6/18/24 – Move down and have no payments for the rest of your life!

I am going to start by saying that tomorrow is a Federal holiday, and our office is closed. However, I will be in the office all day, so call my cell or my direct office line if you need me!  

I have been getting several calls for Reverse Mortgages all year due to the high cost of living and other factors causing many seniors to request or move down to a Reverse Mortgage.

Americans have more equity in their homes and less money in the bank than ever! With high inflation, many people have gone through their savings and are now using credit cards to live. People are struggling even with the low interest rates, many of them locked in a few years ago. We have many options for many buyers, but let’s be real: some people can’t make enough to support themselves, make a mortgage payment, and enjoy their lives.

It’s important to understand the requirements for those considering a Reverse Mortgage. One key factor is the amount of equity in your current home. If you don’t have enough, a move to a more affordable property might be a sensible option.

Below is the approximate percentage of equity that a buyer needs based on their income and today’s interest rates to get a Reverse Mortgage:

• To get a reverse mortgage, you must have about 62.2% equity in your home at age 65.
• You must have about 59.5% equity in your home at age 70 to get a reverse mortgage.
• You must have about 56% equity in your home at age 75 to get a reverse mortgage.
• You must have about 51.2% equity in your home at age 80 to get a reverse mortgage.
• You must have about 45.1% equity in your home at age 85 to get a reverse mortgage.

Let’s look at this briefly and how it may help you get more listings and buyers and help families save money!

Assume a couple who are both 75 years old and owe $600K on a $1.2 million property. They are paying $2800 for Principal and interest, but they are struggling and want relief from their mortgage. If they sell, they will walk with about $522K. They could sell for $1.2 million and buy for $932K, putting down their $522K, and never have a mortgage payment as long as they both live.

Another couple, age 70, and their kids have moved, and they owe $700,000 on a $1,600,000 house. They will net about $796,000 from the sale of their home, which will allow them to purchase for $1.337 mil using the $796,000 down payment.

You need to be at least 62 years old to get an FHA Reverse Mortgage. Other options are available if you are at least 55 years old.

Remember that a Reverse mortgage does not mean you lose your house. Assuming property values increase by 4% annually and the interest rates average 5% over the next 20 years, the first couple will have a value of $2,071,000 on the house they buy for $932,000, and they will owe $1,030,800 at 95 years old! So they will start with 532K down, and at 95 they will have $1,041,000 in equity.

I am using the same assumptions as above. The 70-year-old couple will owe $1,467,538 in 20 years, and their house will be worth $2971,592. Again, the couple has a lot of equity for their kids, and they avoided payments for 20 years!

If you run into clients who are in their house and want to stay but are struggling, we also have Reverse Mortgages that go into second position behind their good first mortgage!

I am available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text, text (661-714-6258) or email me at Mike@AugustaFinancial.com.

But wait, there’s more!

Interest rates are hanging in there. Yesterday was a bad day, and today is good to the same extent! The trend is still downward.

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• We do loans in all states, so call me with anything you need.  
• Government Loans (FHA / VA/ USDA) are in the high 5’s and low 6’s
• Conventional Loans up to $766,550.00 are in mid to-high 6’s
• High Balance Loans $766,550.01 – $ 1,149,825.00 are high 6’s and low 7’s
• Jumbo loans above $1,149,625 are in high 6’s and low 7’s
• Bank statement loans - They are available with 10% down again! 7’s to 9’s depending on down and credit score.
• Profit and Loss Statement loans- You don’t need bank statements, just a profit and loss statement!
• No income qualifier – 40% down with reserves! In the 8’s!
• 0 down loans are in the high 7’s – 660 credit score min right now, up to $793,000.00.
• Private Money lenders - Hard Money Loans – 35% down!
• No Ratio Loans 30% down
• DSCR – Debt Service Coverage loans with as little as 15% down
• Bridge Loans - typically 7.99% with limited fees – and they get you where you need to go!
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!

Interest rates are subject to change without notice! The above are LA County Loan Limits.

Condo Update?  New Today!

Village Park Condo – It’s over the max deductible with a 50k deductible per unit.

Condo / Townhome – issues we know of now. Properties can be financed with 10% down and are considered NON-WARRANTABLE:

1. American Beauty Condos – The brown ones – Insurance – 50 Mil in coverage for 748 units is not nearly enough!
2. American Beauty Gardens: 19% delinquency on special assessments due. 19% are 60 days or more late! We can do with 5% down, but others can’t!
3. American Beauty Village: On Fannie’s List. Per Fannie, this project needs critical repairs and may have conditions such as material deficiencies and significant deferred maintenance. This project’s master insurance policy deductible exceeds the allowable limit
4. Bouquet Canyon Village is on Fannie’s list! Per Fannie – This project’s master insurance policy coverage does not meet the requirements
5. Bridgewater, Emeryville - On Fannie’s list!
6. Brookside Walk – Insurance –
7. Cabrini Villas, Burbank - On Fannie’s list!
8. Calla and Rowan – 27513 Illumination – Fannie Mae Approval expired – New Construction.  See Blog on 5/7/2024
9. Cameo Woods HOA - Per the litigation disclosure, the association is being sued by a homeowner for water heater damage and discrimination, and the damage is still ongoing. We received confirmation that the HOA’s insurance agency is not covering the lawsuit, and the claim was denied due to the nature of the complaint.
10. Canyon Village – Reserves and 10% of the dues not going to reserves!
11. Canyon Oaks – Insurance On Fannie’s list!
12. Casa Marabella – 13951 Sherman Way, Van Nuys -On Fannie’s list!  
13. Cassia and Jasmine  – 26949 Winding Trail Court  – Fannie Mae Approval Expired. See Blog on 5/7/2024
14. Cornerstone – Insurance -On Fannie’s list!
15. Creekside – ??? We don’t know
16. Encino Oaks – 5460 White Oak Ave – On Fannie’s list!
17. Lantana at Valencia – 27034 Hummingbird Lane – Fannie Mae Approval – expired. See Blog on 5/7/2024
18. Liberty Canyon HOA – 27409 Country Glen Road, Agoura Hills, CA- On Fannie’s list!
19. Madison at Towne Center  – Litigation – We can do with 5% down, but others can’t!
20. Mariposa: On Fannies List. Per Fannie Mae – This project’s master insurance policy coverage does not meet the requirements.
21. Orchid at Valencia – 27033 Open Sky Place – Fannie Mae Approval Expired. See Blog on 5/7/2024
22. Penn Court HOA – 4201 Pennsylvania Ave La Crescenta On Fannie’s list!
23. Princessa Estates – has $8200 in Reserves, and they are voting on an assessment in May!
24. Rainbow Sierra Terrace – On Fannie’s Naughty List – This project’s master insurance policy is not written to Replacement Cost Value. See Selling Guide Sec. B7-3-03, Master Property Insurance Requirements for Project Developments.
25. Scenic Hills – Insurance – On Fannie’s list!  This project’s master insurance policy coverage does not meet the requirements in Selling Guide Sec. B7-3-03, Master Property Insurance Requirements for Project Developments.
26. Shadow Ridge – Oak Park – Insurance -On Fannie’s list!
27. Sherman Way Condos – 17900 Sherman Way Reseda – On Fannie’s list!
28. The District Community Association – 19533 Cardigan Dr, Northridge – On Fannie’s list!
29. Treana - Stevenson Ranch: On Fannie’s list! Per Fannie, this project needs critical repairs and may have conditions such as material deficiencies and significant deferred maintenance.
30. Valle Di Oro is on Fannie’s list! Per Fannie Mae, this project contains timeshare, fractional, segmented, or split ownership units or other arrangements (such as mandatory rental pooling, shared interest apartments, or community apartments) restricting the unit owner’s ability to occupy the unit.
31. Vista Del Canon – Insurance is too low, UGH!
32. Village Park Condo – It’s over the max deductible with that 50k per unit.
33. Walnut Gardens II – 7320 Lennox Ave Van Nuys CA – On Fannie’s list!
34. Warner Center Condos – 5515 Canoga Ave, Woodland Hills, CA –  On Fannie’s list!
35. West Creek Condos and Townhomes: On Fannie’s List. Per Fannie, this project’s master insurance policy coverage does not meet the requirements in the Selling Guide!

Please let me know if you hear anything new on condos or townhouses.

I am still available all week if you need anything. Let me know if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. My direct line is 661-291-2222. When you text, text (661-714-6258) or email me at Mike@AugustaFinancial.com.

Have a great day and an even better tomorrow! Please call me when you have a client who needs to borrow!