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As an approved FHA appraiser I have had occasion to provide many appraisals for people requesting an FHA Reverse Mortgage. While the basic appraisal process does not differ, it is a good idea for people requesting an FHA Reverse Mortgage, also known as a HECM (Home Equity Conversion Mortgage) to know what to expect when the appraiser comes to the house.

An FHA appraisal is really no different than a standard conventional appraisal as far as the value conclusion is concerned. However, more emphasis is placed upon the structural integrity of the home, and on any health and safety issues that may be present. For example, and probably the most well known of any FHA appraisal condition, the roof must still have at least 2 years of serviceable life remaining. This will quite probably be the biggest issue that may be faced by owners who have been in their homes for many years, have not replaced their roof, and decide to apply for an FHA Reverse Mortgage.

The serviceable life of any roof is a function of the type and quality of materials, the climate of the area, and general roof maintenance which has been provided. The FHA appraisal requirement of ’2 years remaining life’ is somewhat a judgment call on the part of the appraiser, who will be familiar with appearances and with what is typical for the area. However, it may well be that a certification by a roofing contractor is required. If a roof has less than 2 years of remaining life it will become a condition of the appraisal that it be replaced and this becomes a significant factor which must be considered when applying for an FHA Reverse Mortgage (HECM).

Other. generally less costly, repairs may be required, however the roof issue is certainly the most likely to be a consideration. The other potentially major issue could be an unsound foundation affected by water and/or infestation.

This article is not by any means intended to reference any and all conditions that may arise as a result of an FHA appraisal, but is intended to make people aware that the overall condition of their home will play a part in the ultimate approval of an FHA Reverse Mortgage (HECM).

By: R W Taylor

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Forgiveness of debt on recourse mortgages is a significant issue for taxpayers going through a foreclosure or entering into a short sale. For those who are unaware, there can be challenging tax consequences.

One of the most important issues that must be resolved is determining if the mortgage was a recourse instrument or non-recourse instrument. Recourse mortgages are instruments that allow the financial institutions to hold the borrower personally liable for the debt. With a recourse mortgage, once a foreclosure has occurred and the financial institution has agreed to forgive any remaining deficiency balance, the taxpayer must address the tax impact of the debt forgiveness.

Non-recourse mortgage debt occurs when the only security for the loan is the home itself and the lender is not able to pursue the borrow for any deficiency. In this case, there is no debt forgiveness and the only issue the homeowner needs to be concerned with is calculating the gain or loss on the disposition of the property.

If your debt is recourse it does not automatically mean that you have a tax liability. Debt forgiveness is normally a taxable event. However, in many situations a taxpayer may find relief under one of the many exclusions. The exclusion that will help most homeowners is the Mortgage Forgiveness Debt Relief Act, which was enacted in 2007. In some circumstances, qualified principal residence indebtedness can be excluded from taxable income.

Make sure that you carefully analyze all your tax documents and determine the proper treatment of any debt forgiveness. Completing the tax forms can be challenging. Just make sure that you get them right the first time.

By: Paul Sundin

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By having your client sit with a mortgage planner during the formation stages of the settlement strategy you can get an accurate picture of what your client will be able to afford, be it for refinancing the current residence or to purchase a new one. This will have a big impact on the direction of your settlement strategy.

Unfortunately many attorneys do not get involved with the mortgage process because they see it as a matter of course and it is what it is. However, if the divorce attorney takes an active roll in their client’s mortgage and takes the time to understand how it impacts their client’s cash flow and overall net worth they can and will do a better job negotiating a property settlement agreement for their client.

For instance, what if they negotiate a settlement wherein their client retains the house and then they discover that their client can’t afford to keep the house. Selling it changes the dichotomy of the finances which may have tax implications and the settlement that took so long to reach may have to be re-opened? This wastes time and money.

Many times a mortgage planner will discover that the client cannot afford to remain in the current residence and that of course will impact your approach to settlement discussions. A mortgage planner will analyze the income and assets (as you think they might be post divorce) and come up with what your client can afford. Once you know the answer to this you will be in a better position to negotiate for keeping the home or selling it.

There are two other big benefits in starting with a mortgage planner months in advance of the settlement discussions. One benefit is that you can use the information on affordability as a red herring to get something else during the negotiations. The important thing is to “know” the financial impact to your client before you begin settlement discussions. Of course there also may be a big emotional tie to this issue so the sooner you ferret out this issue the better for you and your client.

Another big benefit is to begin with a credit review. The majority of people going through a divorce have their credit destroyed either out of spite or ignorance. By having a mortgage planner run a tri-merged report they will be able to find out if there are any issues with your client’s credit which could dramatically impact the ability to get a new mortgage and of course it will also have an affect on the monthly payments. In addition, by running a credit report you can see if the other spouse has run up any of the credit cards unbeknownst to your client. You will not be able to see if they opened any new cards in their name but any cards with your name attached to them will show up on your report.

As you can see there is a lot to gain in having your client consult with a mortgage planner at the onset of your discussions with your new client. Additional benefits are having an ally to help deliver bad news to your client when they can’t afford to stay in the house that they want to keep for emotional reasons. In summary, form a relationship with a quality mortgage planner you know and trust and use their services to do a better job for your client and make your life easier.

By: Dave Muti

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When you are thinking of buying a house there is a good chance you will need a mortgage to be able to complete the transaction. However, for some people this becomes more difficult because they will not pass (or do not want) a credit check. This means that many lenders will not want to take the risk in supplying them with a home loan. Fortunately there are some financial institutions that have started to offer no credit check mortgages.

These type of mortgages offer an alternative for those who might have a poor credit history or no credit history at all. In most cases to apply for a no credit check loan you will need supporting documentation such as; savings history, earnings or investments and any other relevant information that will help the lender make their decision.

For all the benefits of this type of home loan there are also some disadvantages that should be considered. Generally this type of loan will have a higher interest rate attached to it meaning that you will pay more over the life of a loan than if you had a standard mortgage. Some lenders will also require you to put a larger down payment on the home you want to buy.

Before you make any decisions it is a good idea to compare the different loans from the many available lenders. With this research you will be able to find the best loan for your needs and you might even save a few dollars in the process. You could talk to a mortgage broker, but one of the best ways to conduct your own research is to use the Internet!

By: Shannon Hurn

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If you are considering signing a mortgage on manufactured home, do not sign the papers until you have thoroughly worked out the issue of land to put your home on. You should never accept a mortgage without knowing for sure where you want the home to sit, and that it is legal for it to be there.

Your options for obtaining land will be to rent property owned by someone else, buy land, or to take package deal, which includes the mortgage on the land and the manufactured home. Each of these arrangements has their own set of circumstances to consider.

Renting Land

If you are going to live in a community of manufactured homes, you need to run this by your mortgage lender first. Many lenders will not allow you to put a home which they finance, on rented property. This is because the risk is high that you will, at some point, be required to move away from the land.

Most manufactured homes today have permanent foundations that cannot be picked up and moved. If you are asked to leave the land you are renting, there is a serious problem with the home. Many homes in this circumstance are merely abandoned, leaving the bad debt on the lender.

Even if you do find a lender willing to allow the home to go onto rented property, it is advised that you check into other options. You will not be able to have your home on a permanent foundation if you opt to move it into a community where land is rented out and it will limit your chances of selling the home in the future since buyers will be limited to getting loans from lenders that will approve a home on temporary foundation and on rented land.

Buying Land

Unless you can afford to outright pay for your land, you will have to take out a second loan in order to pay for it. While this should not be an issue with your mortgage lender, you must make sure that you can secure the loan for the land and that you can afford to pay back that loan and your mortgage simultaneously. The interest on both loans could very well leave you paying more than if you bought a conventional home.

Land/Home Package Deal

One of the easiest loans to secure for people with less-than-stellar credit histories or those that want a low down payment, is a mortgage that includes the home, land, and all set-up costs for the property. Manufactured home retailers often extend these loans themselves, so you don’t have to jump through the rigorous standards of a bank or larger lending company. The problem is the ease of obtaining these loans almost always comes with a much higher interest rate.

If you have reasonable credit and a down payment, it is in your best interest to look into a conventional home before taking a mortgage on manufactured home. You will likely come out ahead by paying less interest on a home that is worth more in the long run.

By: Mark D. Miller

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Mortgage issue

Encountering mortgage foreclosure issues with no apparent solution available up ahead? Worry not, as we have just the answer for you to allow you to keep your foreclosure trouble aside and concentrate on other important aspects of life. I am talking about mortgage refinance, the option that has been taken up by thousands prior to this with high levels of success when we speak of finding a solution to not losing your home to your creditors. Forget about filing for bankruptcy, find the company with the best mortgage refinance rates out there today, and get rid of any mortgage issues once and for all!

When we speak of the best rates for mortgage refinancing packages, what does that actually mean? Well, most think that as long as you find the deal that offers the best interest rates (which means the lowest interest rates), you have for yourself the finest deal out there! Wrong! You have to not only look at the interest rates offered, but also a combination of other terms and conditions that would determine how good the deal really is in reality. Flexibility of the plan is one important factor, it is always good to have deals that are more flexible, and do not charge exorbitant late payment charges just because your payment for the month is delayed for a day! Visiting sites such as mortgageloan.com would help, as it not only provides you with a list of lenders and banks that offer this service, but also provides you with information of how the whole process of mortgage refinancing works and how it can help you salvage your home from being auctioned off! There is also a useful tool there that you could use to compare the terms and rates between different lenders to help you decide on the best deal for yourself!

If you are wondering how you are going to find the best rates in terms of mortgage refinancing today, follow the below steps:

1) Scout around for the finest deal out there. This can be accomplished yourself by browsing the internet, or checking with family or friends that have been through home refinancing before. Their experience could be crucial to help you out. The more options you have, the better your chances are of getting the best deal out there.

2) Remember to check on all hidden costs within the agreement before you put pen to paper. Many tend to ignore this part, and end up paying large amounts for items such as late payment charges, prepayment penalties, balloon charges and other relevant payments that may be charged to you without your knowledge

3) Choose fixed-plans for interest rates instead of adjustable-plans that tend to vary in accordance to the economic situation. The fixed-option is probably the best bet for now if you appreciate stability.

Get the best package for home refinancing by following the above-mentioned tips, and rest assured that you would be devoid of foreclosure trouble in the future! Good luck!

By: Vignes Chandran

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