3 Myths of Reverse Mortgages You Shouldn’t Fall For

December 22, 2020 by Cindy Steelman

Compared to other financial concepts, mortgages are often perceived as some of the most complex of the bunch, especially when it comes to reverse mortgages.

During the homeownership process, the idea of getting a reverse mortgage may come up sooner or later because of how costly matters can get in the long run. Regardless of whether it’s over a sudden change of heart or the reality that owning a house is no longer as feasible as it used to be, a solution like this will come in handy whenever used properly.

However, the main problem of reverse mortgages—no matter how helpful they are—is that the intimidation associated with them comes from the fact that people don’t know enough about them. It also happens that the misconceptions that surround the financial solution in question don’t help with the aforementioned problem, and you might be falling for them yourself.

Debunking Different Reverse Mortgage Myths

On the surface, reverse mortgages can seem straightforward. After all, the name alone is self-explanatory because getting such a solution entails using your property’s equity to get funding from the bank, right?

Well, all seems so simple until you actually find yourself struggling to decipher whether or not a seemingly true myth is real enough. Unfortunately, far too many Californian homeowners put themselves deeper in tough financial stops after falling for misconceptions that pointed them in the wrong direction!

Suppose you’re thinking about getting a reverse mortgage to help ease up the current financial situation or predicament that you might have but are a bit hesitant to do so. In that case, there may be a few misconceptions holding you back. To help ensure that you enter the whole experience or process in the most well-aware way possible, let’s debunk common reverse mortgage myths you shouldn’t fall for:

Myth #1: When you get a reverse mortgage, your heirs won’t be able to get your home. Understand that pulling out a reverse mortgage won’t put you in a situation wherein you’ll end up losing all that you worked hard for right after you pass on. Compared to other myths on this list, the dreaded possibility that a home won’t be passed down to one’s descendants is one of the most prevalent reasons that Californians opt-out of using their equity for themselves. If you decide to take a reverse mortgage your estate will still inherit the home in the future. Family members will need to deal with a lien, the reverse mortgage, on the title for the payoff amount. This can be done by refinancing the reverse mortgage into a forward mortgage into an heirs name (or several heirs) or the home can be sold and all proceeds, after paying the fees including paying off the reverse mortgage, will go to the heirs.

Myth #2: You have to sell your home to the bank when you get a reverse mortgage. Admittedly, the idea of getting a reverse solution can seem intimidating because it seems you are forking your home’s equity over for some payment back to you. However, with a reverse mortgage you are not giving your equity to anyone, you are simply using it for yourself. You will be using your equity to pay the interest on the reverse mortgage (therefore no out of pocket for you) and if you have enough equity you can take a lump sum out to help you buy a car or use towards living expense as needed and you still have no payment because you are using your homes equity to pay for these items.

Myth #3: You may end up getting forced out of your home. As mentioned previously, getting a reverse mortgage isn’t pawning your home. You will not face eviction or foreclosure if you run out of equity to pay the interest on the reverse mortgage. With a reverse mortgage, you stay in your home as long as you would like. Once you vacate your home then it’s time to pay back the reverse mortgage. The reverse mortgage will never force you to leave. Once you vacate your property you can refinance into a forward mortgage, your heirs can refinance into a forward mortgage or another reverse mortgage, your heirs can sell your home and retain any equity left after paying all fees to sell a home plus pay off the reverse mortgage, or if all the equity is used up for yourself then your home can be foreclosed on and it does not require your heirs to pay anything out of your estate.

Reverse Mortgage in Roseville with Steelman Mortgages

For the most part, reverse mortgages can easily come off as intimidating alternatives because of the conditions they entail. However, it’s worth noting that most of the misconceptions they’re associated with aren’t as real as you might think. Through help, you can dispel the uncertainty that you might have over the possibility of getting the solution for your needs!

Are you a homeowner looking for a mortgage broker to help you with a reverse mortgage in Roseville? At Steelman Mortgages, we can make the mortgage process smooth, simple, and pleasant. Call us at (916) 847-7263 now to learn more about how we can help you!

The Truth Behind 4 Jumbo Mortgage Myths: What to Know

December 10, 2020 by Cindy Steelman

For some people, the thought of buying a dream luxury home is just that… a dream. However, jumbo loans can make those dreams a reality. Although not as common as before, these loans can make the process of applying for a mortgage much easier. They are available in some banks and financial lending institutions, and they can help you make your dream home more accessible.

That said, many myths surround jumbo loans and discourage people from applying. If you are interested in getting this type of loan but are unsure about it, let us go over some of these myths to help you make a better-informed decision.

What Is a Jumbo Loan?

A jumbo loan or jumbo mortgage is a type of financing that allows a person to borrow more than the loan limit set by the Federal Housing Finance Agency (FHFA). This loan cannot be guaranteed, purchased, or securitized by Fannie Mae or Freddie Mac. Jumbo loan applicants will undergo more rigorous credit requirements than people applying for a conventional loan.

Loan limits change every year so call Steelman Mortgages at 916-847-7263 for the most recent loan limits.

The Myths and the Truths About Jumbo Loan

Jumbo Loan Will Have an Extremely High-Interest Rate. Jumbo loans can have a higher or lower interest rate than conventional loans. However, it depends on market conditions at the time that you need a jumbo mortgage so you need to check with the current market to know what the current rates are. Jumbo loans are often advertised with adjustable fixed rates for a particular period—mostly between the first three to five years of the loan. After this fixed period, the rate will depend on the index connected to the loan.
You Can Only Use Your Loan for a Single-Family Luxury Property Type. This isn’t true since you can use a jumbo loan to purchase a primary, second or investment property. There are some differences between the property mortgage guidelines for a jumbo loan applicant versus the conventional home loan applicant. These differences can include the down payment required and the debt to income ratio requirement amongst others. You can apply for a jumbo loan on all types of homes.

Some of the other different requirements are:
- A high credit scores
- Sufficient to high income to have a lower debt to income ratio
- Enough savings and investments to cover the cash to close and reserves
You Need to Have Private Mortgage Insurance Before Your Jumbo Loan Gets Approved. Government mortgages require specific requirements, such as private mortgage insurance, from those who cannot provide at least a 20-percent down payment. For jumbo mortgages private mortgage insurance is not available so an applicant can have 10% down and then carry a 1st jumbo mortgage at 80% loan to appraised value and then a second smaller mortgage at 10% loan to appraised value to leave just 10% needed for the down payment. A jumbo loan requires 20% down so by doing a second 10% and having 10% cash down the applicant covers the 20% requirement.
You Cannot Get Loan Approval Without a Huge Down payment. A down payment is still a necessity for any loan type, including a jumbo mortgage. However, since a considerable amount of money is involved with jumbo loans, that means the 20 percent required down payment will also be an large amount. The great news is an applicant can get an 80% loan to appraised value 1st mortgage and a 10% loan to appraised value 2nd mortgage and then only need 10% of their own cash.

Jumbo Loan with Steelman Mortgages

A lot has changed since the introduction of the jumbo mortgage. These changes include making the option of applying for a bigger loan possible with less trouble. Lenders have also adjusted their setups so that more people like you can make their dream homes a reality. Are you a first-time homebuyer in Roseville looking for a mortgage broker to help you purchase your luxury home? At Steelman Mortgages, we can make the mortgage process smooth, simple, and pleasant. Call us at (916) 847-7263 now to learn how we can help you.

Budgeting for Your First Home Down Payment

November 26, 2020 by Cindy Steelman

Owning a home is one of the biggest milestones in adulthood that many people hope to achieve, but it can be difficult if you don’t have the right financial support to afford the downpayment. Therefore having the right budget plan in place can help you reach your homeownership in a reasonable amount of time. A better downpayment will mean lower monthly payments toward your mortgage and allow you more flexibility with housing prices when you search for your home. First time home buyers in Roseville should aim for a comprehensive budgeting process for a more successful home purchase.

How Much is Required to Buy a Home?

Although many people begin saving for their homes early on, most don’t know exactly how much will be required to buy it. Downpayments aren’t constant across the board since they will vary depending on the purchase price but putting more down initially will save you plenty in the long run. Figuring out from the very start how much is required will give you a much better idea of what you can and can’t afford, especially given the lifestyle you want to lead.

The question is, how do you know how much to budget for your downpayment? A good rule of thumb is to save up to 20% of the purchasing price. For instance, if your dream home is worth $300,000, then you should have at least $60,000 tucked away for the initial payment.

Don’t Forget Other Costs

While the down payment is no doubt one of the most important costs that come with purchasing a new home, it’s crucial to take into account other fees as well, such as mortgage costs, escrow and title fees, and home inspection fees. Allot two to three percent of your purchase price to these fees. If you are not able to save it yourself there are several other options to consider. 1) You can request the seller to help pay for them when you make your initial offer for their home (the seller has to agree); 2) At times, if the interest rates are right, you can take a higher interest rate and get a credit from the bank to cover some or all of them (Roseville mortgage broker can help you with this); or 3) You can accept a gift from a relative to help cover some or all of them.

Planning Your Budget for Your Home Purchase

Settling on a budget first requires you to decide on the purchase cost you’ll aim for and the amount you want to save. After that, you must decide when you want to purchase your home so that you can set a target amount to save up per month to reach your goal. Once you’ve figured out this amount, you can begin finding ways to achieve it.

Outlining Your Final Monthly Budget

The amount you need to save per month should be factored into your monthly income and expenses. When calculating your income per month, make sure to consider the net amount, meaning the income you make after you’ve deducted the non-negotiables; such as household expenses, retirement pay, insurance, and bills. Saving more money to reach your purchase goal may be challenging, but it’s not impossible.

On the other hand, expenses can be treated as an opportunity because you have more control over them. Cutting out extras like your daily coffee and eating lunch out will save you plenty in the long run and can add to your goals of saving up for your home. Even your fixed expenses like rent or loans (car, personal, or student) can have a workaround. For instance, you could choose to rent out a cheaper apartment or sell your car for a cheaper option with a lower monthly payment.

Lastly, consider making adjustments to your home purchase goals. Explore different options for home loans in Roseville and be a little bit more flexible with your decisions so that you can achieve your dream home sooner rather than later!

Buying a Home in Roseville with Steelman Mortgages

Knowing where to start with budgeting for your home’s down payment can be confusing. Yet, taking it to step by step and remembering to account for all income and expenses is one way to ensure that you plan your finances accordingly to reach this ultimate goal. With the help of the right mortgage company in Roseville, you can achieve your dream home in no time.

Here at Steelman Mortgages, you’ll find one of the best mortgage lenders in Roseville, CA. We provide a simple and enjoyable process to provide answers to all your mortgage questions. To apply for a fast and easy mortgage, contact us today at (916) 847-7263!