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What Every 401k Plan Sponsor and Fiduciary Should Disclose to Employees: How to Retire a Millionaire (Hint: It’s Easier Than You Think)

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Immigration Reform: A Positive Factor for Utah Home Values

immigration reformMost people understand the reality that location and demand are the prime factors in long-term real estate values. However, it is easy to ignore many of the other factors that actually determine the right location and increasing demand. Yet it is these important trends that are responsible for increasing home prices over both the short and long term. For example, some of the recent announcements by President Obama bode well for the demand for all homes, and especially those located in Utah and the Salt Lake area.

In fact, home ownership is one of the cornerstones of the principles espoused when President Obama addressed the immigration issue in Phoenix recently. He stated, “When more people buy homes and play by the rules, home values go up for everybody, and according to one recent study, the average homeowner has already seen the value of their home boosted by thousands of dollars just because of immigration.”

This fact isn’t just conjecture; it is supported by numerous studies by private firms and government agencies, including Housing and Urban Development.

Utah’s Unique Position

While he was addressing home valuations nationwide, Utah residents stand to receive more immediate benefit than other parts of the country. This is largely due to our large Hispanic and immigrant population. According to the Salt Lake Tribune, our Latino population has grown by more than 78 percent in just a decade, with Hispanics now comprising 13 percent of the total population. Moreover, that trend is increasing, indicating a continued growth in this segment of our demographic makeup.

In fact, the U.S. Census show that Salt Lake City is one of the nation’s most popular destinations for Latinos, where they currently comprise more than 22 percent of the total population. Again, this is a trend that has increased over recent years, and it shows no sign of slowing down.

Why does this have specific significance for our communities and home values? This question is answered by the HUD Secretary Julian Castro. He points out that,”When current residents who are in limbo about their status gain stability, one of their first priorities is to purchase a home.” That, of course, is the precise dynamic that drives increasing demand for existing and new homes.

Looking Behind the Big Numbers

Aside from the total population of Hispanic residents, they drive several other important numbers and demographic factors. These include:

  • One in four of the Hispanic residents are Millennials, the group of young residents born in the 80s and 90s. These represent new families in the making, calling for new homes and residences. Within this age group, Hispanics are by far the largest single racial group.
  • Hispanics seek home ownership faster than other racial groups. According to research by the Metropolitan Housing and Communities Policy Center, Hispanics will account for more than 55 percent of all new homeowners between 2010 and 2020, and this projection was made before the current announcements.
  • Federal lending policies favoring first -time homebuyers. Recent changes in the FHA program and other government-backed mortgages are designed to lower the barriers for new home buyers and increase demand even further.

While we already enjoy a solid housing market in our state, we can anticipate a strong boost from new buyers as immigration reform becomes a reality.

 

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It’s Finally Here! Now You Can Buy a Home With Only 3% Down!

Fannie Mae loosens mortgage guidelines, Lowers down payment requirements. If you have been struggling to save a down payment to buy your first home then your struggles are finally over!

 

In early December of 2014, Fannie Mae finally announced the exciting news that many people, including ourselves, have been eagerly waiting for. They unveiled a new program that is aimed at putting even more people into their first homes while saving them lots of money. Thanks to this exciting and unheard-of program, first-time homeowners will need to come up with significantly less of a down payment which means you will be able to enjoy homeownership much more quickly.

New Option for Those Who Need it Most

Low and middle income families often find themselves unable to save up the necessary funds for a down payment for a traditional loan.

Many lending institutions required at least 5% for a down payment.   With Fannie Mae’s new program, though, you will be able to take advantage of the 97% loan-to-value ratio. This requires only 3% of the purchase price to be used as a down payment.

Real-Life Comparison

Other programs, such as FHA loans, do offer homeowners favorable terms. This newest and long awaited Fannie Mae program keeps even more money in your pocket, right where you need it. While the interest rate charged by Fannie Mae’s new 3% down payment program is slightly higher than what an FHA loan is, you will still be able to save money on two fronts. You will have less of a down payment to come up with and your monthly payments will be lower as well. The handy chart illustrates exactly how this program works.

 

FHA

97% Conv LPMI 95% Conv LPMI
Purchase Price $200,000 $200,000 $200,000
Down Payment Required $7,000 $6,000 $10,000
Interest Rate 3.25% 4.25% 4.00%
Principle & Interest Payment $854 $971 $922
Mortgage Insurance Payment $136 $0 $0
Total Payment $990 $971

$922

Saves Money While Putting People in a Home More Easily

For example, for a home that costs $200,000, Fannie Mae requires only 3% of that amount as a down payment which is $6,000. A FHA loan, on the other hand, requires 3.5% as a down payment which is $7,000. That one-half of a percentage point might seem insignificant, but in the case of purchasing a home in this scenario, it is equal to $1,000. This is a significant amount for low and middle income families and can mean that you can finally get into a home.

Where to Find Help

Buying a home is an exciting time in your life. It also involves many questions and considerations to determine what is the best loan option for your needs. If you have been thinking about purchasing a home in 2015, contact Anthony VanDyke today to start the process and discuss the options available to you.

 

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Obama Lowers FHA Mortgage Insurance by 0.5%

obama fhaIf you were afraid that you had been left out of the housing market, your situation may have been changed dramatically with President Barack Obama’s announcement Jan. 8 in Phoenix of a 1/2 percentage point reduction in the premium new borrowers pay for FHA mortgage insurance.

This is exciting news for anyone who has been contemplating purchase of a new home. Effectively, it means that buying power has been increased substantially, the average buyer’s payment will be reduced by about $90 a month. In practice, a buyer who previously qualified for a $200,000 loan could now be approved for a $220,000 mortgage, for the same payment.

It is also good news for those who entered into a loan during the past three years. Refinancing now with the new rate would result in a savings of more than $1,000 a year. The new premium rate will become effective towards the end of January.

The action reflects a healthier U.S. housing market, in addition to the improved condition of the FHA single family mortgage insurance fund, which has increased in value by $21 billion over the past two years. Castro noted in his announcement that this reduction in rate is a “prudent measure” that will keep the FHA on a “positive financial trajectory.” The rates were initially increased in 2009 in response to the country’s severe housing crisis, action taken in an effort to stabilize the MMI Fund. Observers had previously predicted that the president would recommend lowering FHA premiums. The Obama administration has reportedly been seeking a way to jump-start the U.S. housing market once again, even considering moves that would sidestep Congress. Whether this is the only such action to be taken remains to be seen.

This week’s action is expected to allow more than two million Americans to realize the dream of affordable home ownership over the next three years. While the whole subject of home pricing, mortgage lending and recovery after the housing bubble burst is complicated, this is seen as a positive move, particularly in areas like Phoenix which have yet to regain the robust values and sales records of the past. Traditional housing market rebounds have signaled economic recovery; that has not occurred during this downturn and it is hoped that this action will help to spur a renewed interest in home ownership, and lead to a new home buying surge.

If you have any questions about what this means to you as a prospective buyer, or if you have an existing loan that might benefit from refinancing, contact me at your earliest convenience to discuss the options. More details will become available in the coming weeks, but as a professional mortgage loan officer specializing in FHA financing, I have my eyes on the pulse of the market and will be happy to discuss possibilities with you.

 

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Solving the Mystery of the Reverse Mortgage

Happy mature couple outdoors.The term “reverse mortgage” is one that most Americans have heard, yet many may know little about. Unlike refinancing a regular mortgage loan, this type of loan product usually allows homeowners to convert part or all of the equity they hold in their homes to cash without moving out of the home or making payments.

However, because there is more than one type of reverse mortgage loan, it has become a confusing topic. Keep reading for some detailed information designed to remove the mystery and help Salt Lake City residents determine whether a reverse mortgage is right for them.

Understanding the Three Types of Reverse Mortgage

  • Single purpose reverse mortgages are typically offered by some type of government agency or nonprofit organization and limited in scope, usually for the purpose of assisting with property taxes, home improvements or some other type of repair or need
  • The second type, sometimes called a Home Equity Conversion Mortgage, or (HECM), is a type of reverse mortgage that is federally insured through the United States Department of Housing and Urban Development and has no usage or income requirements
  • The third type is called a proprietary reverse mortgage, and is actually a type of private loan, specifically backed and developed by individual companies

Cash Out Payment Options

Since the single purpose reverse mortgage is taken out for a specific purpose, it does not usually include a payment plan to the homeowner. The HECM and proprietary reverse mortage, however, both include payment options that the homeowner should understand.

HECM Payment Options

  • a monthly cash payment that is fixed for a certain amount and period of time
  • a monthly cash advance on a tenured plan for the length of time the homeowner remains in the home
  • a line of credit option that can be accessed as needed, until the full amount is drawn
  • a combined option that includes a monthly payment plan, plus an accompanying line of credit

In most cases, these payment options can be changed at any time after the loan is in place for a nominal fee.

Considerations That Homeowners Should Understand Before Taking Out a Reverse Mortgage

Borrowers should be familiar with possible risks and issues that can be part of the reverse mortgage process, including, but not limited to, origination fees, closing costs, service fees and interest accrual. In addition, homeowners should understand that they will continue to be responsible for upkeep, taxes, utilities and other expenses normally incurred by homeowners even after the reverse mortgage has been taken out.

Is a Reverse Mortgage Right For You? 

Because each homeowner’s situation is different, it is important to seek the guidance of a trusted loan professional when exploring the possibility of a reverse mortgage.

As a professional mortgage loan specialist serving the Salt Lake City area, I take my client’s needs seriously and use my knowledge and experience to help them determine if a reverse mortgage, or any other type of home loan product is the right move for them.

Call or come see me soon, and let’s work together to see if a reverse mortgage is right for you!

 

 

 

Source: http://www.consumer.ftc.gov/articles/0192-reverse-mortgages

 

 

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Made first page of Yahoo News – Four reasons to buy a home now

Thinking of buying a home? Keep reading to find out why you should take action sooner rather than later.

Yahoo Homes

Four reasons to buy a home now
If you’re thinking about purchasing a home, sooner might be better than later when it comes to favorable conditions for buyers.

Buying a home is a major financial decision that you shouldn’t rush into. But that doesn’t mean you should take your sweet time either. The real estate market is volatile, and truth be told, this year might be your last chance to affordably buy a home for awhile.

“If you qualify for a mortgage and choose not to buy now, you will be kicking yourself in 12 months,” says Anthony VanDyke, president of ALV Mortgage in Utah.

Thanks to a dearth of inventory, home prices are projected to increase by 6.3 percent nationwide from April 2014 to April 2015, according to a recent study by Corelogic, a leading global property information, analytics, and data-enabled services provider.

Just how much could that increase cost you? More than you might think.

“On a $300,000 house today, the same house will cost you $318,000 in one year,” says VanDyke.

The difference isn’t mere pocket change. So if you’re in the market to buy a home, read on for more reasons why this year could be a prospective homeowner’s last chance to buy an affordable home.

 

Continue Reading Entire Article Here

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The Cost of Waiting

Dollars and Sense Approach Points to Present as Good Time to Buy a Home

With the housing crisis of the past several years, some analysts see the downward trend of home ownership continuing, at least temporarily, as millenials struggle to pay off their student loans and wait for good job offers following the recent dry job spell.

But is home ownership still desirable? And, if so, does it make sense to buy now if possible, rather than waiting a year or more?

The answers on both counts are a definite “Yes.”

Why Buy?

Whether individuals and families buy a home as a financial investment or for the freedom and independence it offers, there are solid dollars and cents reasons for doing so. Tax legislation favors homeowners over renters, and building equity has a number of advantages over the long term.

A Matter of Finances

Current affordability is a key factor in the decision to buy now. But prices are trending upward. The appreciation levels of the past are not expected to return, but homes next year will almost certainly be more expensive due to:

Demand Exceeding Supply:

2.2 million jobs created in the last year
÷1.01M total permits for new homes
= 2.2 jobs / per new housing unit created
1.2 is considered normal

Pent-up demand for 25-34 yr. olds

house values one year later

 

 

Interest Rates

  • The Fed is tapering
  • The US has to rollover an enormous amount of debt
  • Reasonable estimate is an increase in mortgage rates in 1 year is 1/2%

monthly payment 1 year later

 

 

 

 

If Interest rates rise a 1/2 percent next year the difference between buying today and buying next year, assuming equal mortgage amounts, could be substantial. A $285,000 mortgage would cost $85 more each month or $1,020 more over a year with a 1/2 point increase.

This equates to $17,000 in purchasing power, meaning your buyer now qualifies for $17,000 less than they did 1 year ago.

 

Total Savings

Common sense and simple math calculations show that buying now is a good decision for those who can qualify and have sufficient down payment and income. By acting today, the buyer would gain that equity, qualify for more, and save those dollars.
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SOURCES: http://finance.yahoo.com/news/end-sight-millenials-struggling-property-040001631.html,http://www.realtor.com/home-finance/homebuyer-information/good-reasons-to-buy-a-home.aspx?source=web,http://www.usatoday.com/story/money/business/2014/06/14/three-reasons-not-to-buy-a-home-now/10387419/U.S.Census BureauAppreciationInterest

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Making a Smaller Down Payment Go Further

One of the primary challenges borrowers face when buying a home is deciding how much money to put down. In nearly all cases, the more you put down, the better off you will be. However, many potential homeowners do not want to wait until they have saved 20% in order to move into their dream home. That’s where we come in. Borrowers who are searching for a new mortgage and only have ten percent down can still take advantage of low rates and avoid paying costly mortgage insurance.

Another alternative to borrowers

Borrowers who have saved only ten percent of their purchase price typically understand they are going to need mortgage insurance. Unfortunately, this can mean an additional monthly payment on their mortgage which can be onerous over the life of their loan.  Keep in mind, mortgage guidelines state that a lender may force mortgage insurance on borrowers who have less than 20% equity for their home purchase. However, by taking two mortgages, one for 80 percent and one for 10%, you can still finance 90% of your purchase price without the burden of mortgage insurance.  This program is available for all qualified buyers.

How does the 80/10 work?

Let’s review what we were able to accomplish for one client recently:

Real Scenario from June 2014

  90% mortgage 80% first/10% second
Purchase price $514,900 $514,900
First mortgage $463,410 $411,920
Rate on first 4.5% 4.5%
Principal and Interest $2,348 $2,087
PMI payment $363 $0
Second mortgage $51,940
Rate on second 5.25%
Interest only payment $227
Monthly payment $2,711 $2,314
Total Saved $397

 

Why is the difference so significant?

Simply put, by not having to pay monthly PMI and obtaining a second mortgage which is interest only, borrowers can realize a significant savings.  The second mortgage requires only monthly interest payments for the initial term of the loan, which is ten years then it converts to a 20-year mortgage. At that time, you will be obligated to pay principal and interest on the balance of the second mortgage.

What happens after ten years?

When the ten year note comes due, borrowers have a couple of options available to them including:

  • Do nothing – since the mortgage will convert to a 20-year mortgage at this point, the borrower has the option to do nothing at all and enjoy a 20-year fixed rate.
  • Payment in full –  borrowers can elect to pay the entire balance of the second mortgage (in this case, $51,940) plus accrued interest in cash which will allow them to enjoy more equity in their home.
  • Refinance –  If interest rates warrant a change, borrowers will be able to refinance their home and pay off the second mortgage. This is optional of course since the mortgage converts to a 20-year fixed rate after the interest only period of 10 years.

Are there drawbacks?

There are risks borrowers must be aware of when using this type of financing. First, interest rates may be significantly higher in ten years. However, keep in mind that since a borrower is saving nearly $400 a month, this money can be saved to pay off the second mortgage in full at the time of maturity.

The 80/10 option is a good option for any borrower who wishes to save money every month and avoiding paying for mortgage insurance. Borrowers can still put down only 10% on their dream home and still save significant money.

 

Even with only 10% down, you can still avoid costly mortgage insurance payments. Ask us today about how to qualify for an 80/10 mortgage and save hundreds of dollars a month on your mortgage payments

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Featured in Yahoo Homes Article, “The $100 down payment mortgage exists – but should you bite?”

Don’t let a big down payment keep you from buying a home. Here are four mortgage options that require as little as zero to $100 down.

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“These programs typically come with a higher interest rate, but for the right borrower [they] are a great alternative to renting,” says Anthony Van Dyke, president of ALV Mortgage in Salt Lake City, Utah.

Why the rate hike? According to Van Dyke, the rate is higher, because the potential risk for lenders is higher when borrowers put less of their own money down in a house purchase.

 

 

Option #2: FHA Down Payment Assistance Programs

Buying a home with 20 percent down may not seem realistic. But what if you could knock that number way down?

Well, with a Federal Housing Administration (FHA) loan, your down payment can be as little as 3.5 percent of the purchase price of a house, according to the U.S. Department of Housing and Urban Development (HUD) website.

If that’s still out of your budget, then you may be able to go even lower with an FHA down payment assistance program. How exactly is that possible?

“FHA allows government entities and non-profit organizations to issue second mortgages to cover the required 3.5 percent down payment,” says Van Dyke. How? Well, these programs offer qualified applicants loans or grants for their down payment – the latter being an even better option since that’s money that doesn’t need to be paid back.

This essentially means that you could secure a mortgage with zero down through a down payment assistance program – a boon for cash-strapped homebuyers.

 

Read the entire Article Here: https://homes.yahoo.com/news/4-ways-to-pay-down-your-mortgage-172117215.html

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Featured in My Mortgage Insider Magazine, “You Won’t Believe These True Refinance Miracle Stories”

From saving their homes to keeping an extra $1,000 per month in their pockets, these homeowners are now believers in the power of refinancing.

by Lee Nelson

 

Angel-RomoloTavani-e1395857651674

 

An Extra $767 a Month? Don’t Mind if I Do.

The new mortgage payment for Anthony VanDyke’s client won’t be going down that much with his new cash out refinance loan. His payment was $1,200 and will go down to $1,140.

“However, we are taking $21,000 cash out to pay off his auto loan, a small home equity line of credit and two credit cards. The savings of $767 per month equals 26 percent of his take home pay after payroll deductions or 20 percent of his gross pay,” says VanDyke, president of ALV Mortgage in Salt Lake City.

“This borrower makes $46,000 per year or $3,800 a month. The refinance equals a significant amount of monthly savings for this borrower,” he says.

 
It’s true that these four cases are extraordinary. But ordinary homeowners everywhere can save a significant amount of money by refinancing. Contact us to get started on your home refinance to see how much you can save.

 

Read Full Article Here: http://mymortgageinsider.com/unbelievable-but-true-refinance-miracles/

My Mortgage Insider

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