Shortening the Life Span of your Mortgage!

Posted in Bob Ashworth, Bob Ashworth Realtor, Buying a Condo, Buying a Home, Buying a Home in SWFL, Buying a Home SWFL, Buying Questions, Buying Tips, Cape Coral Real Estate, Cape Coral Real Estate Market, Cape Coral Realtor, Early Mortgage Pay Off, Florida Mortgage News, Money Saving Tips, Mortgage Advice, Mortgage Changes, Mortgage News, Mortgage Tips, Real Estate Advice, Real Estate News, SWFL Home Tips, SWFL Mortgage Tips, SWFL Real Estate, Uncategorized

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How to pay off your 30 year mortgage in 15 years.

Paying off your mortgage in half the time is easier than you think. Actually, it’s really quite simple, although this advice is rarely ever given to the public. Every one of my clients who closes on a home with me on a 30 year mortgage loan receives this guidance from me and today I want to share it with you.

Early Mortgage Pay OffSurely the main reason that most home buyers select a 30 year loan over a 15 year term is not because they prefer to pay the mortgage twice as long. They make this choice because of its affordability since a 30 year loan has a much lower monthly payment than a 15 year one. The other reason to choose a 30 year over a 15 year is more flexibility. If you’re committed to a 15 year term with your home loan lender when some unforeseen event occurs where all of a sudden your income drops will mostly likely be stuck making the higher payments. This also means you will be unable to refinance into a 30 year which would lower your payments. However, If you were committed to a 30 year mortgage and make additional principle payments on your own, you can immediately halt the additional principle you’ve been sending to conserve cash.

Let’s take a look at the two different options using a $200,000 mortgage loan as the example. For simplicity sake I’ll leave out real estate taxes and insurance and instead just focus on the principle and interest associated with the two different loans. I’ll also use a typical interest rate in today’s market (summer 2014) for an owner occupant home loan.

Mortgage Pay Off Calculator SWFLA $200,000 loan with a 30 year payback at 4.125% would be $969 per month

A $200,000 loan with a 15 year payback at 3.375% would be $1,418 per month

The simple formula is just this. Every month when you review your mortgage loan statement from your lender, find the amount of the payment that is slated to go towards your principle. Hint: it’s usually the smallest amount of all!

The first monthly payment on your $200,000, 30 year loan at 4.125% will be $969 plus or minus a few cents, and not including taxes and insurance. Of that $969, only $282 will go towards your principle balance. Now while your payment will remain the same for the life of the loan, the amount that goes towards principle and interest will change as your principle balance is reduced.

Add $282 to your payment. You’ve just made 2 months of payments. Do this same thing every month, and your 30 year or 360 month mortgage just became 15 years, or 180 months.

Cutting home loanFurther examples:

Next payment the very following month –

Now because you made 2 principle payments, one that was required, and one that was your extra, your new principle balance is now $199,436. Your required payment is still $969 but the amount that will now go towards the principle is $283. Only $1.00 more, but at this pace you’ll pay off your 30 year mortgage in 15 years.

Yes, of course as time goes on the additional principle does become more of a burden. Although it will get better down the road. And at that point you’ll have made quite a dent in not only your principle balance, but in the years required to be mortgage free.

Final example:

5 years or 60 payments made, each including an extra month of principle. Your principle balance will be approximately $160,000 as opposed to $180,000 had you not been making the extra payments. When your principle balance is around $160,000, the required payment is still $969, though $415 +/- is what is going towards principle now. If you’re still committed to a 15 year payoff, your extra principle payment is more than it was in the beginning, but remember; all these principle payments are equity in your home.

Even if you are not able to continue to increase the amount of your extra payment, you’ve dramatically reduced your balance and, your loan will pay off years ahead of schedule saving you thousands of dollars in interest.

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We invite you to like us on facebook, follow us on twitter and connect with us on linkedin. We hope that you find our website to be a great source of information and visit often. Whether you are looking for Homes for SaleMoving Resources, or even Mortgage Information everything you need is right here.

We will always be available for personal service by phone or email, so feel free to contact us with questions any time! My offices are located on 2326 Del Prado Blvd. S., Cape Coral, FL 33990. You can reach me at 239-425-2503 or email me at Bob.Ashworth@gmail.com and you can visit my website at www.BobAshworth.com.

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Bob Ashworth Remax Realty Team

Bob Ashworth
Realtor, CBR, CDPE
Your Real Estate Solutions Provider
239-425-2503
2326 Del Prado Blvd. S.
Cape Coral, FL 33990
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Good News for FL Homeowners Underwater

Posted in Bob Ashworth Realtor, FL Real Estate Market Update, Florida Housing Market, Florida Mortgage News, Florida Real Estate, Florida Real Estate News, Home Tips, Mortgage Changes, Mortgage News, Real Estate Market, Real Estate News, SWFL Housing Update, SWFL Market News, SWFL News, SWFL Real Estate, Underwater Mortgage

Mortgage Underwater Assistance FL

Florida reopens program for underwater homeowners

TALLAHASSEE, Fla. (AP) – May 14, 2014 – Florida housing officials are reopening a program intended to help homeowners who owe far more on mortgages than their houses are worth.

The Florida Housing Finance Corporation announced this week that the online application for the Florida Hardest-Hit Fund Principal Reduction program (HHF) will re-open on Thursday beginning at 9:00 a.m.

Last year the program accepted 25,000 applications but only extended aid to more than 2,400 homeowners. Nearly $102 million out of an available $350 million has been spent.

Florida homeowners who have remained current on their mortgages but missed out on the opportunity to apply for the program last fall will be allowed to apply. Homeowners could get a break up to $50,000 if they qualify.

First-mortgage eligibility requirements

• Legal Florida and U.S. resident who lives in the home
• Current on the monthly mortgage payment or 60-plus days late on a first mortgage within the past 24 months
• Property purchased prior to Jan. 1, 2010
• Unpaid principal balance up to $350,000
• Loan-to-value ratio greater than 125%
• Total household income less than 140% of the area median income (AMI) as provided by HUD.

Mortgage Answers

The online application will be available at the official Florida HHF Principal Reduction website. Click here to view original article. 

SWFL Real Estate

We invite you to like us on facebook, follow us on twitter and connect with us on linkedin. We hope that you find our website to be a great source of information and visit often. Whether you are looking for Homes for SaleMoving Resources, or even Mortgage Information everything you need is right here.

We will always be available for personal service by phone or email, so feel free to contact us with questions any time! My offices are located on 2326 Del Prado Blvd. S., Cape Coral, FL 33990. You can reach me at 239-425-2503 or email me at Bob.Ashworth@gmail.com and you can visit my website at www.BobAshworth.com.

Like me on Facebook    Follow me on Twitter    View my profile on LinkedIn    Visit my blog

Bob Ashworth Remax Realty Team

Bob Ashworth
Realtor, CBR, CDPE
Your Real Estate Solutions Provider
239-425-2503
2326 Del Prado Blvd. S.
Cape Coral, FL 33990
Bob.Ashworth@gmail.com
www.BobAshworth.com
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House Vote to Limit Reverse Mortgages

Posted in Bob Ashworth, Bob Ashworth Realtor, Buying a Home, Buying a Home in SWFL, Cape Coral Real Estate, FHA Loans, FHA Mortgage, FHA Reverse Mortgage, FL Real Estate Market Update, Florida Housing Market, Housing Market Update, Mortgage Changes, Real Estate Advice, Reverse Mortgage, SWFL Market News, SWFL Real Estate, SWFL Reverse Mortgage

Reverse Mortgage Changes

House votes to limit reverse mortgage initial draw

The Federal Housing Administration (FHA) could limit the size of initial lump-sum payments that lenders offer reverse mortgage borrowers and require escrow accounts to cover taxes and insurance, under legislation the House passed Wednesday.

The bill, passed on a voice vote, is intended to help the government mortgage insurance agency work its way out of financial difficulty.

Reverse-Mortgage SWFLReverse mortgages allow people over 62 to borrow against their home equity, stay in their home and use the money for living expenses. They can take lump sum or monthly payments.

Borrowers still must pay property taxes and insurance. Sale proceeds from the home go to the lender when the borrower dies or moves out.

The measure allows the FHA to change the terms for new reverse mortgages that it insures, so the agency doesn’t have to follow the normal rule-making process that can stretch out months or even years.

“Hundreds of thousands of seniors currently utilize federal reverse home mortgages,” said Rep. Denny Heck, D-Wash., who sponsored the bill with Rep. Michael Fitzpatrick, R-Pa. “We need to act to stabilize the program.”

FHA Commissioner Carol Galante said the bill would “greatly assist” the FHA’s efforts to make the program financially sound while making sure that “seniors who have worked hard their entire lives can continue to enjoy their home throughout their retirement.”

The FHA sought the legislation after incurring big losses in paying out claims for defaulted reverse mortgages when homeowners taking out large lump sum payments later ran into financial problems, often aggravated by falling home prices.

The agency is struggling with more than $5 billion in reverse mortgage losses this year alone may need as much as a $1 billion rescue package from the Treasury to bolster its reserves.

Sen. Robert Menendez, D-N.J, has introduced a similar measure in the Senate.

In addition to limiting the first draw borrowers may receive and mandating escrow accounts, the FHA plans to require lenders to conduct financial assessments of borrowers.

The FHA is required by law to maintain reserves equal to 2 percent of the portfolio of loans it insures. It currently has about $32 billion in reserves.

The agency has until Sept. 30 to decide whether or not it will need the cash infusion from the Treasury, which does not require congressional approval and would be the first in the agency’s 79-year history.

It has raised mortgage insurance premiums this year and started requiring most new borrowers to carry the insurance through the 30-year life of their loans.

FHA Reverse Mortgage Vote

As a Southwest Florida Real Estate Agent it’s my job to educate my clients and help them get exactly what they want and make sure their best interest are being considered in every detail of the purchase. This blog is all about educating you and empowering you with all the industry news, information, tips and things to consider before buying or selling your home. If you found this article interesting and know someone else that might benefit from it please feel free to share!

SWFL Real Estate

We invite you to like us on facebook, follow us on twitter and connect with us on linkedin. We hope that you find our website to be a great source of information and visit often. Whether you are looking for Homes for SaleMoving Resources, or even Mortgage Information everything you need is right here.

We will always be available for personal service by phone or email, so feel free to contact us with questions any time! My offices are located on 2326 Del Prado Blvd. S., Cape Coral, FL 33990. You can reach me at 239-425-2503 or email me at Bob.Ashworth@gmail.com and you can visit my website at www.BobAshworth.com.

Like me on Facebook    Follow me on Twitter    View my profile on LinkedIn    Visit my blog

Bob Ashworth Remax Realty Team

Bob Ashworth
Realtor, CBR, CDPE
Your Real Estate Solutions Provider
239-425-2503
2326 Del Prado Blvd. S.
Cape Coral, FL 33990
Bob.Ashworth@gmail.com
www.BobAshworth.com
Like us on Facebook Follow us on Twitter View our profile on LinkedIn Visit our blog  Find us on Yelp

Review us on Yelp