If you spent your teenage years waiting anxiously for one of your siblings to get out of the shower, the idea of selling your spacious, multi-bathroom home and moving into a smaller house or condo may feel like a reversal of fortune.
Yet for many retirees, downsizing makes financial and practical sense. Younger baby boomers — those currently ranging in age from 57 to 66 — made up 17% of recent home buyers, while older boomers — ages 67 to 75 — accounted for 12%, according to a 2022 report from the National Association of Realtors Research Group. Boomers’ primary reasons for buying a home were to be closer to friends and family, as well as a desire to move into a smaller home, the report said. Both younger and older boomers were more likely than others to purchase a home in a small town, and younger boomers were the most likely to buy in a rural area.
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For retirees Fred and Shelby Bivins, selling their home in Green Valley, Ariz., will enable them to realize their dream of traveling in retirement. The Bivinses have put their 2,050-square-foot Arizona home on the market and plan to relocate to their 1,600-square-foot summer condo in Fish Creek, Wis., a small community about 50 miles from Green Bay. They plan to live in Wisconsin in the spring and summer and spend the winter months in a short-term rental in Arizona, where they have family.
Fred, 65, says the decision to downsize was precipitated by a two-month stay in Portugal last year, one of several countries they hope to visit while they’re still healthy enough to travel. “We’ve had Australia and New Zealand on our list for many years, even when we were working,” says Shelby, 68. The Bivinses are also considering a return visit to Portugal. Eliminating the cost of maintaining their Arizona home will free up funds for those trips.
With help from Chris Troseth, a certified financial planner based in Plano, Texas, the Bivinses plan to invest the proceeds from the sale of their home in a low-risk portfolio. Once they’re done traveling and are ready to settle down, they intend to use that money to buy a smaller home in Arizona. “Selling their primary home will generate significant funds that can be reinvested to support their lifestyle now and in the future,” Troseth says. “Downsizing for this couple will be a positive on all fronts.”
Challenges for downsizers
For all of its appeal, downsizing in today’s market is more complicated than it was in the past. With 30-year fixed interest rates on mortgages recently approaching 8%, many younger homeowners who might otherwise upgrade to a larger home are unwilling to sell, particularly if it means giving up a mortgage with a fixed rate of 3% or less. More than 80% of consumers surveyed in September by housing finance giant Fannie Mae said they believe this is a bad time to buy a home and cited mortgage rates as the top reason for their pessimism. “This indicates to us that many homeowners are probably not eager to give up their ‘locked-in’ lower mortgage rates anytime soon,” Fannie Mae said in a statement. As a result, buyers are competing for limited stock of smaller homes, says Hannah Jones, senior economic research analyst for Realtor.com.
Here, though, many retirees have an advantage, Jones says. Rising rates have priced many younger buyers out of the market and made it more difficult for others to obtain approval for a loan. That’s not an issue for retirees who can use proceeds from the sale of their primary home to make an all-cash offer, which is often more attractive to sellers.
Retirees also have the ability to cast a wider net than younger buyers, whose choice of homes is often dictated by their jobs or a desire to live in a well-rated school district. While the U.S. median home price has soared more than 40% since the beginning of the pandemic, prices have risen more slowly in parts of the Northeast and Midwest, Jones says. “We have seen the popularity of Midwest markets grow over the last few months because out of all of the regions, the Midwest tends to be the most affordable,” she says. “You can still find affordable homes in areas that offer a lot of amenities.”
Meanwhile, selling your home may be somewhat more challenging than it was during the height of the pandemic, when potential buyers made offers on homes that weren’t even on the market. The Mortgage Bankers Association reported in October that mortgage purchase applications slowed to the lowest level since 1995, as the rapid rise in mortgage rates has pushed many potential buyers out of the market. Sales of previously owned single-family homes fell a seasonably adjusted 2% in September from August and were down 15.4% from a year earlier, according to the National Association of Realtors. “As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales,” NAR chief economist Lawrence Yun said in a statement.
However, because of tight inventories, there’s still demand for homes of all sizes, Jones says, so if your home is well maintained and move-in ready, you shouldn’t have difficulty selling it. “The market isn’t as red-hot as it was during the pandemic, but there’s still a lot to be gained by selling now,” she says.
Other costs and considerations
If you live in an area where real estate values have soared, moving to a less expensive part of the country may seem like a logical way to lower your costs in retirement. While the median home price in the U.S. was $394,300 in September, there’s wide variation in individual markets, from $1.5 million in Santa Clara, Calif., to $237,000 in Davenport, Iowa. But before you up and move to a lower-cost locale, make sure you take inventory of your short- and long-term expenses, which could be higher than you expect.
Selling your current home, even at a significant profit, means you will incur costs, including those to update, repair and stage it, as well as a real estate agent’s commission (typically 5% to 6% of the sale price). In addition, ongoing costs for your new home will include homeowners insurance, property taxes, state and local taxes, and homeowners association or condo fees.
Nicholas Bunio, a certified financial planner in Berwyn, Pa., says one of his retired clients moved to Florida and purchased a home that was $100,000 less expensive than her home in New Jersey. Florida is also one of nine states without income tax, which makes it attractive to retirees looking to relocate. Once Bunio’s client got there, however, she discovered that she needed to spend $50,000 to install hurricane-proof windows. Worse, the only home-owners insurance she could find was through Citizens Property Insurance, the state-sponsored insurer of last resort, and she’ll pay about $8,000 a year for coverage. Her property taxes were higher than she expected, too. When it comes to lowering your cost of living after you downsize, “it’s not as simple as buying a cheaper house,” Bunio says
Before moving across the country, or even across the state, you should also research the availability of medical care. “Oftentimes, those considerations are secondary to things like proximity to family or leisure activities,” says John McGlothlin, a CFP in Austin, Texas. McGlothlin says one of his clients moved to a less expensive rural area that’s nowhere near a sizable medical facility. Although that’s not a problem now, he says, it could become a problem when they’re older.
If you use original Medicare, you won’t lose coverage if you move to another state. But if you’re enrolled in Medicare Advantage, which is offered by private insurers as an alternative to original Medicare, you may have to switch plans to avoid losing coverage. To research the availability of doctors, hospitals and nursing homes in a particular zip code, go to www.medicare.gov/care-compare.
At a time when many seniors suffer from loneliness and isolation, a sense of community matters, too. Bunio recounts the experience of a client who considered moving from Philadelphia to Phoenix after her daughter accepted a job there. The cost of living in Phoenix is lower, but the client changed her mind after visiting her daughter for a few months. “She has no friends in Phoenix,” he says. “She’s going on 61 and doesn’t want to restart life and make brand-new connections all over again.”
Time is on your side
Unlike younger home buyers, who may be under pressure to buy a place before starting a new job or enrolling their kids in school, downsizers usually have plenty of time to consider their options and research potential downsizing destinations. Once you’ve settled on a community, consider renting for a few months to get a feel for the area and a better idea of how much it will cost to live there. Bunio says some of his clients who are behind on saving for retirement or have high health care costs have sold their homes, invested the proceeds and become permanent renters. This strategy frees them from property taxes, homeowners insurance, homeowners association fees and other expenses associated with homeownership
The boom in housing values has boosted rental costs, as the shortage of affordable housing increased demand for rental properties. But thanks to the construction of new rental properties in several markets, the market has softened in recent months, according to Zumper, an online marketplace for renters and landlords. A Zumper survey conducted in October found that the median rent for a one-bedroom apartment fell 0.4% from September, the most significant monthly decline this year.
In 75 of the 100 cities Zumper surveyed, the median rent for a one-bedroom apartment was flat or down from the previous month. (For more on the advantages of renting in retirement, see “8 Great Places to Retire—for Renters,” Aug.)
Aging in place
Even if you opt to age in place, you can tap your home equity by taking out a home equity line of credit, a home equity loan or a reverse mortgage. At a time when interest rates on home equity lines of credit and loans average around 9%, a reverse mortgage may be a more appealing option for retirees. With a reverse mortgage, you can convert your home equity into a lump sum, monthly payments or a line of credit. You don’t have to make principal or interest payments on the loan for as long as you remain in the home.
To be eligible for a government-insured home equity conversion mortgage (HECM), you must be at least 62 years old and have at least 50% equity in your home, and the home must be your primary residence. The maximum payout for which you’ll qualify depends on your age (the older you are, the more you’ll be eligible to borrow), interest rates and the appraised value of your home. In 2024, the maximum you could borrow was $1,149,825.
There’s no restriction on how homeowners must spend funds from a reverse mortgage, so you can use the money for a variety of purposes, including making your home more accessible, generating additional retirement income or paying for long-term care. You can estimate the value of a reverse mortgage on your home at www.reversemortgage.org/about/reverse-mortgage-calculator.
Up-front costs for a reverse mortgage are high, including up to $6,000 in fees to the lender, 2% of the mortgage amount for mortgage insurance, and other fees. You can roll these costs into the loan, but that will reduce your proceeds. For that reason, if you’re considering a move within the next five years, it’s usually not a good idea to take out a reverse mortgage.
Another drawback: When interest rates rise, the amount of money available from a reverse mortgage declines. Unless you need the money now, it may make sense to postpone taking out a reverse mortgage until the Federal Reserve cuts short-term interest rates, which is unlikely to happen until late 2024 (unless the economy falls into recession before that). Even if interest rates decline, they aren’t expected to return to the rock-bottom levels seen over the past 15 years, according to a forecast by The Kiplinger Letter. And with inflation still a concern, big rate cuts such as those seen in response to recessions and financial crises over the past two decades are unlikely.
Note: This item first appeared in Kiplinger’s Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Mortgage demand increased last week as mortgage rates fell to their lowest levels since August 2023, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
For the week ending December 1, total mortgage applications increased 2.8% compared to the prior week, the survey showed. The results include an adjustment for the observance of the Thanksgiving holiday.
mortgage rates, the rates remain high and have kept conditions challenging for both prospective homebuyers and homeowners looking to sell. They have also continued to suppress refinance activity.
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“Mortgage rates declined last week, with the 30-year fixed-rate mortgage falling to 7.17 percent – the lowest level since August 2023,” said Joel Kan, MBA vice president and deputy chief economist. “Slower inflation, and financial markets anticipating the potential end of the Fed’s hiking cycle, are both behind the recent decline in rates.”
The Market Composite Index, which measures mortgage loan application volume, increased 2.8% on a seasonally adjusted basis from the prior week, and decreased 43% on an unadjusted basis, MBA said.
The Purchase Index decreased 0.3% on a seasonally adjusted basis, compared to the prior week. On an unadjusted basis, the index increased 35% from the prior week and fell 17% from the same week a year ago.
The Refinance Index, which measures refinancing and prepayment activity, increased 14% from the prior week and was 10% higher than the same week a year ago. The refinance share of mortgage activity increased to 34.7% of total applications from 30.6% the previous week.
The FHA share of total applications increased to 15% from 13.5% the prior week. The VA share increased to 12.8%, from 12.6% in the week prior, and the USDA share remained unchanged at 0.5% from the week prior.
“Refinance applications saw the strongest week in two months, increasing on a year-over-year basis for the second consecutive week for the first time since late 2021,” Kan said. “The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast. Purchase applications remained 17 percent lower than a year ago, held back by low inventory and still-challenging affordability conditions.”
Looking to rent in a tight, competitive market or even a specific apartment community? A renter cover letter may not be required, but it could set you apart from the other potential candidates, increasing the odds that you’ll be the one signing that coveted lease.
Approaching the rental process as though you were vying for a coveted job — with a renter cover letter and resume — will leave a lasting positive impression and match the standards and criteria landlords have in place.
What to include
Much like the cover letter you’d send to a potential employer, a renter cover letter should showcase your best attributes for the landlord or property management company and let the decision makers know you’re the best choice among those presented, showcasing your professionalism and responsibility, two qualities landlords prize among tenants. It’s important to understand that a cover letter is supplemental to your required rental application, so only include information not listed in the application.
Property managers have a vested interest in choosing the most qualified applicants for their rental units, increasing the odds that the community rules will be adhered to, that the apartments will be well taken care of and that rent will be paid on time. Keep this in mind when writing your rental application cover letter, bragging and explaining your best qualities and attributes as a tenant is encouraged.
The Fair Housing Act prohibits landlords from discriminating against potential tenants on the basis of things such as race, religion, gender, disability, national origin and sexual orientation. However, they will pore over other criteria, including credit and employment history and the references they furnish, to make their decisions when filling vacancies with the ideal tenant.
If you have great credit and have been steadily employed, include it in your rental cover letter, along with things such as a positive rental history. Tell them who you are, but also who you aren’t. For example, if you’re applying with two other college students, you might be seen as irresponsible, inconsiderate or loud. Include in your cover letter — if it’s true — that you’re study-centric, not the type of people who would throw wild parties or play loud music. Showcasing hobbies that lend themselves to such traits like reading, gardening or volunteering for a local organization won’t hurt, either.
Renter cover letter template
Check out the below template as a baseline for your own renter cover letter, a foundation on which you can build. Simply fill in the information for sections in parentheses ( ), while the section in brackets [ ] is for your information, not to be included in the letter.
Download a Word document of the rent cover letter template
(Your Name) (Address) (City, State Zip)
(Date)
(Landlord or Property Manager Name) (Address) (City, State Zip)
Dear (Name of landlord or property manager),
My name is (Your name) and I have a keen interest in renting the apartment you have available at (Property name or address).
I currently live at (Your current address) and have lived there for (XX) years. I am looking for a new place to live because (reason for moving: closer to home, closer to family, downsizing, etc.). I find your (apartment community/available unit/rental home) particularly appealing because (list specifically why you want to live in this property).
[The next two paragraphs apply only to potential tenants who will be utilizing an assistance program; omit if not applicable.]
While my current monthly income is $(X,XXX), I have been approved for rental assistance through the (name of your program). This program is funded by and administered by (the organization funding the program). A brief fact sheet about the program is attached to this letter.
Per the plan, I will pay (XX percent) of my monthly adjusted income toward rent, enabling me to make rent, in full, each month with no problem. (Program name) pays the remainder of my rent each month.
I believe I’d be a wonderful addition to your rental community — and here’s why. I am employed at (Your employer) and have been working there for (XX) years. In my free time, I (list some interests here and other things about yourself. For instance: play on the company softball team, coach your daughter’s soccer team, volunteer at specific organizations and enjoy hiking and baking. My current neighbors will miss my banana bread when I make the move to your community!)
I am quiet and friendly, a good neighbor who always pays bills on time. Attached you will find my renter resume, along with several references from neighbors and co-workers, as well as staffers from my current rental community.
If you have any questions, please don’t hesitate to call or e-mail me at (Your phone number) or (Email address).
Thank you very much for considering my rental application. I look forward to hearing from you.
Sincerely,
(Signature)
(Printed name)
Have everything ready to go
In addition to having all your paperwork in order, be sure to show up to view the rental property and furnish these documents on time and dressed appropriately. Don’t be afraid to ask questions, or answer them. First impressions count!
With these tips, tricks and templates, you’re ready to write your rental application cover letter to successfully prove you’re an ideal tenant who will pay rent, take care of a rental unit and keep a steady income. Good luck and happy renting.
Over the past few years, regulators have been working to right the wrongs that occurred during the mortgage boom and subsequent bust to ensure history doesn’t repeat itself.
One focus has been on improving mortgage disclosures so homeowners can actually make sense of what they’re reading.
The latest development is a model form for mortgage statements, which came about thanks to the Dodd-Frank Act, spearheaded by the Consumer Financial Protection Bureau.
It amends the Truth in Lending Act by adding a section on “Periodic Statements for Residential Mortgage Loans.”
This is similar to the credit card overhaul, which has led to more transparent monthly statements that spell out your current balance, how much interest you will pay, when your payment is due, and more.
What’s On the New Mortgage Statement Form?
The new mortgage form, which is pending public comment (including yours if you want to get involved), specifies that the following items must be included:
– the principal loan amount – the current interest rate – the date when the interest rate may reset (if adjustable) – description of any late fees – description of any prepayment penalty – phone number and e-mail address to obtain more info about mortgage – information about housing counselors
Check out the form here
The first item on the list specifies what your current loan balance is, which is pretty straightforward. It is also accompanied by a maturity date, which is when the mortgage will be paid off in full.
On the top right side of the form is your account number, payment due date, and amount due. It also includes an alternative amount if you pay late.
Below that, your monthly mortgage payment is broken down into principal, interest, and escrow, which includes taxes and insurance. It displays what you paid last month in each of these departments, and also what you’ve paid year to date.
I think the form should also include the total amount of interest and principal paid since loan inception as well, so hopefully they’ll include that.
This can help illustrate how much homeowners spend on interest versus principal over the years, and could lead to shorter-term mortgages.
[30-year vs. 15-year fixed mortgage]
The proposed form will also include transaction activity for the past month detailing what amount you paid, including any late fees if applicable. This can be handy as proof of payment if there are any disputes.
The current mortgage rate will also be listed prominently. If it’s a fixed-rate mortgage, there won’t be any mention of a possible interest rate reset.
If it’s an adjustable-rate mortgage, there will be text that says, “until X date” next to the interest rate. This is helpful to ensure borrowers know how long their interest rate is fixed, as this date often gets lost in the shuffle.
Below that is information regarding a prepayment penalty, assuming one applies, including how much you will owe for prepayment.
Ensure Extra Payments Go Where You Want Them
My favorite part of the new form is the box pertaining to any overpayment. At the bottom of the new form, it allows you to designate where you want additional funds to be applied.
So if you want to make extra payments each month, you can specify that they be directed toward principal or escrow, to avoid the lender or loan servicer doing what they please.
There is also a large box toward the bottom of the form that provides information for those experiencing financial difficulty, including where to find a state or federally approved housing counselor.
All in all, it looks like a good improvement to the mix of mortgage statement forms currently used by loan servicers.
It will likely increase transparency and lead to a better understanding among homeowners, who are often in the dark when it comes to making sense of their mortgage.
This form should reduce homeowner abuses and perhaps even defaults.
What do you think of the new form? Is it missing anything important?
In an e-mail sent out today to business partners, Indymac warned about and provided general guidance regarding the “buy and bail” phenomenon allegedly sweeping the industry.
The Wall Street Journal brought the problem to light yesterday in an article that explained how borrowers with underwater mortgages purchased nearby homes at a discount and then stopped making mortgage payments on their existing homes until they fell into foreclosure.
While it may seem like a complicated endeavor, the article noted that some borrowers were doing it with relative ease, while others received coaching from real estate agents and mortgage brokers.
And so now Indymac has warned business partners to be “extra vigilant” when their borrowers are looking to purchase owner-occupied homes if they already own existing property.
The e-mail said to be especially careful in hard-hit markets in Arizona, California, Florida, and Nevada, noting that lending to borrowers who are about to bail is much the same as lending to a borrower with a recent foreclosure, which is strictly prohibited by the GSEs and the FHA.
The mortgage lender advised that borrowers in these situations should generally have a minimum of 20 percent home equity in their existing property, no mortgage lates, and the capacity to repay current obligations.
Additionally, they should put down at least 20 percent on the new property, and “extreme caution” must be taken if their current property was recently listed.
The e-mail noted that “buy and bail” is becoming a significant problem, adding that the FHA, Fannie Mae, and Freddie Mac have already instructed underwriters to proceed with such deals cautiously.
Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
Taking out a home mortgage or refinancing a currently existing mortgage? If so, you need to know the tax rules for deducting interest.
home equity loans is tricky.
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You can deduct this interest if the loan is secured by a first or second residence and used to buy, build or substantially improve a home. That’s part of the $750,000 (or $1,000,000) acquisition debt. Improvements are substantial if they add value to the home, extend the residence’s useful life or create new uses for the home. Additions and renovations count. Basic repairs and maintenance don’t.
You can’t deduct interest if you use the home equity loan proceeds for purposes other than to buy, build or substantially improve the home. Before 2018, you could use cash from these loans to buy a car, pay off credit card debt, take a trip and the like, and deduct interest on up to $100,000 of debt. But, the 2017 tax law temporarily ended this tax advantage for home equity loans.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
Political news site Politico last week asked 100 U.S. senators to explain how they obtained their mortgages in light of recent news that Countrywide had a VIP program.
So far 77 senators have provided information regarding their mortgages, although many of those questioned haven’t had mortgages for years (go figure).
Of those who failed to disclose the exact details of their mortgage situation, the office of Senator Michael B. Enzi (R-Wyoming) wrote an e-mail to Politico, saying the mortgage wasn’t with Countrywide, and therefore wasn’t relevant.
Another, the office of Senator John Thurne (R-South Dakota), claimed he was a private citizen when he obtained his mortgage and received it through a local bank, not Countrywide.
So I guess the loan not being with Countrywide is the easy out, although I’m sure other banks and mortgage lenders had their own special considerations.
However, even the office of Senator Dodd (D-Connecticut), who received his home loan from Countrywide, said he “did not seek or expect, and was not aware of, any special terms on his loans.”
The office of Senator Conrad (D-North Dakota), the other fellow under fire, said he was not aware of any special privileges, claiming that waived mortgage points were common at the time and the apartment loan he received was a granted exception because it could be sold on the secondary market at that time.
The office of Barbara Boxer (D-California) said she had two loans with Countrywide obtained through loan officers in 2006, but they have since been paid off.
Of those who did provide details, 28 no longer had a mortgage, either because the loan was already paid off or the property in question was purchased with cash.
Loans were also originated in a number of other banks, including Bank of America, Chase, CitiMortgage, GMAC, SunTrust, Wells Fargo, and other regional lenders.
An e-mail sent to business partners this morning contained recent thoughts from Indymac Bancorp CEO Mike Perry, who recognized the fact that his company needs to raise capital to stay afloat.
In what was originally believed to be a memo to Indymac employees, Perry noted that the company was in good shape on the liquidity front, funding loans entirely on customer deposits and FHLB advances.
However, he said the Pasadena, CA-based mortgage lender needs to raise capital, echoing similar sentiment from UBS analyst Eric Wasserstrom, who recently cut his price target on the company and speculated that it would need to raise capital by selling assets or via a strategic investment.
“We don’t have any issues with respect to liquidity or funding and we don’t have a single warehouse line,” said Perry in the e-mail. “We fund ourselves 100% with deposits and FHLB advances and have $4.4 billion of operating liquidity as of today.
“Now with the above said, we clearly need to raise capital, reduce our NPAs, and return to profitability for us to ensure our long-term health.
Indymac raised over $670 million in new capital in 2007 and $84 million via its Direct Stock Purchase Plan since late February, but as of March 31, 2008, non-performing assets totaled $2.1 billion.
Wasserstrom said Indymac won’t be able to rely on its stock purchase plan going forward, and estimates a loss of $4.65 in 2008 and 95 cents in 2009.
“This is why our stock is where it is….same with a lot of other thrifts, banks, MI companies, and bond insurers,” added Perry.
“P.S. The stock price does not have anything to do with our regulatory capital or liquidity. Radian is at $3.00, Nat City is at $5.15, WAMU at $6.67, Flagstar at $3.95, Downey at $4.96, PFF is at $1.16, Franklin Bank at $0.90,” he concluded.
Shares of Indymac were up one penny, or 0.79%, to $1.28 in early afternoon trading on Wall Street, slightly above their all-time low.
Wells Fargo sent out an e-mail to its retail sales force today, notifying them that its Equity Direct guidelines will be experiencing a series of changes amid the ongoing mortgage crisis.
Effective end of business Friday, the maximum debt-to-income ratio for home equity lines of credit and home equity loans will be cut by five percent to 50 percent, an underwriting guideline change that actually matters because most of these loans are now full doc.
In addition, as of July 19, an 185 basis point economic adjuster will be required to qualify a borrower for these types of loans, instead of a typical qualification method based on the fully indexed mortgage rate.
So if a borrower is eligible for a loan at say five percent, an additional 185 basis points will be added on top to serve as the qualification rate, bumping the rate up to 6.85 percent fully amortized in that example.
Effective July 12, loans-to-value ratios (LTV) on these second mortgages will be reduced by five percent across the board, with new limits ranging between just 70-85 percent.
In “severely distressed” markets such as Orange and Los Angeles County, the max LTV for a home equity line or loan will be a mere 70 percent.
Wells Fargo Equity Direct is also eliminating bridge loan products.
Despite managing to avoid much of the mortgage mess thanks to their conservative lending philosophy, Wells was warned of rising delinquencies within their hefty home equity loan portfolio.