Mel's Blog: Mortgage Update

Reverse Mortgages seem to be getting a lot of play in the media these days. Robert Wagner lends a lot of creditability and does a masterful job as front man for the Senior Lending Network who, on request, will send you out a rather seductive cd telling all about the product and people who have taken out reverse mortgages.

The reverse mortgage, sometimes called a Lifetime Mortgage or Home Equity Conversion Mortgage (HECM), was created some years ago by the Federal Housing Authority (FHA) for seniors 62 years or older. The loan is rather unique because it will allow an owner to convert a portion of the equity of the home into tax-free cash which can then be taken in one lump payment or in monthly payments for a period of time or for life.

The money derived…

I found it rather amusing the other day while reading my EarlyBird News Daily Briefing from the Florida Association of Realtors and looking at Mortgage Rates. The fist few line read as follows and I quote: "Rates on 30-year mortgages inched higher this week to 4.87 after two weeks of record lows, but still remained at attractive levels for borrowers looking to refinance their homes."

The key being attractive levels...are they kidding, it's almost like they're saying that the levels are getting close to being unattractive. Maybe the writer was too young to remember 18.5% back in the day. Heck having gone through owning a home back then, anything under 10% looks good to me.

Maybe it's just that we're all getting a bit spoiled these days!

The Federal Reserve cut its key federal funds rate to between 0% and 0.25% yesterday, from a rate that was already the lowest in over half a century to help battle the financial crisis. Today mortgage rates on a 30-year fixed and others dropped again to below 5%.

A good friend of mine walked into Wells Fargo, a bank with plenty of ready money to loan, and filled out a mortgage application to re-finance his $100,000 mortgage which is a 5/1 ARM getting ready to adjust in March 2009. He has virtually no debt with the exception of his mortgage, $40,000 cash in the bank, a stock account worth maybe $5,000 and his home is worth about $400,000 in today's market. He is self-employed and has had several bad years, but still managed to show $80,000 income over that…