I have news this month on loans for seniors and veterans, but first let’s look at the overall outlook for December.
End of Year Mortgage Rates
Hello, Friends. Mortgage interest rates continue to be around 1.125% lower now than at the same time in 2018. The last Federal Reserve rate cut did not move mortgage rates lower, as of the middle of November 2019. The Fed has convinced the markets that another rate cut in December 2019 is unlikely to happen. With the stock market hitting record highs throughout the month of November 2019, the bond market did not see the kind of demand that would help reduce mortgage rates further. Regardless, the refinance madness continues.
We continue to wait and see what will happen in the markets. Maybe the Trump impeachment inquiry will have caused some erosion in the stock market that could benefit bonds and help reduce mortgage rates further. That, coupled with more indicators that 2020 will see our economy fall into a recession, would be good for mortgage rates.
New Reverse Mortgage Products
I have been expanding my offerings recently to offer more varieties of mortgage products. Over the past ten years, we have seen a steady increase in the volume of reverse mortgages to help the elderly remain in their homes while on a fixed income that isn’t keeping up with the cost of living. I have access to multiple reverse mortgage lenders and investors.
While the Federal Housing Administration provides the bulk of reverse mortgages through their HECM program, Home Equity Conversion Mortgage, there are other investors now offering reverse mortgage products that are outside normal HECM guidelines. These products offer higher loan amounts and fixed interest rates that can be beneficial to elderly borrowers who have high-value properties and need to tap larger amounts of equity to continue living in their homes.
Loans for Seniors
Reverse mortgages for seniors are not for everyone, but can really help when a person of very advanced age wants to stay in their home and needs expensive in-home health care to continue living in the home. Reverse mortgages can also use home equity to pay off debilitating credit card and installment debt while always allowing the borrower to not have a mortgage payment until they and their spouse pass away. Cash from the home’s equity can also be used for home improvements. This is a complicated solution and I am happy to speak with anyone about these options if they, or their loved ones, are looking for a solution that can ease the financial burdens that aging presents.
VA Loan Certification
I have also been working with more military veterans since I completed a VA lending certification course earlier this year. The product is great because it allows veterans to purchase with zero down payment or borrow up to 100% of the equity in their home while keeping interest rates .5% or more lower than conventional rates.
Loans for Veterans
Examples of when a VA loan really works:
- I recently put a veteran into a duplex where he had no down payment and paid no closing costs. A combination of a lender rebate and seller credits covered the closing costs. The rent from the other unit paid half of his mortgage obligation and his rate was still better than conventional market rates.
- I am working with a veteran who needs cash out to pay off credit card debt and to do some home improvements. The rate is so low with VA that his new payments are $200/month less than if he went with a conventional loan.
- VA loans are very forgiving on the qualifying debt-to-income ratio as well, which can really help a veteran buy their first home and qualify with low income where the veteran is interested in renting out rooms to help cover the cost of the mortgage. Normal underwriting doesn’t allow boarder or shared housing rents to help the buyer qualify, unless the property is a legal multi-unit property. Since VA will qualify the buyer at a much higher debt-to-income ratio, this program is great for veterans who want a single-unit property and are willing to rent out rooms.
With the holiday season in full swing, I would like to wish you all Happy Holidays and Happy New Year. I’d love to help anyone looking for help with loans for seniors and veterans as we close out the year. Looking forward to more mortgage madness in 2020!
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Your mortgage guy, Viral (Vic) Joshi
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