Category: Housing Market (Page 36 of 38)

Asset depletion is a method for calculating monthly income by dividing a borrower’s total assets by a set number of months.

• What is an asset based loan?  Essentially the program takes your assets and spreads them over 360 months (or less in some cases) to create your monthly income in order to qualify for a mortgage loan.

• Who should use this type of loan?  Those who are retired (or close to it)….or those with a liquid high net-worth.

Most importantly, the borrower is not required to cash in their assets as they’re only used to demonstrate an ability to make the mortgage and housing payments. 

Borrowers who use an asset depletion program to qualify do not need to show any source of income or employment.  They can instead rely on asset depletion calculations based on a combination of cash, retirement, and investment monies divided by 360 payments.

Assets are generally qualified with 100% of cash accounts and 70% of retirement and investment accounts (100% of retirement funds may be used if the borrower is over 59 ½ years old).  For example, if a 45 year old borrower  has $2,000,000 in liquid assets, and another $1,000,000 in retirement and investment funds, then their qualifying monthly income would be $7,500 ($2,000,000 + $700,000 = $2,700,000; divided by 360 = $7,500).

Asset rich individuals who don’t want to provide a qualifying employment history or sufficient income may find this as an ideal solution.  Please reach out to me to learn more about asset depletion and to determine whether this method will work for your specific transaction.

Mortgage rates are near historic lows, which has put millions of U.S. homeowners in the money to look at refinancing their current mortgage.

And yet, many homeowners have chosen to do nothing.  Are you one of them?

Source: The Mortgage Reports

According to the Federal Housing Finance Agency (FHFA), the parent of Fannie Mae and Freddie Mac, mortgage refinance volume dropped ten percent last quarter despite sub-4 percent mortgage rates and the loosest mortgage guidelines in more than 10 years.

Homeowners that have elected to refinance, though, are saving big money.

The majority of refinancing homeowners, according to the report, have reduced monthly payments by $150 or more; and, many are using zero-closing cost mortgages to keep the benefits of refinancing high.

Homeowners doing debt consolidations are saving even more — especially with the recent changes in how lenders treat credit card debt.

Despite a drop in mortgage rates (and a loosening of mortgage lending standards), refinance volume remains off its peak. Too many homeowners feel it would be difficult to get a mortgage; or, don’t feel that a refinance is worth the time required.

Give me a call to find out if refinancing might be a good fit for you!