STAY CONNECTED Facebook Twitter
SELECT LANGUAGE
Call us: 317.255.0062
APPLY NOW

GRANDVIEW LENDING INC.

OUR BLOG

If You Have the Cash, Buy a House

July 5th, 2011

We all know that the housing market is down. I don't think there is an adult in the United States that doesn't realize that! But this market is not bad news for some people.

I read an article on Forbes.com by Kerry Hannon, titled "Buy Now, Retire Later." Hanon stated that he believes this is the perfect time for "well-off boomers to buy marked-down properties in attractive resort areas they want to move to--or at least spend more time in--once they dial back their working hours."

I couldn't agree more with Hannon. If you have plans to own a home elsewhere in a few years when you're ready to retire, do consider buying it now.

Hannon cited the 2011National Association of Realtors Investment and Vacation Home Buyers Survey results as support for this thought process:

  • in 2010, vacation home buyers' average age was 49
  • 34% planned to use the house as a primary residence in the future (retirement)
  • the 2010 vacation home median sales price was $150,000, down 11% from 2009.

If you can pay cash, it's the best way to purchase your retirement home. A cash sale will find a better deal. In 2009, 29% of vacation home buyers paid cash. In 2010, that number was up to 40%.

Watch the market. Depending on where you plan to retire - or just purchase a vacation home - you might want to jump on it now. The majority of analysts are predicting another housing drop (approximately 5%) before the end of this year. But different areas of the country are not expected to bottom out until late in 2012, so know the market to make a strategic buying decision.

If you are one of the 60% who do not have the ability to pay cash for your retirement home, talk to a professional mortgage broker to help you with the transaction.

READ MORE

Know Your Debt to Income Ratio

June 28th, 2011

Income Debt ScaleA familiar scenario today is as follows: You have been waiting for the right time to buy a house and have decided this could be it. There are great opportunities for buyers; this could very well be a good time to invest in a house.

However, as the scenario continues, you've been hit by the economy as well and were out of work for a while. Possibly you had difficulty paying some bills and used your charge card(s) more than you normally do.

How do know if you're able to qualify? Know what your debt-to-income ratio is.

Debt-to-income ratio is a key factor that will be taken into consideration. This is a percentage based on how much your monthly bills (personal debt) are and the amount of your monthly income. The reason for this is to determine if you can handle more debt (your mortgage) and how much more.

To figure your debt-to-income ratio, total your your credit card minimum payments, your car payment(s), student loans, etc. (you are not required to include groceries or utilities). Next, add up what you expect your new mortgage payment to be. Divide the total debt by your total monthly income.

What's the 'magic' number?
The norm is to not exceed 36%. If your number is higher then 36%, you could be denied a loan or be granted a loan but charged higher interest.

Is this a 'no exceptions' number?
Absolutely not! There are lenders who will accept up to 41%. You won't know until you ask. Talk to a knowledgeable mortgage broker. In the meantime, do what you can to decrease your debt-to-income ratio by paying down as much debt as possible.

READ MORE

Backing Out of the Reverse Mortgage Business

June 21st, 2011

Reverse Mortgage BusinessI read an interesting article last week by Tara Siegel Bernard. She writes for the Mortgage section of the NY Times and covered a topic I've been giving some serious thought to lately. Reverse Mortgages. With the real estate market taking such a hit, there are many questions in a lot of people's minds about this type of mortgage and how the senior community is responding.

Will the seniors have the money in their homes that they expected, considering the dropping values in the housing market?

The biggest answer comes from the fact that the nation’s two biggest providers of reverse mortgages are not offering this loan any longer. According to Bernard, Wells Fargo and Bank of America combined for a total 32,058 reverse mortgages. That's 43% of the business! BOA chose to exit this business in February of this year, and Wells Fargo announced last Thursday that they are following BOA's lead.

So, what does this do to the seniors who are expecting to use this lifetime investment to fund some (or all) of their retirement needs?

With the two big players out of the game, so to speak, there are no heavy hitters. And that means it might be difficult to get a reverse mortgage.

Key components of the reverse mortgage

  • You must be over 62 years old.
  • If you have enough equity in your home, you can get a reverse mortgage.
  • The bank pays you out of the equity in your home.
  • You are required to continue to pay the taxes.
  • You are required to have homeowners insurance.
  • You are required to pay mortgage insurance premiums.

The issues

  • Home values are continuing to drop, which decreases the equity in the home.
  • Some have taken a reverse mortgage out to pay off the balance due.
  • Some now owe more than the house is worth.
  • Some aren't paying the taxes.
  • Some aren't able to afford the insurance, so have stopped paying for it.
  • Banks cannot decline anyone if they meet the age and equity requirement; thus, they are required to issue loans to those unable to pay the insurance and taxes.
  • Lenders are required to pay the tax and insurance payments on behalf of delinquent borrowers (with delinquencies, they submit a claim to HUD, which is responsible since it's guaranteeing the loan).

What's next?
While the economy continues to struggle, some action is being taken. HUD provided lenders with some tips to help the borrowers, such as repayment plans and requesting a mortgage counselor's assistance. If neither of these options work, the lender is required to start foreclosure proceedings.

HUD is coming up with a plan for lenders that enables them to determine a loan applicant's ability to make the payments or have a determined amount set aside to pay for the taxes and insurance. There is no indication when HUD will complete this plan.

Things have changed
In past years, prior to the recession, a reverse mortgage was as close to a guarantee as anything could be. The housing market was stable and growing. Equity would grow for these homeowners because the value of the house continued to increase. This meant there would continue to be funds available.

And now ...
Wells Fargo and BOA will continue to service their current reverse mortgage customers.
The reverse mortgage association will work to ensure that seniors who need these loans will still be able to get them.
Some anticipate increases in fees due to less competition, especially when the two key players have removed themselves from this market.
It's not just the seniors affected by this. Wells Fargo will be eliminating about 1,000 employees who are currently in the reverse mortgage offices. They are being offered other opportunities within the bank. Half of Bank of America's 600 employees have already been transferred to other positions within the bank.

Are you a senior, or know someone who is, and are interested in discussing your current mortgage? Do you want to prepare for a reverse mortgage? Grandview Lending has years of experience and are trusted mortgage brokers. We are happy to discuss any mortgage options with you.

READ MORE

What's Happening With HAMP

June 14th, 2011

PromisesWhen the Home Affordable Mortgage Program (HAMP) was introduced, it was designed to help those facing foreclosure to remain in their home. The general idea is to help eligible mortgagees receive a lower monthly payment (modified) that would be no more than 31% of their pre-tax income.

Participation in HAMP is voluntary, and most of America's largest banks chose to participate and signed contracts to do so. Incentives were to be distributed to mortgage servicers to assist an estimated 4 million people in need. According to an article in the New York Times, though, only less than 700,000 mods have been processed.

This government program, unfortunately, has not gone smoothly. The article states that:

  • The mortgage servicers weren't prepared to handle the amount of paperwork.
  • Homeowners complained that paperwork had been lost (more than once).
  • Trial modifications dragged on for months.
  • Banks are now facing a new assessment.

And now three of the nation’s largest banks are being penalized for subpar performance -Wells Fargo, Bank of America and JPMorgan Chase. An evaluation, with a scale of one to three, graded the financial institutions on if they had searched and found eligible homeowners, assessed the eligibility correctly and "maintained effective program management, governance and reporting."

This evaluation resulted in all three banks issuing separate statements. In general, they all said the same thing ... that they are committed to improve their processes and their customer service.

We'll keep an eye on this, with the hopes that those in need of assistance can indeed take advantage of the Home Affordable Mortgage Program and be able to remain in their homes. In today's market, this would be a win for everyone!

READ MORE

Pros and Cons of Conventional Mortgages

June 7th, 2011

nesteggOur previous post discussed the advantages and disadvantages of FHA mortgages. For comparison purposes, today we’ll cover a conventional mortgage.

Conventional mortgages are the most common way to finance a house; thus the word “conventional;” they are sometimes called conforming loans. They are any loan that is not insured or guaranteed by the federal government.

This type of loan is usually written as a fixed rate and for a 30-year term. However, more recently they are also being written with adjustable rates and for shorter (15 or 20 years) terms.

Thumbs up:

  • Loan fees can be negotiated.
  • Creative financing is an option.
  • Fixed rates guard against inflation (if the rates go up, yours will remain the same).
  • Higher immediate equity guards against a downturn in the housing market (as we are experiencing right now).

Thumbs down:

  • Interest rates can be set by the lender, so they could be higher than FHA rates.
  • Higher down payments are required.
  • Fixed rates can be a negative if you purchase your house when interest rates are high and then are unable to refinance when they drop.

These are just a few of the key points of a conventional mortgage. There are many other options that a mortgage broker can share with you. Be sure to work with an experienced broker so you will receive the best advice and learn all of your options before making your decision.

READ MORE

Advantages and Disadvantages of an FHA Loan

May 31st, 2011

fhaRealtors are busy! Busier than they've been in a long, long time. If you're a 1st-time buyer, this process can be quite overwhelming. There are so many options available, how do you know what mortgage is right for you?

We suggest you contact a reputable mortgage broker when you're first starting to go house-hunting. This way, you'll have time to review your options and even get pre-qualified.

 

To get you started, here are the key points to consider for an FHA loan.

Thumbs up:

  • FHA loans are available to anyone.
  • The down payment can be a gift.
  • Low down payments can be as small as 3 to 5%.
  • Less strict credit requirements.
  • Sellers pay part of the closing costs.
  • When you're ready to sell the house, these loans are assumable to a qualified buyer.

Thumbs down:

  • The loan size has a cap on how much you can borrow.
  • Requires a Mortgage Insurance Premium of 1.5%.
  • If you're the seller, you'll have to pay some of the closing costs.

These are just the key points of an FHA loan. There are many other options that a mortgage broker can share with you. Next post ... Convention Loans.

READ MORE

There Is More Than One PMI Option

May 24th, 2011

reverseMany home owners and home buyers are under the impression that there is only one PMI program. Though there are a few different options, they all provide one key element: it allows the customer to bring less of a down payment when buying a house without being required to have 20% down.

Most people think there is only one PMI opportunity. However, the lenders have a few options:

  • Traditional monthly, where the borrower pays a monthly amount.
  • Lender Paid Mortgage Premium (LPMI), which is when the lender pays the mortgage insurance (financed through a higher rate). With the FHA monthly premiums increasing (almost doubled over the last 24 months), in certain occasions using a LPMI is a cheaper route over the 1st 10 years of the loan. The borrower in turn may pay 1/2% higher in interest rate but it could still be much less than the traditional Mortgage Insurance.
  • FHA, which is government mortgage insurance (1% + monthly amount)
  • Hybrid Mortgage Insurance is like government mortgage insurance but used for conventional loans in which you pay some upfront, thus reducing your monthly amount. These can be cheaper than the government program. The advantage to this is that a buyer can actually have the seller pay for this cost in a seller concession. Sellers are doing more concessions in this market and the buyer can benefit more because the payment is lower than they would get by just asking for a lower sales price. Both Seller and Buyer win in this scenario. The seller keeps a higher price and the buyer gets a lower payment.

Any of these mortgage insurance options allows lenders to lend more Loan-To-Value (LTV) than they normally would. Also, under some circumstances with income, the mortgage insurance is still tax deductible just like mortgage interest is. To determine if you qualify, check with your CPA.

READ MORE

Mortgage Insurance or Term Life Insurance?

May 17th, 2011

You're hunting for a house, and among all the other decisions you have to make, there's the question of whether to purchase mortgage insurance (not PMI which is required by lenders) or a term life insurance policy. Either one will serve the purpose of being able to pay off the mortgage if you or the other person listed on the loan should die while there is still a balance due on your home loan. So, which is the best option?

Mortgage insurance (also known as creditor or mortgage life insurance) serves the purpose of helping the surviving partner/spouse by not having a mortgage to pay. If both people listed on the loan want this protection, both need to be insured. Typically, the mortgage life insurance is written only for a portion of the time of the loan (first 5 years) and then goes away. Additionally, the premium stays the same, but obviously, the balance decreases. This means you're paying the same amount each year for less coverage.
I believe it's in most peoples' best interest to purchase term life insurance instead of mortgage life insurance. The main reason is that it is less expensive. You can do a 20/30 year term insurance and get an amount equal to your mortgage. That way, no matter if you were to pass away, regardless of your mortgage principle balance, you would have the full benefit amount and not just the loan principle balance. In other words, your benefit will remain the same, not decrease according to the balance of your mortgage loan.

In addition to cost factors, the pay-out is also an item to consider. The mortgage insurance payment goes directly to the lender to pay off the balance of the loan. Life insurance payments go to the beneficiary, which means you can use the money where it's needed the most.

Another advantage of purchasing term life insurance instead of mortgage insurance is it discourages you from making extra payments on your loan. This is because as you reduce the balance of your principal, you are reducing the coverage amount.

There are other factors to consider. Before making a decision, discuss your particular situation with your trusted mortgage broker to determine which is the best scenario for you.

READ MORE

Possibly a Lifeline for Those Underwater With Their Mortgage

May 10th, 2011

Life Boat HouseIf you are underwater with your mortgage, or know someone who is, this could be the lifeline you're hoping for.

There is a program that has been quite successful in Pennsylvania that was designed to help unemployed workers make their mortgage payments and keep their house. According to the New York Federal Reserve Bank report, this program could be revamped as a federal progarm to help those who are underwater with their mortgage.

The State of Pennsylvania runs a bridge loan program and because of the careful screening of borrowers, there has been a high number of borrowers that were able to remain in their home while the seek new employment. The 80% success rate of borrowers being able to keep their homes proves the quality of this program.

Federal economists believe that the Home Homeowners' Emergency Mortgage Assistance Program (HEMAP) could be revised/restructured to help underwater borrowers by reducing the principal due on their mortgage.

The report states that currently, lenders are reluctant to write down the principal amount of the loan when the borrower is employed. "However, the incentive for the lender to write down principal increases significantly once a negative equity borrower experiences a job loss. Moreover, the potential to qualify the borrower for a HEMAP loan, which insures the borrower's ability to make the mortgage payments for at least two years, is an added incentive for the lender/servicer to agree to write down the mortgage balance."

The efficiency of this Pennsylvania program is what caught the Federal economists' attention. Though many people shy away from federally-run programs because of the red tape, the report concludes that, "lending by the government to a carefully screened group of unemployed borrowers can be a successful strategy to reduce foreclosures."

How could a program like this help? The process of writing down the principal balance would reduce the amount of the HEMAP loan as well as the monthly payment, thus providing a smaller loan amount due. And with a reduced monthly payment, it would be easier to afford this financial responsibility.

We'll keep you posted. In the meantime, if you have an immediate need, Grandview Lending will be happy to review your situation with you.

READ MORE

The Four Parts of the Mortgage Payment - PITI

May 3rd, 2011

House dollarsWhen considering how much of a mortgage payment you can afford, be sure to consider all four parts of your total monthly amount, not just the amount that you'll be borrowing. This four-part payment is referred to as PITI - Principal, Interest, Taxes and Insurance.

PRINCIPAL
This is the amount applied to the loan, which pays down the balance due.

INTEREST
Currently quite low, this percentage changes according to the economy. Based on the designated percentage rate, this is the cost charged for borrowing money.

TAXES
Once you learn what your property taxes will be, divide the number by 12. That will tell you how much you'll be adding to your monthly payment.

INSURANCE
It's best to insure your home for replacement value so you'll know if you have a total loss, you'll be able to rebuild the exact home again. Factors that determine the premiums can include the age of your home, where it's located (one issue is proximity to a fire station), materials used (brick or wood) and the size. The annual amount, divided by 12, will tell how much this will increase your monthly mortgage payment.

HOMEOWNERS ASSOCIATION DUES
Often your HOA bill is added to your escrow. If your Association annual fee is $600 per year, that will add $50 to your monthly house payment.

Obviously, it's important to take all four - Principal, Interest, Taxes and Insurance - into consideration when determining how of a house you can afford.

READ MORE
Affiliate LogoConfirmed Lender ZillowGreater Indianapolis Chamber of CommerceEqual Housing OpportunityNAMB The Association of Mortgage Professionals
Grandview Lending, Inc. BBB Business Review

OPERATING HOURS

MONDAY:
TUESDAY:
WEDNESDAY:
THURSDAY:
FRIDAY:
SATURDAY:
SUNDAY:
9:00 AM - 5:30 PM
9:00 AM - 5:30 PM
9:00 AM - 5:30 PM
9:00 AM - 5:30 PM
9:00 AM - 5:30 PM
9:00 AM - 1:00 PM
CLOSED

OTHER INFORMATION

ADDRESS
8445 Keystone Crossing Blvd,
Indianapolis, IN 46240
MAIN OFFICE
317.255.0062
TOLL FREE
866.690.4920
FAX
317-947-0500
EMAIL
info@ghlindy.com
Find Us On Google Maps

START YOUR APPLICATION

We partner with our clients, walking shoulder to shoulder with them through the financial maze that mortgage lending has become. We provide our clients with exceptional service and integrity which has become our hallmark. Every loan is different. So we listen to our clients to help them assess the impact their mortgage decisions have, not only today, but tomorrow.
APPLY NOW

Certificate of Excellence

Grandview Lending Certificates Of Excellence Mortgage Companies in Indianapolis Best Mortgage Refinance Companies in Indianapolis
© 2024 Grandview Lending Inc. NMLS# 124728

Terms of Use | Privacy Policy | TCPA Consent

map-markerphoneenvelope