Front Page Articles
Innovative Mortgage Tools
by Debbi Conrad
Plunging mortgage interest rates are creating quite a stir as borrowers rush to take advantage of desirable financing terms. Conventional financing, variable-rate loans and refinancing rates have all been affected, but other mortgage alternatives are also presenting themselves. One interesting by-product of current market conditions has been the introduction of the "Mortgage on the Move," a portable mortgage from E*TRADE Financial. In addition, a reverse mortgage is a good option for homeowners who have paid off their mortgages and assume they are unable to enjoy the low rates.
Portable Mortgage from E*TRADE
With E*TRADE Financial's "Mortgage on the Move," homebuyers have a brand new option-a portable mortgage. The portability feature refers to the fact that the homebuyer has the opportunity to transfer the terms of the loan to a new residence if the owner moves in the future, rather than paying off the existing loan and applying for a new loan at the then-prevailing market interest rates.
To qualify for a portable mortgage, the loan must be for the purchase money for an owner-occupied, single-family residence only. No refinancing, no second or vacation homes, and no condos taller than four stories are eligible. The borrower cannot have had any mortgage late payments in the last 12 months or foreclosures in his or her recent credit history. Loan amounts cannot exceed 80 percent loan to value and can range from $60,000 to $1,000,000. The mortgage loan is a 30-year fixed mortgage only, with interests rates slightly higher than conventional rates, a 360-month term and no prepayment penalty.
If the homeowner moves into a higher-priced home or moves and maintains the same loan balance, the monthly payment and term will remain the same. If the new home has a higher price, E*TRADE Mortgage will offer the owner a second mortgage at its then-current first mortgage rates so the owner can maintain an 80% loan to value. If the homeowner moves down to a lower-priced home and the new loan is for a lower amount, E*TRADE will re-amortize the new loan based on the remaining term of the original loan. If existing loan payments are current and the owner has not filed for bankruptcy, the owner does not need to re-qualify for the new loan. However, the owner will be responsible for all fees and closing costs that E*TRADE normally charges in connection with the other first-lien mortgage loans they originate. All closing costs, expenses, and fees (including appraisal, survey, title insurance premium, and security instrument recording fees and taxes) will apply. The owner may exercise the portability option one time only.
When first announced, there was no investor market for the E*TRADE portable mortgage. However, Freddie Mac, Fannie Mae and the Bond Market Association plan to meet and discuss establishing a secondary market for portable mortgages. Whether they succeed may determine the longevity of this product, which may last only as long as the interest rates are low without secondary market support.
For more information about this portable mortgage product, visit
https://lending.etrade.com/e/t/mortgage/lhome.
Reverse Mortgage Alternative
A reverse mortgage allows homeowners to receive extra income that is borrowed against the equity in their homes. The cash received from a reverse mortgage can be paid in a single lump sum, as a regular monthly cash advance, as a credit line account, or as a combination of these payment methods. No matter how the loan is paid to the homeowner, no repayment is due until the homeowner dies, sells the home, or permanently moves out of the home. To be eligible for most reverse mortgages, the homeowner must be 62 years of age or older. Although most people assume that a homeowner cannot take advantage of a reverse mortgage until all mortgage loans on the home have been paid in full, homeowners with substantial equity actually can borrow the money with a reverse mortgage to satisfy the remaining balance on their existing conventional mortgage loans. With a reverse mortgage, a homeowner can turn the value of his or her home into cash without having to move or repay the loan each month.
For additional information about reverse mortgages, see the WRA's
"Mortgage Loan
Assistance" resource page, the national Reverse Mortgage Lenders' Web site, or NAR's
"Field Guide to Reverse
Mortgages".
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NAR Supports New WRA Initiatives
Programs Highlight State's Economy and Quality of Life
by Michael Theo
The National Association of Realtors® has approved $50,000 in financial support for an innovative Wisconsin program sponsored in part by the WRA. The program, known as Building the New Wisconsin Economy (BNWE), is a statewide civic journalism project that will bring together key statewide leaders from media, business, state and local government, education, and labor. The group will stimulate a high-profile public discussion on how to build a diverse, vibrant and sustainable state economy and delineate what needs to be done to get us there.
Approval of the NAR funds came after a detailed presentation of the program led by WRA Chairman of the Board Bob Weber at the NAR meetings in Washington, D.C. in May. The presentation included Jim Wood, President of Wood Communications Group, (a partner of the BNWE program) and WRA President Bill Malkasian. National funding came through NAR's Issues Mobilization Committee, which provides financial support to state and local association advocacy programs and campaigns that have both national and local significance.
Why is this program important and why should the Realtors® be involved? The answer to long-term financial stability for state and local governments, as well as Wisconsin families and businesses, is economic development and growth. Economic development and growth helps attract and keep families and businesses in Wisconsin.
Currently, few people disagree that Wisconsin's economy needs rebuilding for the future. Our national standing in today's economy is particularly weak. Our historically strong manufacturing sector now ranks 32nd in new capital investment. We rank 41st in federal research and development dollars received, 36nd in venture capital investments and 47th in the rate of new business formation. The good news is that most of the pieces to build a new Wisconsin economy are already in place. The state does, however, lack a coordinated plan on where to invest and how to grow. The goal of the BNWE project is to inspire a widespread, substantive public discussion and creation of such a plan.
How will this be accomplished? The BNWE has three working groups, called alliances. The education and research alliance will develop the issues (based in large part on in-depth public opinion surveys), the business alliance will define and illuminate the issue, and the media alliance will disseminate the issues through public forums and news outlets. Together, key economic development issues for Wisconsin's future will be identified, synthesized and publicized.
The BNWE project is a perfect compliment to the WRA's new Quality of Life (QOL) initiative. This program is intended to create an environment where any issue-regardless of how complex or esoteric, regardless of where it arises (federal, state, regulatory, local), regardless of who is pushing it (politicians, news media, environmentalists, business groups)-can legitimately be "claimed" as a
Realtor® issue.
Why are these programs important to Realtors®? Because Realtors® sell quality of life and because every major public policy issue-including land use policy, tax policy, energy policy, health care policy, environmental policy, transportation policy, financial policy, and economic development policy-impacts Wisconsin's quality of life.
If you have questions regarding these exciting initiatives, contact
Michael Theo.
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REALTORS® Promote Housing Affordability, Strong Communities
NAR promotes strong national housing policies to assist families achieve the American dream of home ownership. For example, NAR President Cathy Whatley has addressed numerous groups endorsing the American Dream Downpayment Act which would provide $200 million in downpayment and closing cost assistance to 40,000 first-time homebuyers. This and NAR's Housing Opportunity Program encourages
REALTORS® to stimulate affordable housing and close the homeownership gap. This mission is consistent with President's Bush's goal to increase homeownership in our country, especially for women, immigrants and minorities.
NAR has also recognized that affordable housing is not the only piece to the puzzle. The American dream of homeownership also requires strong and vibrant communities where everyone can enjoy a safe and decent quality of life. As NAR's National Homeownership month draws to an end,
REALTORS® should continue the campaign to build strong communities where everyone would be proud to say, "This is my home!"
REALTORS® find time to roll up their sleeves and make their communities better places to live and work. Regional or local boards and associations, broker companies and individual
REALTORS® derive multiple rewards from participating in local community-building projects. Not only does this develop community recognition for
REALTORS® and improve the quality of life in their communities, but it also provides a healthy balance to the hectic business schedule followed by most licensees.
Ideas for community participation abound on NAR's Homeownership-This is My Home Web
pages. A few of those projects include:
H Discover the programs of the Urban Land
Institute, an organization committed to providing responsible leadership in land use and environment enhancement.
H Adopt a local Head Start program and provide volunteers or fundraising support.
H Plant trees each month with help from
REALTOR
VIP® Alliance Program Partner, The National Arbor Day Foundation.
H Follow the lead of Metro Brokers
Inc., which supports the Volunteers of America's Toy Drive, as well as Special Olympics Colorado.
H Participate in "Meals on Wheels" one day a month or sponsor a "Golden Oldies" party at a local senior citizens' center.
H Partner with the Enterprise
Foundation, dedicated to helping low-income individuals have affordable housing, safer streets and access to jobs and childcare.
H Post open house information online in English and Spanish, as well as other languages commonly spoken in your area, and take out ads on local non-English radio stations and in ethnic newspapers.
H Consider the work of Carpenter GMAC Real
Estate, which raises money each year for a local free clinic that serves the medical needs of homeless and low-income people in Indianapolis with volunteer health professionals.
H The Missoula County Association of
REALTORS® hosts homeownership fairs including displays and workshops on home-buying processes, issues and programs.
H Encourage local businesses to donate home furnishings, appliances and related products for your Association's Habitat for
Humanity® or homeownership projects.
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