchase, San Diego Housing Market, San Diego Housing, Fixed Income, H4P

Seniors holding on to their homes longer

Posted by Mehran Aram on Sun, Feb 10, 2019 @ 05:02 AM

More of America’s senior citizens are choosing to put off downsizing in retirement and instead are making the decision to stay in their family home. According to a new report from Freddie Mac, this may be a significant cause of the housing shortage that exists.

An analysis from Freddie Mac suggests that seniors choosing to age in place is responsible for at least 1.6 million homes not being listed for sale in 2018. For many seniors living on a fixed income, holding on to the family home is often made possible through powerful financial tools like reverse mortgages.

Improved health and longevity are giving retirees more reason to utilize their homes equity as a form of supplemental income. Reverse mortgages allow those 62 or older to not only eliminate existing mortgage payments but also to receive extra income in the form of a lump sum, monthly payout or a line of credit.

Meanwhile, conventional conforming no-point 30-year fixed mortgage rates are averaging 4.375 percent, 15-year rates are near 3.75 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.

Topics: Reverse Mortgage, senior citizen, Retirement, Seniors, Freddie Mac, downsizing, Age in Place, housing shortage

Baby Boomers express desire to age-in-place

Posted by Mehran Aram on Wed, Jan 30, 2019 @ 05:01 AM

It used to be that empty nesters were expected to downsize but according to a new survey, America’s seniors are expressing a strong desire to stay in their family home. The Housing Confidence Index, released by Chase and Pulsenomics, found that 52 percent of Baby Boomers intend to never move out of their current home.

Rather than relocating, 88 percent of respondents say they plan to make improvements to their current home. Nearly 66 percent of those polled said they think their home values will continue to rise, providing incentive for homeowners to age in place and utilize their home as a source of income.

Powerful financial tools like reverse mortgages allow exactly that. In addition to eliminating monthly mortgage payments, reverse mortgages can provide supplemental income in the form of a lump sum, monthly payout or a line of credit. This can provide those 62 or older with a pathway to stability and security in retirement.

Today, conventional conforming no-point 30-year fixed mortgage rates are averaging 4.375 percent, 15-year rates are near 3.875 percent and the 5-year ARM is averaging 4.375 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.

Topics: senior citizen, Seniors, Housing Market, Housing, downsizing, Baby Boomers, boomers

Purchasing Your Home in Retirement: Using HECM Reverse Mortgage

Posted by Craig Sutliff on Thu, May 8, 2014 @ 09:05 AM

Downsizing? Refinancing? Wanting a change of scenery? It is a common misconception that you can’t use a reverse mortgage to purchase a home. That is entirely false!

Purchasing Your Home in Retirement:Using an HECM Reverse Mortgage

Many of our elderly clients live in homes in which they’ve raised their families and some are looking to downsize or move into a retirement community. This move allows them to take advantage of less upkeep of a home and to enjoy their time doing other activities. With a Home Equity Conversion Mortgage (HECM) they are able to accomplish this, and can avoid moving into costly retirement homes. 

Downsizing is not the only way to reap the benefits of a HECM Reverse Mortgage. With many of our clients, we are able to list and sell their home so they can go on to purchase a new home. This is accomplished by using some or all of the proceeds they received from selling their home as a down payment on a new home. We simply finance the purchase of this new home with a HECM Reverse Mortgage for purchase, and the homeowner enjoys their new home with out the usual burden of monthly payments. If the property purchased is a home of equal or lesser value than your existing home, you in most cases can transfer the current taxable value to your new property (of course it's a great idea to consult your tax professional, we're just the real estate and. Mortgage pros). This means that property taxes WON’T go up AND, with the Reverse Mortgage, you will have NO mortgage Payment (just be sure to follow the terms of the loan)! Even with these benefits, you are not restricted from purchasing a higher-value home if you so choose.

Owning a home is also not a prerequisite to get a Reverse Mortgage. Many seniors that are currently renting and may have saved money over the years or came into an inheritance, can use some of their savings to purchase a home using a Reverse Mortgage.  This provides a tremendous amount of freedom and security for the senior. With ownership, the housing payment is essentially fixed and you, the owner, are no longer subject to ever-increasing rent payments.

While being a homeowner means being responsible for property taxes, insurance, and maintenance, this option provides a freedom that renting does not. With owning a home, YOU are in charge, allowing you to make changes to the space, etc. without having to worry! With no mortgage payment, the costs of owning a home can be very manageable and the benefits of owning far out-weigh the uncertainties of renting.

Call The ARAMCO Group at 877-700-0942 for more information on how a HECM for Purchase Reverse Mortgage can help you!

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Topics: Reverse Mortgage, HECM, home buying, senior citizen, Retirement, Aramco Mortgage, Aramco Properties, Retirement Concerns, downsizing, retireing without a mortgage, 10-31 excahnge, Selling, HECM for Purchase

Non-Borrowing Spouses and Reverse Mortgages: What you need to know

Posted by Jay Zayer on Wed, Apr 30, 2014 @ 15:04 PM

On April 25th, 2014, HUD released their new reverse mortgage guidelines for non-borrowing spouses.  For HECM loans with FHA case numbers on or after August 4, 2014, non-borrowing spouses will be able to remain in their home and defer payment in cases where the named borrower passes away.

HUD will be updating factor tables that will be based on the youngest borrower or non-borrowing spouse and will be used to calculate the principal limit for borrowers younger than 62 years of age.

Non-Borrowing Spouses and Reverse Mortage: What you need to knowThe reverse mortgage will continue to accrue interest in accordance with the original terms and the borrower will also need to make mortgage insurance payments to the FHA.  The non-borrowing spouse will be able to sell the property regardless of equity however, a non-borrowing spouse certification will also be required prior to closing escrow (this certifies that the borrower is married to the non-borrowing spouse.)

According the Mortgagee Letter 2014-07, in the event the borrower predeceases the non-borrowing spouse, the loan repayment will be deferred for as long as the non-borrowing spouse meets all the necessary requirements. Such requirements include the continuation of the following:

1. Within ninety days from the death of the last surviving HECM mortgagor, establish legal ownership or other ongoing legal right to remain (e.g., executed lease, court order, etc.) in the property securing the HECM;

2. After the death of the last surviving borrower, ensure all other obligations of the HECM mortgagor(s) contained in the loan documents continue to be satisfied; and

3. After the death of the last surviving borrower, ensure that the HECM does not become eligible to be called due and payable for any other reason.

If the non-borrowing spouse is unable to meet these requirements, the deferral period will cease and the reverse mortgage will become due and payable. 

Although these changes will affect the loan amount that borrowers will qualify for, it will also allow non-borrowing spouses to stay in their home without the fear of being evicted down the road.

For more information regarding reverse mortgages or any of the information provided, please contact us at 877-700-0942 or click the link below.

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Topics: Reverse Mortgage, HECM, Aramco Financial, The Aramco Group, San Diego, Mehran Aram, Loans, senior citizen, Certified Reverse Mortgage Professional, Non-Borrowing, Spouses, HUD, Retirement, FHA

Retirement Prep for All Ages and Stages

Posted by The Aramco Group on Mon, Apr 7, 2014 @ 06:04 AM

It is never too early, or too late, to make decisions when it comes to your retirement planning. Whether you are just starting your career or retirement is just around the corner, do not let the financial and emotional side of planning overwhelm you. There are calculated steps you can take at every age and life stage that will help you reach retirement comfortably and enjoy your post-workforce years without undue hardship.

Take a look at this guide for retirement planning based on your age and how soon you plan to stop working. Remember that this is general advice and your retirement plan will be unique.

40 Years From Retirement
Most Americans will work about 40 years of their adult lives before retiring. It can be hard to comprehend what your life is going to look like several decades into the future, but you will be grateful later for the planning you did in advance.

The main way to plan for retirement at the beginning of a career is to set up a retirement fund and dedicate a small amount to it every month. To figure out the amount you should be contributing, check out a retirement plan calculator online that will take your age, income, and projected retirement savings into account. If your employer offers a 401(k) program or something similar consider joining in unless you plan to start your retirement account separately. However, if your employer offers 401(k) matching, it’s strongly suggested that you take advantage of this benefit. Find out what your employer’s rules are for vested money in the account so that you are sure to take every penny you earned and were given if you switch to a different job down the road.

The bottom line is this: you’re young, but that means that you have even more time to build up the savings you’ll need in retirement. A young person who puts $4,000 per year into retirement beginning at the age of 22 will have $1 million by the age of 62, based on 8 percent average annual returns. Even though it’s hard to put away extra cash for something that’s so far away, remember that nobody else is going to save for your retirement for you.

20 Years From Retirement
If you are right in the middle of your career and have yet to start planning for retirement, you will need to play a little bit of catch-up. Likely, you are more financially secure than you were at the beginning of your career, so it is a great time to start seriously saving retirement money.


The median net worth of workers ages 40 to 49 is $133,100, with the top 25 percent worth $371,000. By comparison, the median net worth of workers in their 20s is just $6,400. You may feel like your paychecks are gobbled up by house payments, car loans, and taking care of children, but prioritize finding a way to put at least 15 percent of your income in retirement accounts.

If you have not actually calculated what you’ll need in your retirement years or figured out what age you want to retire, now is the time. It may still seem far off in the distance, but understanding your financial constraints now will make a difference in how much you are able to save. Even if you think there is no way to save enough, meet with a financial planner to find ways to make it happen. A little is way better than nothing.

10 Years From Retirement
When it comes to what you will need to live out your work-free years in financial comfort, most experts cite 12 times your salary at the age of 65. If you are around 55 or in your 60s but planning to retire a little after that 65 mark, it is time to take a long look at your savings and determine how you can put more away.

Check out your savings. Are you at five times your income? Bump up the savings to 33 percent—putting $5,500 in your traditional 401(k) plan and the rest in IRAs or Roth IRAs. If you are married, you will want to talk with your spouse about the timing of retirements. Research shows that one in five couples retire in the same year as each other but keeping at least one on the payroll a little longer can mean a much happier and more comfortable retirement for both. Sit down and take a long look at where you stand financially and where you want to end up. Then adjust your savings to make it happen.

1 Year From Retirement
At this point, you are getting so close to retirement that you start to feel giddy—and maybe a little bit nervous too. The best way to face that anxiety is to know exactly where you stand financially.

Meet with your planner. If you have money in stocks, adjust it to be no more than 40 to 50 percent of your retirement cash (now is not the time to take risks, it is the time to coast on what you already have). Do a trial spending run based on your anticipated budget for the retirement years and look for ways to pull back on spending. What can you pay off? If you started late with retirement savings or are worried that you will not have enough to last through your golden years, ask your financial planner or a representative from The ARAMCO Group about the possibility of a reverse mortgage to tap into the equity of your home and put your mind at ease. Tie up any loose ends or financial burdens weighing on your mind, then decide if you are truly ready at the end of the year or if you can make it through a few more.

Like all phases of life, retirement takes some planning to truly be enjoyed. No matter where you are in the planning process, there is always time to make a better future for yourself. Use the income and resources that you already have smartly and you can live comfortably in your retirement years.

Topics: Reverse Mortgage, senior citizen, Certified Reverse Mortgage Professional, retirement planning, Retirement Concerns

HECM For Purchase

Posted by The Aramco Group on Tue, Dec 3, 2013 @ 23:12 PM

Last year the home buyer rejection rates for major banks ranged from 11% to 34% according

to the Federal Financial Institutions Examination Council.   Out of 556,302 HECM, HECM for Purchase, Home Buying, Downsizingoan applications submitted to purchase a new home, Wells Fargo, JPMorgan Chase and Bank of America denied 131,128 applications.  Many of these loans were denied because of credit scores, debt-to-income ratios, and job history. 

One option that works great for borrowers 62 and over is a HECM for purchase.  HECM(Home Equity Conversion Mortgage) better known as a reverse mortgage is a great option and can be used to purchase a home.  A HECM for Purchase does not currently have requirements for credit score, job history, or a maximum debt to income ratio. 

Let’s say a borrower is 67 years old.  They would qualify for a HECM for Purchase with a down payment of about 45% and because this is a Reverse Mortgage the borrower can live in the home without ever making a mortgage payment.   

This is also a great loan product for borrowers that are selling a home and downsizing to a smaller home, a single story home or maybe just want to live closer to friends and family.   

This is probably not the best loan option for an individual that has sufficient income/credit score and can qualify for conventional financing. With that being said, this can be a great financial tool used to help borrowers purchase a new home that may not have qualified without the HECM for Purchase. 

 

 

Topics: Reverse Mortgage, HECM, home buying, senior citizen, Retirement, Home Equity Conversion Mortgage, Loan Options, HECM for Purchase

HOME EQUITY LINE OF CREDIT VS. REVERSE MORTGAGE

Posted by The Aramco Group on Wed, Jun 12, 2013 @ 17:06 PM

Are you 62 or older and have you recently considered accessing the equity in your home? Perhaps you would like to make some home improvements, or maybe you have some bills and Seniors, Senior Citizens, Retirement, Reverse Mortgage, Home Equitythe extra money could help alleviate the burden. Home equity continues to be the biggest asset Americans own. We at The Aramco Group would like to present an informative look at the 2 main types of home equity options available for seniors 62 and older, a Home Equity Line of Credit (HELOC) and a Reverse Mortgage.

 

We will first take a look at the Home Equity Line of Credit option. The HELOC is, in essence, a second mortgage on your home in the form of a line of credit. The entire loan amount is made available to you but it gives you the freedom of choosing how much and when it is withdrawn over a specified period of time, typically 10 years known as the “draw” period. During this period interest-only monthly payments are typically made but ONLY on the amount that is withdrawn. When the draw period is over, the loan amortizes over the remaining term in which it is repaid and no more draws are allowed. In determining the actual line of credit a consumer may receive, a lender will look at numerous factors which include: income, debts, credit history, home value and other financial obligations. Once approved, the HELOC works more like a credit card because it has a revolving balance where the home serves as collateral. Because a home is often considered a consumer's most valuable asset, many homeowners use a home equity line of credit for major items, such as education, home improvements, or medical bills. However, it is typically available with a lifetime adjustable rate capped at 18% rather than periodic interest rate caps. Those that want some form of certainty when it comes to paying their monthly interest payments will be dissatisfied by this feature because your interest rate will change every time the Fed moves the Federal Funds Rate which impacts the prime rate. One of the major drawbacks is that you could end up owing more on your first mortgage and HELOC combined than the actual value of your home, which means refinancing or selling your home could come with great difficulty. As mentioned above, a HELOC tends to be in the form of interest-only payment terms which means you will not be reducing the principal balance and at the end of the loan term you will owe the entire balance to the lender in a lump sum.

 

Now let’s take a look at the Reverse Mortgage or Home Equity Conversion Mortgage (HECM). The main advantage with a HECM is that you will not have any mortgage payments for the remainder of your life in your current home, regardless of the interest rate fluctuations. Also, you do not have to be concerned with the usual income, credit and asset requirements to qualify for a HECM. A Reverse Mortgage has the flexibility to payout however the borrower prefers as long as one borrower continues to occupy the property as a principal residence. It can be in the form of Tenure payments – equal payments for as long as the borrower lives in the primary residence. Term Payments – fixed number of payments for specified period of time. A Line of Credit – unscheduled payments or in installments, at times and in an amount of your choosing until the line of credit is exhausted. Or you may choose any combination of the above mentioned payouts. If you were to choose the Line of credit option for the Reverse Mortgage and compare it to the HELOC, the Reverse Mortgage would be a better option because its adjustable rate in today’s market is usually capped at or below 13% compared to 18% offered by the Home Equity Line of Credit. The Reverse Mortgage line of credit option also has a growth rate. The growth rate on the unused portion in the line of credit is determined by the current interest rate on the loan plus 1.25. For example if the current rate is 3.0%, the growth rate will be 4.25%. If and when the interest rate on the loan increases so does the growth rate on the line of credit, meaning even more funds become available to the borrower over time. At closing you may be required to pay an origination fee, mortgage insurance premium (MIP), appraisal fee, and a service fee set-aside. (For a more detailed understanding of these costs please read our previous blog below “The Costs Associated with a Reverse Mortgage).  However, you may finance the costs into the loan amount rather than pay for them out of pocket. The good news is that the HECM Saver product can save you thousands of dollars in closing costs and can eliminate your upfront mortgage insurance (2% of your home value, up to $12,500). So, low closing cost options are available, but you may receive less cash or a lower amount of a line of credit or average equivalent to about 10% of the value of the home. Some HECM saver products are even offered with lower or no origination fees, further reducing your closing costs.

 

As you can see each option has its advantages and disadvantages just as any other comparison a consumer does. With this blog post we wanted to bring an informative look at both options to hopefully help assist those that are currently in the decision-making process of choosing a home equity line of credit or a reverse mortgage. Please feel free to contact us here at The Aramco Group if you have any questions, our knowledgeable team will be more than happy to assist you in any questions you might have.         

 

 

 

 

 

 

 

Topics: Reverse Mortgage, Aramco Financial, The Aramco Group, Mehran Aram, senior citizen, Home Equity Conversion Mortgage, Mortgage Insurance Premium, Home Equity Line of Credit, Mortgage rates

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

The Steps Required to Qualify for a Reverse Mortgage

Posted by The Aramco Group on Wed, Apr 17, 2013 @ 15:04 PM

Chances are you may already qualify for a reverse mortgage and you don’t know it yet.  The requirements are as follows:

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• Both you and your spouse must be 62 years of age or older

• Live in your home and have sufficient equity in it

•  Must continue to pay your property taxes and homeowners insurance and the up-keep of your home.

 If you meet the eligibility requirements mentioned above, then you are ready to begin the process of applying for a reverse mortgage. It is a eight-step process and each step will be discussed in detail below.

  1. Examination of Financial Situation – The beginning of the process will have you meet with a reverse mortgage professional, a member of the National Reverse Mortgage Lenders Association. They will review your current financial situation and make sure you fulfill all the requirements needed to proceed with the reverse mortgage process and will benefit from it.

  2. You will be Provided a Reverse Mortgage Analysis – Once you provide your basic information, you will be provided with different options of receiving payments from the loan. Your options are:

a. Fixed monthly payments

b. Lump sum payment

c. Line of credit

or a combination of the above.

3. Counseling with a HUD (Housing and Urban Development) Representative – Counseling is a required step in the reverse mortgage process. You will meet with an independent counselor in your community to receive a better understanding of the details that are associated with a reverse mortgage and fulfill the Government requirements.

4. Sign you Loan Application and Disclosures

5. Home Appraisal – This process is necessary as well since the home will be used as collateral and it must meet specific Federal Housing Association guidelines. If repairs are needed then a portion of the loan is set aside to fix those repairs. Items which involve health and safety are required to be completed prior to the close of escrow.

6. Loan Processing – When all of the above have met the required criteria the loan goes through the underwriting process. In this process all pertinent information if verified to be correct such as property ownership and title insurance, allows the loan to move into the closing stage of the process.

7. Closing – The closing requires the signature of a notary or an attorney for verification of the documents. Once this is complete the applicant has a 3 –day period to cancel should some concern arise. This is called the “3-day right of rescission.” If the applicant is satisfied, then the loan process is complete and the applicant can begin receiving payments.

8. Receive Your Money!!

It might seem like an intimidating process, but having the right professionals with you every step of the way makes all the difference. Feel free to contact us here at The Aramco Group. A reverse mortgage professional will be more than glad to answer any questions you might have about beginning the process of a reverse mortgage.

Topics: Reverse Mortgage, Aramco Financial, senior citizen, Aramco Mortgage, home ownership, Aramco Properties, Retirement Concerns