Reverse Mortgages Pros And Cons » Reverse Mortgages

About Reverse Mortgages – Learning The Basics

admin — Mon, 18 Jan 2010 20:31:56 +0000

Reverse Mortgages, sometimes referred to as a Lifetime Mortgage, can offer financial help to senior citizens after they have retired. But learning about reverse mortgages is critical before you decide if they are for you.

These mortgages are made available to individuals 62 years old or older to free up a bit of of the equity in their real estate to use as they desire. This can be carried out either through a lump sum payment or through regular payments. There is also a third alternative and that is to reserve the money as a home equity line of credit.

Most any homeowner that are 62 can qualify for a reverse mortgage. A job is not needed because the recipient will not be making payments. In the identical respect, creditworthiness is not necessary because the equity is already built up in the dwelling and is not being repaid until the house is sold or the owner is deceased.

Reverse mortgages are growing in popularity as retirees are seeking opportunities to complement their retirement income. A reverse mortgage gets its name from the actions of taking or reversing the equity in the home rather than building the equity.

Here are a few of the benefits to having a reverse mortgage:

*Reverse mortgages give additional financial security to seniors after they have retired. The funds are also available for unexpected expenses, medical expenses, house upgrades, a vacation or anything else that may be necessary or desired.

*There are no payments required while you are residing in the home.

*There are no revenue taxes paid on the proceeds of a reverse mortgage. A reverse mortgage will not interfere with Social Security or Medicare.

*You will keep ownership of your house as well as preserving your independence.

* Reverse mortgages are insured by the FHA (Federal Housing Authority) or guaranteed by Fannie Mae.

*Most important, reverse mortgages give a monthly income after retirement offering financial independence and peace of mind.

There are a lot of reasons to consider a reverse mortgage, but ultimately you have to come to a decision if this is what is in your best financial interests. Independent credit counseling is required before a reverse mortgage is granted to ensure that the applicants fully recognize everything that is involved in a reverse mortgage.

Finding all about a reverse mortgage can be done by contacting an honest lender. They will answer all your questions and explain alternatives that may also work for you. A reverse mortgage can help you unlock the equity that you have in your home and help you get financial security.

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About Reverse Mortgages – Learning The Basics is from Reverse Mortgages Pros And Cons

Hecm Reverse Mortgage

admin — Fri, 27 Nov 2009 18:25:18 +0000

trinity reverse asked:

Almost everyone knows what a mortgage loan is, and a good number of those people are familiar with most of the mortgage plans available. It’s a simple concept that aids millions of Americans in financing new houses by taking out a loan and paying it back in increments. However, there aren’t many people that have heard about reverse mortgage loans, this is because reverse mortgage loans aren’t for just anybody, they’re for people experiencing their golden years and who are 62 years of age or older. Yet, with any kind of mortgage, even a reverse mortgage, people need to be careful as to what service they go to. Services that offer mortgages, especially reverse mortgages, need to be reputable, they need to have been in business for a long time and have a good track record, and perhaps most importantly the lenders employed by the company must be honest, forthright, and concerned about their clients’ welfare.

HECM Reverse Mortgage (HECM) is one such reputable product, which is linked by a reputable company. HECM is the oldest and most popular reverse mortgage product, and it makes up for 90 percent of the total market, now that’s a good reputation! HECM has been available since 1989 and is insured by the federal government itself through an equally as reputable system called the Federal Housing Administration (FHS), which is part of the U.S. Department of Housing and Urban Development. Now, that is a lot of long names, and a lot of acronyms to follow, but the only thing you as a senior citizen need to remember is HECM.

With a HECM Reverse Mortgage the older you are, the more money you are eligible to receive with your reverse mortgage loan. This reverse mortgage is a mortgage where the lender pays the borrower (homeowner) instead of the other way around. Lenders pay the homeowner in One Lump Sums, monthly payments, periodic credit lines, or a combination thereof. There is no risk of losing the house in a foreclosure like there is with a regular mortgage, and the money received can be used according the recipient’s own discretion. The way a HECM loan is paid back is through the sell of the home. The home is automatically sold if the homeowner becomes deceased (unless the heir(s) wish differently) if the homeowner is absent for more than 12 months or has to move somewhere else in order to receive care with a family member or in a nursing home, or if the homeowner decides to sell. If the house sells for higher than the loan amount due then the existing homeowner or heir(s) receives the difference. In contrast, if the house sells lower than the loan amount due, then the insurance company typically pays the difference.

HECM is perfect for senior citizens who don’t want to worry about pesky monthly mortgage fees, and want to receive money instead. Also, if you’re still confused, applicants of a HECM are required by law to attend a financial counselor with no cost to the applicant; the counseling service will provide more information into HECM and the service is paid for by the Federal Government.

For more information please visit our website on Reverse Mortgage

Reverse Mortgage Information

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All you Need to Know About the Aarp Reverse Mortgage Page

admin — Mon, 09 Nov 2009 13:24:43 +0000

Terry Edwards asked:

Do you wonder if a reverse mortgage is the right choice for you? Do you know exactly what a reverse mortgage is? Do you know how to find out more information on a reverse mortgage? These are just a few questions that a lot of people may have about reverse mortgages. The good news is that these questions and more can be answered through the AARP reverse mortgage information page. This webpage can give you the tools that you need to make an informed decision on reverse mortgages. Read on to discover the kind of useful information that you will find on the AARP reverse mortgage page.

The very first thing you will discover is the definition of a reverse mortgage. You should read this carefully so that you are fully aware of what a reverse mortgage is. The more informed that you become the easier it will be to make an intelligent decision. Don’t depend on other people to tell you what you should do, research for yourself.

Another thing that you will find on the AARP reverse mortgage page is an explanation of how a reverse mortgage works. This is a great explanation that is written in plain English and very easy to understand. This will help you become aware of what you are getting into when you apply for a reverse mortgage.

Do you wonder if you are eligible for a reverse mortgage? The AARP reverse mortgage page will give you the information that you need to find out if you are eligible. It will also tell you if your type of home is not eligible. Having this information will save you a lot of time and stress.

A great feature on the AARP reverse mortgage page is the explanation of how you can receive the reverse mortgage payment. Some programs will give you a lump sum, some will give you a monthly cash advance and some programs are set up to do a credit line where you decide how money you want each month. It also will tell you which program gives the largest cash advances.

Be careful when choosing which reverse mortgage program to work with. Some programs will tell you what you can do with the money. For example, some federal programs will only allow you to use the money for home repairs.

The AARP reverse mortgage page will also give you good advice on what you will pay when you get a reverse mortgage. This page will reveal to you who the cheapest lender of a reverse mortgage is in the private sector. Read this carefully to save yourself a ton of money.

As you can see, there is a ton of helpful information on the AARP reverse mortgage webpage. If you are thinking about getting reverse mortgage, study all the information on this page before you make your decision. It will save you a ton of money in the long run.

Reverse Mortgage Explained

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Reverse Mortgages = Journalistic Opportunism

admin — Thu, 05 Nov 2009 22:02:00 +0000

Written By:Michael Branson

On July 5th 2008, Robert Powell of the Wall Street Journal online posted an article which quotes the Chief Executive of The Financial Industry Regulatory Authority (FINRA), Mary Schapiro, entitled Three Warnings for Hard Times: Beware of Strategies That Put Nest Egg at Risk.

I really must admit that when I first read the title I thought, Here we go again, another article by another journalist knocking reverse mortgages. As I started to read and I saw the quoted expert, and as an individual who has been a mortgage banker for 32 years and has worked closely with many Wall Street investment firms for that last 10, I started to think that the Financial Industry Regulatory Authority had to be a recent attempt at stopping the bleeding as obviously there was no one of any authority who had truly been regulating the financial industry for a while!

I remember thinking that securities firms such as Bear Stearns, Lehman Brothers, Goldman Sachs and countless other securities firms that engaged in the activities resulting in the sub-prime and Alt A debacle that has left this country in the worst credit crunch in most working peoples lives could have been avoided had a Regulatory Agency taken just a slight glance at the product these companies were encouraging lenders to fund and then securitizing to sell to unknowing investors.

I thought, this is the expert source Mr. Powell uses to spread yet one more wave of panic about reverse mortgages through the market place? Let’s face it, reverse mortgages are a popular subject these days and anything having to do with people’s financial situation is also newsworthy so I decided to find out exactly what FINRA was all about and what they actually said.

First I went to the FINRA website and did some research on Mary Schapiro, the individual quoted in the article. Ms. Schapiro has a very impressive resume. So after reading the article and seeing the excellent credentials of the Chief Executive of FINRA, Mary Schapiro, I wondered, how could the article be so misleading? Because the first bullet point in the article says that if you take a lump sum, it could affect you or your spouse’s eligibility for some programs such as Medicaid and left the statement there. That’s a true statement under some circumstances.

If you aren’t paying off an existing mortgage with that lump sum and you have a large amount of cash, then it could affect some need-based programs. But they don’t tell you that if you have an existing payment that you replace and there is no cash left over, that lump sum has no effect on programs but could permanently end the burden of monthly mortgage payments and improve the borrower’s quality of life.

They don’t tell you that there are many options to obtain the money which helps borrowers with their lives if they are struggling, other than the lump-sum option. They don’t tell you that every borrower is encouraged to seek competent financial advice pertaining to their circumstances and are required to go through HUD approved counseling before any services can be ordered on their behalf.

In the FINRA announcement of June 26, 2008, FINRA states that Whether the decision is right for you may ultimately depend on a number of factors your health, your spouse’s health, other sources of income, the reason you’re tapping your home equity, when you do it, and how wisely you use your home proceeds. Then they warn that borrowers should also beware of broader financial impacts of the decision.

All sound advice but not exactly the reverse drawback that the author throws out. Next, the author, Robert Powell tells you depending on the laws of your state, you may not have the same protection against creditors. Talk about vague threats! How many states will this affect and what creditors? What type of debts, and again, are they referring to excess cash if the borrower has a large amount of unpaid debts and they take a large sum of cash, put it in the bank and then creditors seek payment? Are they referring to potential future creditors? This is a terrible way to put fear into the hearts of senior borrowers.

I didn’t know to which specific creditors the author, was referring but with my admittedly limited legal knowledge, I knew most creditors can seek judgments which can be filed against properties anyway so this confused me. The FINRA announcement specifically states that depending on the laws of your state, a reverse mortgage may not enjoy the same home-equity protection and that there may be a loss of a homestead exclusion. As of this writing, I am unaware of any such losses and am planning on researching this further as neither FINRA nor the author used any state as an example of where this could possibly happen.

Powell’s third and final drawback is that a reverse mortgage isn’t the right choice if you want to leave the house to your heirs. WHAT?! A reverse mortgage does not affect what you do with the property after death. Heirs still inherit the property according to the wishes of the property owner.

If Mr. Powell is trying to state that because the senior homeowner will be using a portion of the equity for their daily lives then, it is true. A reverse mortgage is known as a reverse mortgage because it operates in a reverse manner as a normal, forward mortgage it is a rising debt falling equity loan as opposed to the typical rising equity falling debt loan. What this means is that the balance does rise on a reverse mortgage, but those funds are utilized by the individuals who were responsible for paying down that loan in the first place to allow them to age in dignity and in place.

This statement did come directly from the FINRA announcement so I think that both the author and FINRA should have explained that there is no problem leaving the home to your heirs, if it is more important to leave a property that is free and clear of a mortgage encumbrance than for the senior homeowner to extract equity for living expenses, then by all means, I would not encourage the borrower to take out a mortgage against the property. But then again, I would not encourage any borrower to take out any loan they did not need, reverse mortgage or otherwise.

Obviously neither Mr. Powell nor FINRA has ever sat across a table from a borrower or a couple who couldn’t meet their monthly obligations during these times of rising costs, they never talked to borrowers who had $ 25 left in their account on the fifteenth of the month and had to figure out a way to make ends meet for the remainder of the month until they received their next check, and they certainly never sat down with senior borrowers talked into an option arm by an unscrupulous lender (selling to poorly supervised Wall Street Securities Firms) who are now losing their home because they can’t make the new rising payments. We have had more than a dozen such cases in our small company alone, sadly, 5 of which we were unable to help. As a mortgage banker you could say that I have a stake in making sure that people continue to want to take out reverse mortgages.

But as a man who has sat across the table from senior borrowers who have welled up with tears when you have told them that they were done and never had to make another payment for as long as they lived in their home, it’s aggravating to read accounts like this from those who haven’t been there and send out a message that could confuse or scare off someone who could really use this instrument with a half-truth.

As a person who has seen borrowers who did not qualify for a reverse mortgage because they owed too much due to falling values, etc, and watched them weep openly when you had to tell them they could not get the reverse mortgage, it’s infuriating to read someone flippantly suggest that you might want to downsize in a market where real estate is not selling and go rent which indicates to a senior borrower who has lived in their home sometimes for 20, 30, 40 years or more that you think they can just pick up and move and give up the home they love and where they feel comfortable.

And yes, reverse mortgages are expensive loans and not for everyone, But has anyone figured out the costs of selling a home and relocating lately, not to mention what it does to you psychologically, especially when it’s something you’re forced to do? And finally, it just makes me sad when I see an article where people don’t even consider the value of the senior borrower and their ability to age in place and dignity.

These people worked hard for their homes and I do agree with the premise that a reverse mortgage is not right for all people. The last thing I would want to see is someone getting a loan, any loan, that is not right for them. We counsel borrowers on the costs of reverse mortgages every day and if Mr. Powell wants to suggest that family members stay involved with senior borrowers contemplating a reverse mortgage due to the costs involved and the other financial implications, I would be the first to applaud his efforts.

When you read the entire FINRA announcement, it doesn’t say not to get a reverse mortgage, it says that the bottom line is that all options including downsizing, selling and renting, consolidating debts, looking into other government assistance programs and seeking help from children or other heirs may be less expensive or lower cost ways to address your needs.

I would agree with the FINRA assessment, but the senior borrowers with whom I’ve worked loved their homes and don’t want to move and shouldn’t have to if they’ve worked all their lives to build up the equity and that equity can provide a way for them to stay in the home. Many have had their children living with them because they themselves have been forced to move in with their senior parents and often are not in a position to help with anything in this economy.

I just **** to see people given wrong or half the facts to support a journalistic position that is popular at the time.

Michael Branson

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Fha Reverse Mortgage Lender

admin — Sat, 10 Oct 2009 10:30:43 +0000

trinity reverse asked:

The Federal Housing Administration, which is also known more commonly as the FHA, is a group that has been aiding people in getting a home since 1934. The FHA’s job is to administer the government home loan insurance program, which allows for homebuyers to qualify for a home loan, is an organization that lenders must affiliate with. In addition to offering mortgage loan insurance, FHA also offers insurance for what is called a Reverse Mortgage Loan. Reverse mortgages are only available to senior citizens that are 62 years of age or older.

Reverse mortgages are mortgage loans that a person who already owns a home can take out in order to refinance that home. In addition, reverse mortgage loans can also be taken out for senior citizens that are looking for a new home to purchase, but do not want to pay monthly mortgage bills. The way a reverse mortgage works is very different from the way a traditional mortgage works; reverse mortgages do not require the borrowers (homeowners) to pay back the loan. In fact, reverse mortgage lenders actually pay the borrowers (homeowners) instead. Lenders pay in a variety ways, the most common of which are One Lump Sums, monthly payments, periodic lines of credit, or a combination thereof. The money that the homeowner receives from the lender is un-taxed, and the recipient of the money can do whatever he or she wants with funds. This can help homeowners who already have a home and have fully paid off their mortgage, or are almost done paying off their mortgage, to receive extra money for retirement without having to work, and it’s tax-free. Also, this can help potential homeowners who are senior citizens by getting rid of the need to pay off monthly mortgage bills, and allows the potential new homeowner to receive money instead.

However, even though reverse mortgages loans allow borrowers to receive money, it is still considered a loan. The homeowner is not in risk of loosing his or her house, and the homeowner does not need to pay back the money later. Instead, the money is paid back through the proceeds generated from the house sale. The house can only be sold if the homeowner wishes to, if the homeowner becomes deceased, or if the homeowner is absent for more than 12 months. When the house is sold, the FHA Reverse Mortgage Lender is paid back. If the house sales for more money than the FHA Reverse Mortgage Lender is owed, then the existing homeowner or heir(s) receive the difference.

Yet, what happens in the event that the money sells for less than the reverse mortgage loan due? This can worry many people, because they may suspect that either the existing homeowner or heir(s) will have to pay back the difference to the lender. Thankfully, because of the FHA, the FHA Reverse Mortgage Lender has no worries about whether or not the home will sell lower than the amount due, and neither does the homeowner or the heir(s). The FHA removes the risk from the lender by insuring that FHA will pay back the difference to the lender, therefore everyone is safe.

For more information please visit our website on Reverse Mortgage

Reverse Mortgage Wholesale

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Fha Reverse Mortgage Lender is from Reverse Mortgages Pros And Cons

What’s Wrong With Reverse Mortgages

admin — Thu, 01 Oct 2009 06:36:51 +0000

Steve Dahl asked:

Red flags are warning signs. If you see the warning sign then you won’t fall off the cliff, hit the pothole, or go where no one should go. Take a look at the red flags listed here and don’t see these as negative aspects of reverse mortgage but just reminders of the fact that when big money is involved, there are a few people out there who might get a little greedy now and then. Surprising, yes but it’s true. Reverse mortgages can be wonderful tools for seniors trying to make ends meet by putting their home equity to work. And, like anything else, you’ve got to know where those potholes and cliffs are to get to where you want to be. Here are some reverse mortgage red flags to keep an eye out for.

Red Flag #1. Complicated paperwork may have unforeseen consequences. If you don’t understand the document, you won’t understand the consequences. Take the time to get proper guidance, second opinions, and a review of appropriate alternatives.

Red Flag #2. High cost of a reverse mortgage may outweigh the benefits of alternatives. As in any loan, there are going to be associated fees and costs. These should be clearly spelled out up front. Consult your lawyer, accountant, or other trusted adviser to review any loan application before making a major financial commitment like a reverse mortgage.

Red Flag #3. Uncertain benefits. The strange thing about reverse mortgages is that you cannot calculate the true cost of this loan because it depends on how long you are going to live. But, if you want to pass anything to your heirs, it’s worth considering the alternatives. There is no way to predict the home appreciation and future interest rates so consider the reverse mortgage carefully. Yes, payments come to you tax free but the debt on that asset is going up. This may be fine as long as you live and as long as you live there. Again, just know your options.

Red Flag #4. Tight-lipped lenders. Lenders who don’t fully disclose fees and terms are a big problem. As we’ve just seen in the sub-prime lending mess, many consumers didn’t understand what they were getting into. Some sleaze-ball lenders have gone so far as to work themselves into the deal to gain a large percentage of the property’s appreciation. Ask your lender if they are attempting to gain any percentage of the appreciation as part of their profit.

Red Flag #5. Forcing borrowers to buy additional financial products such as variable annuities. In this case, consumers can lose their principle and the earning potential of that money. Sometimes it’s alright to combine financial products but if you do, please double check the terms with someone who understands both types of products.

Red Flag #6. Numerous front end and back-end fees can be exorbitant. Artificially inflated fees raise the cost to the borrower and deflate consumer benefits fast. Oh yes, the definition of exorbitant can be debated all day long but that is exactly why you need to take the time to educate yourself, get several reverse mortgage proposals, and obtain advice from a trusted expert like your accountant, lawyer or financial adviser.

Red Flag #7. Reverse mortgage counselors imply that they are there to protect the interest of the seniors applying for the loan. This may be legitimate but if they present themselves as a counselor yet, have an affiliation with the lender; there is an inherent conflict of interest. Unfortunately the government still allows this practice. Your tax advisor doesn’t work for the IRS does he? Well then your reverse mortgage counselor should not work for the lender he is trying to protect you from.

Red Flag #8. Borrowers should not pay a referral fee for an agent just for the privilege of introducing you to a lender. That fee has been as much as 10% of the loan amount in some cases. Don’t pay referral fees or finder’s fees for reverse mortgages just find a new agent or broker.

Red Flag #9. You don’t know your lender. Laws and recourse vary from state to state. It’s a good idea to know your lender. Get referrals from family and friends and ask for references from the agent you are talking with.

Red Flag #10. HUD might be a DUD. You cannot assume that because Uncle Sam is guaranteeing some aspect of a reverse mortgage that it is safe or good for your situation. HUD does provide some helpful and free info on its website but it is very limited. If the sales rep says this loan is safe because it’s backed by the U.S. Government, don’t be overly impressed.

Red Flag #11. Information is withheld. When Total Annual Loan Costs (TALC) rates are not disclosed, be careful. When information is withheld and real costs and fees are not fully explained up front, there’s trouble on the horizon.

Red Flag #12. If a borrower’s ability to make a major decision is in anyway questionable, everyone including the agent, the lender, and family members should slow down and get additional professional assistance. If you are dealing with agents and lenders with any degree of integrity they will certainly offer any senior who doesn’t understand the consequences of the reverse mortgage, the resources and time to get more assistance. Families should work together to keep tabs on senior family member’s financial needs and lend a helping hand and a second set of eyeballs to major financial decisions such as reverse mortgages.

Red Flag #13. Alternatives to reverse mortgages are not known. There are several safe and secure alternatives that should be considered.

The bottom line to reverse mortgages is this. There are reverse mortgage alternatives beyond lines of credit or selling your home. Get the facts, recognize the red flags and take the time to do your homework.

Elder abuse is an ongoing concern when it comes to reverse mortgages or other financial products. The best way to fight this problem is to punish lenders who have no ethics and to teach seniors and their family members the facts and the alternatives. Families need to keep closer tabs on senior members and do the homework when it comes to reverse mortgages.

Reverse Mortgage Wholesale

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Steps to Getting a Reverse Mortgage

admin — Mon, 14 Sep 2009 23:56:53 +0000

Brian Armstrong asked:

Here are a few of the steps you’ll want to go through to get started with a reverse mortgage. Keep in mind that these types of loans are not necessarily for everybody, but they can be a great source of funding when seniors are in need of additional income.

1. Becoming Aware: Because reverse mortgages are relatively new, there are a lot of people that don’t know much about them. Although the media including newspaper, tv, radio, etc. are reporting more on stories about reverse mortgages, there are still a lot of misconceptions and misunderstanding. People learn about reverse mortgages through the news, articles in the newspaper, magazines and other medium including word-of-mouth.

2. Get Educated: Homeowners find out additional details from a reverse mortgage lender or use tools like the internet to get more details on reverse mortgages. The National Reverse Mortgage Lenders Association may also have some insight into reverse mortgage lenders in your area.

3. Independent Counseling: Before being able to be approved for a reverse mortgage, the borrower will need to work with independent counselors through either the AARP or through a local HUD-approved counseling agency. This counseling can be done in person or over the phone. Counselors will review other options including housing, social services, health and financial alternatives as well as other home equity conversion options including property tax deferral. The counselors will also discuss the financial implications of a transaction like this and the potential consequences including tax liabilities.

4. Application Process: Homeowners will then work with their loan officers to complete an application and choose their payment plan in the form of either a lump sum or monthly payments, a line of credit, or a combination of all three. The lender will disclose all of the details about the loan and the loan amount and all estimated costs as dictated by the federal truth in lending act. The application will also include verification data including social security information, deed to the home, information on existing mortgage (if any), and counseling certificate.

5. Processing: The lender will order an appraisal of the home to determine the value and the appraiser will also make sure the home meets the FHA guidelines for the physical condition of the home. Repairs may be required if any component of the home doesn’t meet the guidelines for the physical condition of the home. Repairs are the responsibility of the homeowner and any expenses occurred in this case are the responsibility of the homeowner as well.

6. Underwriting: Once the application and all necessary paperwork required to accompany the application are submitted, the process of underwriting the loan begins. By this time, the loan parameters have been agreed to by the lender as well as the borrower and include things like payment options, frequency of loan interest rate adjustments, and loan amounts. The underwriting process takes about 4-8 weeks to underwrite the loan package. Some underwriting may be done faster, some slower.

7. Closing: Once the loan is approved through the underwriting process, the closing is scheduled. Interest rates are calculated at this point and the closing documents and final numbers are prepared. Most costs, if not all costs may be financed as a part of the loan. The homeowners are required at this point to sign the loan papers.

8. Disbursement: Following the closing of the loan, the homeowner has a 3-day right of rescission. This means the homeowner can cancel the loan within those three days without penalty. Once this 3-day right of rescission has passed, the funds from the loan are dispersed. Depending on the method of payment selected by the homeowner, the funds are then dispersed or made available. Any existing debt on the home at this point is paid off and a new lien is placed on the home. The homeowner at this point may use those funds for any purpose.

9. Repayment: Homeowners aren’t required to pay any mortgage payments or repay the reverse mortgage until they cease to occupy the home as their principal residence. The reverse mortgage may be repaid by the homeowner or the heirs or by the estate. This repayment doesn’t require the sale of the home. The repayment obligation of mortgage can be taken care of by a traditional refinance as well. The loan amount or repayment obligation can’t exceed the home’s value or sales price.

These are the main steps to getting a reverse mortgage. Seniors age 62 and older can apply for and get approved for this type of loan. Reverse mortgages aren’t for everybody, but if you are in a position to need income beyond retirement, the reverse mortgage may be a very good option. How much you’ll get will depend on your age as well as the equity and value of the home. Plan on speaking with a counselor as well as a loan officer prior to getting a reverse mortgage. Research will be a valuable tool when making a decision involving perhaps your most valuable possession.

Reverse Mortgage Explained

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Reverse Mortgage Types And Benefits

admin — Fri, 31 Oct 2008 04:29:21 +0000

Reverse mortgages are not of a one size fits all type. You need to look at all the available types to be sure you get the best reverse mortgage for you own situation at the least possible cost.

Single-purpose reverse mortgages are, as the name implies, designed for a particular purpose as specified by the nonprofit or government lender. This might be for property taxes, home improvements or repairs. In order to qualify for these loans you generally have to have low or moderate income and they are not available everywhere. But if you can qualify for one, you will enjoy the lowest possible loan costs.

HECMs and proprietary reverse mortgages have no income requirements and can be use for any purpose but are usually the most expensive. This may not be a problem if you intend your current home to be your final residence but if you plan on moving within a short time, this probably is not the way to go.

You are required to meet with a government approved hosing counselor before applying for a HECM. The counselor will explain all of the financial implications of the loan and point out alternatives to you. The counselors charge a fee for this service which is dependent upon your income, but will not be more than $125.00 (currently).

Several factors determine the amount of the money you can borrow through a HECM or proprietary reverse mortgage. These include including your age, the type of reverse mortgage you apply for, the FHA appraised value of your home, current interest rates and where you live. As a general rule, the more your home is worth, the less you currently owe on it and the older you are, the more money you can get through a reverse mortgage. The AARP has a free reverse mortgage loan calculator that is easy to use.

The HECM gives you options as to how you receive funds from a reverse mortgage. Options include a fixed monthly cash advance for a certain period or for as long as you stay in your home. You can also opt for a line of credit and then draw on this credit line as you choose. You may also select a combination of these methods.

HECMs will usually provide for a larger loan advance at a lower total cost when compared with proprietary loans. But higher-valued homes may provide the owner with a larger loan advances with a proprietary reverse mortgage.

There is only one way to find out which of the available reverse mortgage loan program is right for you. Shop and compare. And don’t be afraid to deal with a company you find online. We did and saved hundreds of dollars in costs.

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Reverse Mortgages For Retirement Income

admin — Fri, 03 Oct 2008 01:23:41 +0000

Is a reverse mortgage right for you? You will have to decide that for yourself but it was one of the best decisions I ever made. Reaching the decision to use the equity in our home to increase our retirement income was not an easy one for my wife and myself.

Like many seniors, we looked at an equity line of credit to fill an increasing income shortfall in our retirement years. We quickly decided that this was not the way to go because the interest rapidly depletes what is already a smaller monthly income. Sort of self-defeating. You may find yourself with no equity at all left in your home.

Reverse mortgages are one of the safest, most heavily government regulated sources of extra income for your retirement years. And because of the regulation, the fees and closing costs are higher than a standard mortgage.

The US Department of Housing and Urban Development (HUD) sets the maximum fee percentage that lenders may charge under this program. So guess what? That’s right. Most lenders charge the maximum permitted and then tell you that it is a Federally regulated fee over which they have no control.

We found this to be true with the first couple of lenders we talked to. One was the bank we had been using for years and which held our current mortgage. Another one was a local lender who has advertised heavily in the senior market and had many glowing testimonials.

Both of these lenders assessed the maximum fees permitted by the FHA.

We found the internet a wonderful tool in our search for the best reverse mortgage and lender for our needs. Don’t be afraid to deal with someone online. They may be able to save you thousands in fees and increase your monthly income significantly.

Our search led us to a lender who was courteous, answered all of our questions, closed the loan quickly and saved us thousands of dollars in fees. It was a painless transaction even though the broker was located in Chicago and we live in the Northwest. In retirement you need all of the money you have worked for. Don’t just give it away in loan fees and don’t be afraid of a long-distance relationship with the lender.

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Reverse Mortgages For Retirement Income is from Reverse Mortgages Pros And Cons