Category: Finance

Can Better Technology Help Improve HUD’s HECM Program?

If you’re tapping into your home equity through a reverse mortgage, you have probably heard by now about the new reverse mortgage “financial assessment” that is soon to be part of the process of getting a government-insured Home Equity Conversion Mortgage (HECM).

How the HECM Calculation Works

According to ARLO: “The Principal Limit or loan amount you can receive as stated above is dependent on several factors. Borrowers ages, interest rates, property values or HUD lending limit whichever is less on the HUD Home Equity Conversion Mortgage (HEMC or “Heck-um”) and these items as well on the jumbo programs but then the program parameters instead of the HUD lending limits on the jumbo or proprietary programs.”

New Financial Assessment Rules

The financial assessment, which is like the assessment that a “forward” loan originator conducts for traditional mortgage borrowers, is being introduced this year as an extra safeguard for borrowers.

On a basic level, the financial assessment takes a detailed look at your financial situation including your income, debts, credit history and other financial health measures, to determine that you’ll still be able to pay for your mandatory obligations after you get a reverse mortgage.

Under the terms of all HECM reverse mortgages, the borrower must continue to pay property tax and homeowners insurance premiums, for example, and the financial assessment’s goal is to make sure that as a borrower, you’ll still be willing and able to meet those property charges.

But the financial assessment is not black and white. Your lender will collect information from you, ask some follow-up questions, and make one of a few determinations based on the assessment:

Yes, you qualify

No, you don’t qualify

Maybe, you might qualify

If you fall into the “maybe” category, there’s one tool that can help lead to your qualification. It’s called a set-aside.

Software Framework to Force Set-aside

Think of a reverse mortgage set-aside as a designated pool of money that is budgeted upfront for your expenses down the road. If you have had a traditional mortgage, you might have escrowed, or set aside, funds for your future property taxes.

The reverse mortgage set-aside is similar, but if you require a set-aside, it will be calculated based on how much you are likely to need for the rest of your life.

Do I need a set-aside?

No, if: Your credit history and property charge payment history are deemed satisfactory, and your residual income as determined by the lender meets the standard. (You can also opt for a set aside if you choose, on a voluntary basis, and will be held to this set-aside for the life of the loan.)

Yes, if:

You do not have satisfactory credit history and/or

You do not have a satisfactory property charge payment history, and/or

You do not have adequate residual income

How does the lender calculate the set-aside?

If you require a set-aside, your lender follows a formula to determine the amount you’ll need. That formula includes:

The sum of the following:

– Current property taxes

– Current homeowners insurance premiums

– Flood insurance premiums

A factor reflecting any increase in rates of tax and insurance

The expected mortgage insurance premium rate both for the upfront MIP and the ongoing, annual MIP

Life expectancy of the youngest borrower

Partial versus fully funded set-asides

Depending on the results of your financial assessment, your lender will determine whether you require a fully funded, or partially funded set-aside. Ask your lender if one of these scenarios applies to your situation and how it’s likely to impact the amount you can receive from your loan.

HUD Technology Problem:

Information Technology (IT) plays a critical role in the Department of Housing and Urban Development’s (HUD) ability to carry out its mission of encouraging home ownership and spurring community development. Each year the complexity of the IT environment grows, and making sound IT investment decisions requires greater amounts of information.

OpenLab Solutions:

Improve HECM actuarial Software

Improve Post Closing Servicing Software

10 Myths About Loans And Personal Finance, Debunked

The loan industry has been going through a lot of changes lately, powered by the advent of AI, FinTech and machine learning. Moving further and further away from traditional banks, loans are fueling a new financial revolution and put personal finance in a whole new perspective. In fact, the process of applying and getting approval for a loan has become so dramatically different that it has almost nothing in common with the experience the previous generations had.

Banks and financial institutions have more millennial clients, but their expectations regarding the lending process are often based on myths and misconceptions passed on from Gen X and Baby Boomers, for whom loans were anything but simple. At the same time, they don’t know how exactly to approach personal finance, because the practices that worked a few decades ago are no longer relevant or efficient in today’s climate. According to recent surveys, a growing percentage of millennials have no savings whatsoever and don’t know how they could manage in the event of an emergency. Most of these problems stem from a lack of understanding of personal finance, so it’s time to debunk the biggest myths on this topic and learn how to take informed financial decisions.

Myth #1: You can’t get a loan if you have no credit or bad credit

While this used to be true until the late 2000s, loan acceptance criteria have changed a lot after the economic crisis. Thanks to the skyrocketing evolution of AI and FinTech, lenders now have at their disposal advanced tools that help them determine fiscal risk without relying so much on the credit score and weighing in other factors as well, such as spending patterns. Today, your loan application can be approved even if you’ve just graduated college, are unemployed or have bad credit and there are many flexible financing solutions that can help you get out of a tight situation.

Myth #2: Only banks offer loans

Banks may be the traditional option, but they’re not the only ones who offer loans. In fact, the economic crisis has favored the advent of independent lenders and disruptive FinTech startups that revolutionize the lending process and offer flexible online solutions.

Myth #3: Loan application and loan approval take months

In the past, loan applications had to be assessed manually and, in lack of today’s modern tools, applicant background check could take weeks. Now, thanks to Big Data, lenders can assess applications very quickly and the average waiting time is no longer than 24 hours. This gives applicants enough time to look for other solutions if their request is denied. Additionally, thanks to aggregators and online resources like LoanStar, applicants can do their research in advance, comparing options to find out which loan is right for their situation.

Myth #4: You can’t apply for a loan if you’re self-employed

Contrary to popular belief, freelancers are no longer the high-risk category they once were. In the U.S., there were 57.3 million freelancers in 2017 and, according to an INACO analysis, there could be more freelancers than employees by 2050. Self-employment can be a lucrative career choice that shouldn’t raise a red flag, and lenders have come to
understand that.

Myth #5: Lenders have poor customer support

This is another myth perpetuated by banks that no longer applies to the modern lending market. As competition is increasing, lenders are going the extra mile to help potential clients with personalized financial advice and advanced chatbots offer instant 24/7 support for more questions than you might think.

Myth #6: You need a large upfront deposit to get a loan

Loans with 20% deposits are not accessible for everyone, which is why more and more lenders are including options with as low as 5% deposit. Some categories, such as borrowers with stable jobs and high salaries, can even be eligible for loans with no deposit.

Myth #7: You should get a loan from your current bank

Although a loan from the bank where you opened a debit account may sound like a comfortable idea, it is often very limiting, especially if you are thinking about a long-term loan, such as a mortgage. Instead of going with your first option, you should compare the offers of various lenders and take advantage of loan comparison and calculator tools.

Myth #8: You should start saving when you earn more money

Most Millennials are aware of the importance of savings, but a worrying percentage of the assume that they should open a savings account only when they have a high-paying job. In reality, it is never too late for savings and the smallest amount deposited in your account will matter in the long run.

Myth #9: You shouldn’t increase loan monthly payments

Many borrowers would like to increase their monthly payments but fear that doing so might put their financial stability at risk, but, if you know that you can afford that amount, then you shouldn’t stick to small installments. Increasing your monthly payment can actually be a good thing, because it helps you pay off the loan faster.

Myth #10: You should pay off high interest debt first

Getting rid if the highest interest loan is the first solution that comes to mind when paying off debt, but it doesn’t always work, according to financial advisors. It might actually have the opposite effect, especially if you don’t have a high income. To avoid being overwhelmed by multiple sources of debt, it would be a better idea to pay off all your smaller interest loans first and then focus on the larger debts, such as the mortgage or the student loan.

7 Important Financial Steps Every New Freshman Needs to Take

When new freshman move on campus, they’re usually more focused on conventional aspects of college like going to class, studying, and partying with your friends. But this is also a kind of training ground for adulthood; for many freshmen, this is the first time you’ll be away from home, living on your own, which means you’ll need to take control of your finances and spending habits if you want to make things work.

On top of that, these are pivotal years that could dictate the habits you carry for decades to come. Mastering your finances while you’re in your late teens and early twenties will give a serious leg up on financial management for the rest of your life.

The problem is, most freshmen don’t know where to start.

The Most Important Steps to Take Early

These are some of the most important steps you can take now:

1. Understand and compensate for your tuition costs. First, don’t choose a school blindly, and think carefully about the tuition demands for your top universities. The average private college costs more than $34,000 a year, while state residents at public colleges pay an average closer to $10,000. After 4 years, that’s $136,000 and $40,000, respectively. Depending on your degree program and the college you’re attending, that may be worth it—but you should also work actively to compensate for those costs by looking for grants, scholarships, and other forms of assistance. Filing for FAFSA may also help significantly.

2. Create a budget. Next, when you’re living on campus, you’ll need to prepare a strict budget. Depending on how you’re paying for college, you might have room and board built in, but you’ll still need to monitor your spending on other things, like school supplies, entertainment, and extras. This is the perfect time to create your first budget—a blueprint for how much money you have coming in, and how much you’re “allowed” to spend each month. Aim to end each month with at least a little bit of cash left over.

3. Prepare an emergency fund. Every young person should know how to build and maintain an emergency fund . This pocket of extra money should be able to last you at least a few months if your primary income source runs out, or cover a major unexpected expense (like a hospital bill). It may take several months of saving to build up your emergency fund, but if it isn’t there when you need it, it could put you in debt.

4. Establish a source of income. In an ideal world, you’d be able to devote 100 percent of your time to going to class and studying, but getting at least a part-time job, or a side gig while you’re in college is beneficial to your long-term financial health. Not only will it help you start compensating for the costs of college, but it will also get you used to receiving a steady paycheck, giving you practice on how to manage that paycheck.

5. Open and manage a credit card. Even if you don’t plan on using it often, it’s a good idea to open at least one credit card. Credit cards are an easy way to build up your credit score (something many millennials overlook), and their downsides only kick in if you allow your debt to grow beyond “manageable” territory. It’s also important to have for emergencies, and is a good way to build a strong habit of paying your bills on time.

6. Have a plan to pay off your student loans. Most students don’t like to think of the harsh realities they’ll face after graduating—which often include paying off a massive amount of student debt. But the sooner you start thinking about this, the better. How much will your minimum monthly payments be? How will you be able to afford them? How can you save more, so you can pay down that debt even faster?

7. For bonus points, open a Roth IRA. If you have some extra money to save and you’re interested in planning for your long-term future (i.e., retirement), consider opening a Roth IRA. A Roth IRA is a type of account with special tax perks, since it’s used to help people save for retirement. Any money you put into this account is allowed to grow completely tax-free, which you’ll soon realize is incredibly valuable, especially if you start while young to reap the power of compound interest.

Immersing Yourself in Financial Knowledge

It’s hard to cultivate good habits and learn financial lessons all by yourself. Fortunately, in college, you’re in a perfect position to immerse yourself in financial knowledge. Consider taking classes on economics or personal finance if your college offers them, and talk to your professors or other students who seem to be more experienced than you. The more you confront what you don’t know, and the more open you are to learning, the faster you’ll gain mastery over your financial habits.

Foundation Of Success In Business And Life

It is important for us to be successful in implementing our life plans, in solving the tasks we face, in achieving goals that are meaningful to us. Success in our time is perceived as one of the most attractive aspects of life.

what does it actually mean?

It is precisely achieved – that is, the success is the one who has the right to consider himself the “author” of the result. However, as long as a person does something, he cannot be completely sure of ultimate success, there is always uncertainty: in spite of all efforts, he can still fail.

So, we emphasize two points that are important for understanding success:

The person himself determines whether any particular result will be a success or a failure for him.

A person can only strive for success: efforts by themselves do not always lead to success (the principle of a person’s inadequate efforts to achieve success).

The first point – “the definition of success” – refers exclusively to the person.

The second point – “the path to success” – along with our intensive and purposeful efforts, also requires a certain amount of luck, luck, good fortune. A believer would probably say that the blessing or mercy of Allah is needed. Thus, success is a derivative of two components, the coincidence of effort and success.

Tips and Foundation for successful life and business:

1. Build a business from the heart.

When a person wants to earn as much as possible, without thinking about what he will give to the world in return, a business has no chance to survive for long. The law of conservation of energy also works here. If you want to get a lot, think about what benefits you will bring to humanity.

2. Determine the goal.

Why do you need your own business? What do you get by doing it? What is your strategic goal? Answers to these questions will pave the right route to finding out the secret of success. And for the success in business you need to Hire business plan writer who can make a strategy and plan to achieve the goal.

3. Be unique.

Learn to think differently from the majority and be different. The surest way to do this is to be yourself, or rather the best version of yourself. You will succeed!

4. Improve your skills.

Many pay true professionals in their field. One day you can make money by chance, but only the best people in their field have a high income. How to become a rich and successful person? The advice is simple: pump your competencies, be cooler than the rest of what you do.

5. Create the right environment.

People in your circle influence thinking more than you can imagine. Tips for successful people on how to become successful are full of recommendations for communicating with those you admire.

6. Act.

What makes a successful person out of the gray mass? The ability to quickly move from thought to action. This does not mean that you need to rush headlong into everything that dreamed at night and seemed ingenious. This means that you need to clearly think out and write down the strategy and tactics, and then do the maximum possible to achieve your goal.

7. Value your time.

Time is an irreplaceable resource. In any list of quotes about success, you will definitely find business advice and have to hire the business plan writer to catch trends and bring ideas to life faster than others do.

8. Be confident.

If you have problems with it, admit it right now and be like a psychologist before starting your entrepreneurial path. If you lack self-confidence, it will be so difficult for you to experience the first difficulties that will inevitably arise, which is likely to go the distance. Do not expose yourself to unnecessary stress and pump personal qualities in advance.

9. Know that you are no worse than others.

Remember the saying “No gods burn pots”? When it is terrible to approach something very desirable, it always seems that we are worse than those who are close to perfection in this matter. In fact, this is only partly true: the newcomer simply has less experience. But this is only for now. To work it out is quite a real task, and not a transcendental dream. Business tips from successful people to help you: you too can achieve everything that others achieve

10. After falling, get up and follow on.

The guru of entrepreneurship and marketing would not give business advice for nothing. To admit mistakes is difficult, but necessary. The one who does nothing is not mistaken. If something didn’t work out the first time,
it’s sure to happen from the fifth.

Thinking about how to succeed?

Tips from successful people will tell the right direction of thought, but they will not stand your fate for you. Learn, be inspired by examples of successful people and build your success according to your own rules!

Steve Jobs said:

“Learn from your mistakes, admit them and move on.”

Top Benefits Of Same Day Loans

Same day loans are often considered dicey as there are a few risks associated with them however these can prove to be of great help for borrowing instant cash. Furthermore, here are some of the top benefits associated with the same day loans:

They offer immediate access to cash

Same day loans are meant for short-term and are immediately accessible when you need the funds. Thus, these are ideal in the case of emergencies. With these, the funds get deposited into your bank account instantly. You can pay for the smallest of things with the same day loans such as your home rent, car repair, medicines, etc. As you get the loans on time, you can stay assured about during the financial burden.

It offers ease of convenience

The entire process and communication that is involved while applying for the payday loans are conducted online, and you are spared from booking an appointment with the loan officer or call the lender to get cash. You can send your application from wherever you are which makes it convenient for you and saves you from meetings with your loan officer. Another advantage of the payday loan is that you get your credit in cash which is not the case with a credit card as you can only purchase goods or pay for services with it.

Payday loans are not meant for a specific purpose and you can use them to pay anything right from your electricity bill to your car repairs. The paperwork involved with the same day loans is minimal and if in case a lender asks you about the proof of your income, you can fax them the required documents.

You just need to meet some basic requirements

Payday loans are accessible and you just need to meet some of the basic requirements in order to become eligible for the same. A stable income is essential if you are applying for this kind of loan so that you can show the lender a proof if they ask you and along with that you would need to have an active checking account and you should be a permanent resident of your state. On the other hand, traditional loans might require collateral.

You would also be required to show an age proof as payday loans can only be availed by people above 18 years of age. There are some lenders who might ask you for your credit score when you apply for a personal loan and if you are a poor rating on the same, you might not be qualified for a bank loan. However, if you are able to show a proof that you can pay the loan even if you have a bad credit, you would be able to enjoy such benefits. Your current financial situation would be checked to make you eligible for the loans.

They help in protecting your credit rating

The short repayment period for the payday loan is an advantage as you get to protect your credit rating. In case of an installment loan, you would get one or two years to repay the loan, and during this period if you face any unforeseen situation, you might lose on giving your installments which might add up to your debt. This might make you faulty in terms of repayment of your loan which might worsen your credit score. There might even be a case of penalty and fine and if you use a credit card, you would need to protect your credit ration. With a credit card in hand, there are times when the consumers do not have control over the amount of money they spend and thus it has a negative point in this matter.

Payday loan, on the other hand, helps in managing your financial issues and saving money as you can access the cash within a few hours time even with bad credit and no collateral. You do not even have to specific about the purpose of expenditure in case of the payday loan. But there is a legal time bound within which you need to pay back the borrowed amount if you want to avoid lawsuits and penalties. There are laws which do not allow the extension of dates of the loan payment and thus you need to be careful in this matter.

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