Posts tagged with 'Reverse Mortgage'

Reverse Mortgages Benefits From Fed Governments

  • Posted on August 16, 2010 at 9:17 am

Reverse mortgages are increasing in popularity as a way to turn home equity into a liquid asset. Before you jump on a reverse mortgage, you need to understand the impact it can have on government benefits.

The beauty of home ownership is found in the value of time. The longer you own a home, the more valuable it become. On one hand, you are paying off the mortgage over time, which is increasing the equity you have in your property. The other finds your real estate appreciate over time. This double whammy is what makes home ownership so attractive.

Retirement and old age will become an issue when you need to convert your home equity into usable cash. Reverse mortgages are touted as a solution. A reverse mortgage is a loan against your equity that does not need to be repaid until an event happens, usually the sale of the home or your death.. Essentially, you have reversed the process of a traditional mortgage. The lender is now giving you money in exchange for a piece of your home equity. Payments are expedited in lump sums, monthly or through credit lines depending upon the particular package you go with. As the clock ticks, the equity in your home is reduced, but you will have a reliable and predictable monthly revenue source.

Over the years, the fed has tried to find ways to reduce the amount of benefits they pay out to citizens. One of the factors they like to use is the asset value you hold. If you have a certain amount of assets, your benefits are reduced or terminated because they government takes the position you do not need them. An analysis of government benefits is beyond the scope of this article, but reverse mortgages have an impact.

Basically, be assured that taking a reverse mortgage on your home will not affect Medicare or social security benefits. This is true, however, only so long as you spend the full amount you receive each month. The government is always playing with benefit issues, so make sure you get up to date information on the situation. You will want to understand what you are getting into, particularly if you rely heavily on Medicare for the payment of medical bills.

In general, reverse mortgages do not impact most government benefits. That being said, make sure to get an informed opinion on exactly what will happen before you agree to a reverse mortgage.

Reverse Mortgage is For You

  • Posted on July 19, 2010 at 9:17 am

Seniors would want to enjoy their golden years but are usually left stranded with decreasing income or the inability to increase their monthly income. One of the better ways to overcome this problem is by obtaining a loan called a reverse mortgage. A reverse mortgage enables homeowners older than sixty two years of age to convert the equity in their homes into tax-free income while they continue to live in that property. Seniors will be paid by the lender according to the current value of the property, in contrast with a traditional mortgage where monthly payments are made to the lender.

How do you know if a reverse mortgage is right for you and that you would not end up sleeping on the streets? Reverse mortgages are indeed an excellent option for many living in their twilight years, but will take careful planning and consideration. Since the pay out terms can be structured in a variety of ways, it is essential to look at the amount you are able to get from your home and your long term financial needs.There are of course no restrictions on the use of funds, meaning you can do anything you like with the proceeds of a reverse mortgage, including home improvements and daily expenses.

Reverse mortgages won’t affect regular Social Security or Medicare benefits. MedicAid eligibility may be affected in some instances. Counseling is a mandatory for those who wish to apply for a reverse mortgage. Look for a counselor from a government sponsored lending agency if you need them to answer all your questions convincingly or those related to benefit reductions.

Reverse mortgages is a very effective method in supplementing your post retirement income but you must be aware of how the pay out structure can positively lessen your worries on the long term financial picture. Make an informed decision. Simply view all the information available before taking up a reverse mortgage. The good news is for those who have paid the majority or their entire home, their post retirement lifestyle need not be hampered by a lack of cash flow.

Reverse Mortgage In A Nutshell

  • Posted on July 12, 2010 at 9:17 am

Reverse mortgages are becoming popular among the senior citizens. They give seniors cash in lieu of the part ownership of their home property

If you want to go for a reverse mortgage, the information below will help you:

For senior citizens above 62 years, lenders offer instant cash without any monthly repayments by converting the equity that has been build up overtime in the seniors’ home into cash.

This mortgage allows you to stay in your own home and get a monthly income which will help you sustain a comfortable standard of living.

The cash received from the mortgage is non-taxable since it is a loan and not income. The advantages seem to be very attractive but in the long term the risks far outweigh the benefits. Unlike a traditional mortgage, the lender pays you money based on the equity in the home. The lender will of course impose some strict conditions on you. You can only get a reverse on a primary residence. If you die, sell home or move out from your existing residence, you need to pay back the loan along with the accrued interest. To do that, you will have to sell off the home. Besides, if you want to leave the house as an inheritance, you will not be able to do so.

How much mortgage will I get?

You can get any amount between 10 to 40% of the value of home obtained after appraisal depending on your age, the present rate of interest and the value of the property.

Online reverse mortgage quotes can be obtained through the internet. There are lots of reverse mortgage websites,whether it be a fed site or a private lender site, which would be useful to you.

Reverse Mortgage Benefits To Seniors

  • Posted on July 5, 2010 at 9:17 am

Reverse mortgages are available through lenders insured by the federal government and can be of great benefit to those who are eligible to apply. There are three types of reverse mortgages currently available in the United States, including Home Equity Conversion Mortgages (HECM), Fannie Mae (FNMA) Home Keeper and Financial Freedom Cash Accounts. The basic premise of a reverse mortgage is that it allows homeowners over the age of sixty-two to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title to the home, or take on a new monthly mortgage payment. The reverse mortgage is titled as such because lenders pay the borrower fixed payments or a lump sum over time as opposed to a traditional mortgage arrangement. Properties that are eligible include single-family dwellings, manufactured homes built after June 1976, town houses and condominiums.

The process for applying for a reverse mortgage is more involved than with a traditional mortgage. Aside from meeting the age and property type restrictions, applicants must discuss the loan with a counselor employed by the U.S. Department of Housing and Urban Development before the signing of the terms agreement. There are 5 different types of payment methods for each fed government insured loans, allowing for flexibility to meet the needs of the applicants. These include monthly, quarterly, semi-annual and annual payments to the borrower for a fixed number of periods or a lump sum that can be invested.

Like traditional mortgage, the interest rates can vary accordingly. Those who choose variable rate mortgages will pay over one percent less since the risk assumed by the borrower for agreeing to monthly adjustable rate calculations can greatly increase their risk over the life of the mortgage. The mortgage is due when the house is no longer occupied by the borrower and will be paid by the borrower or heirs in the event of death.

While many consider borrowing to be a bad idea later in life, reverse mortgages simply allow seniors to enjoy the equity they have already established without carrying the risk of having to meet monthly payments while on a reduced or fixed income. This can substantially increase the quality of life for many older Americans and allow them to enjoy the fruits of their life long labor.

Reverse Mortgage A Seniors Financial Tool

  • Posted on June 28, 2010 at 9:17 am

Reverse mortgage is a financial tool for retiree homeowners living in their twilight years to carry on with life without having to worry about their daily expenses. But some prefer to see this as an opportunity to maximize a dream lifestyle of their choice. It is a method of acquiring cash from their home equity.

By using this type of borrowing method senior citizens can come up with money that they can use any way they want without the need to pay it back during their lifetime. If these elderly Americans can qualify they can turn their home equity into money.

The purpose of a reverse mortgage is to allow senior citizens the opportunity to receive the extra cash they require without the necessity of having to sell their house. The cash they get can provide them with the additional financial security they require and also give them a chance at enjoying their remaining years by reducing their money worries. There are several ways to receive this money including regular monthly payments, a lump sum or even as a credit line. A line of credit is the most common method people use to receive money from a reverse mortgage. Some retired persons get their money by using a combination of these methods. It’s possible to receive monthly payments while also getting a big chunk of money up front too.

The term reverse mortgage is a simple way of “reversing” a mortgage. Rather than being forced to make monthly payments by taking out a home loan people can actually receive monthly payments themselves. It’s a method for retired homeowners to increase their comfort of living by taking advantage of the equity they have built up in their home. The loan amount depends on many factors including the value of their residence, how old they are, how much equity is in the home along with other factors.

To qualify for a reverse mortgage the applicant must be 62 years of age or older. They must also own a home (single family residence), manufactured home built on or after June 1976, town home or condominium. And of course they must have a certain amount of home equity. It is not necessary to have the house paid off completely, but there must be equity in it. In other words you can still qualify for a reverse mortgage even if you have an outstanding mortgage loan.

The loan cannot exceed the home’s value, but there are no monthly income requirements and no medical prerequisites for qualification. There are few requirements, one of which is that the applicant must first meet with an approved counselor to discuss the loan or other possible options for their situation. Other than that there are very few requirements.

There are no monthly income requirements and no medical prerequisites for qualifications but with one condition that the loan cannot exceed the value of the property. Before approval of any reverse mortgage loans, it is required that the applicant must first meet with an approved counselor to discuss other possible options before taking up a reverse mortgage. Other than that there are very few requirements for its eligibility.

Reverse Annuity Mortgage

  • Posted on June 21, 2010 at 9:17 am

Reverse annuity mortgages (RAM) were created to allow senior Americans to tap into the equity of their paid for or nearly paid for home. Homeowners receive a tax-free payment each month, with the mortgage paid out and when the home is sold. Before you choose a RAM, make sure you have evaluated the risks since this option can limit future housing plans.

Types Of Reverse Mortgages

RAM programs are developed by HUD.To be eligible you must be 62 or older, use the property as your residence, and have paid off your mortgage in full. The fed government will then insure your mortgage.

You might want to talk to private lenders as an option. You will want to review their terms and conditions very carefully to be sure that you are getting the full value of your home and not paying unnecessary and exhorbitant fees.

Both types of RAM will never let you owe more than what your home is worth. When you decide to move out of the property, the loans principal, interest, and fees will be due and any equity remaining from the sale of your home will be yours or can be based onto heirs.

Difference Between A Reverse Mortgage and A Home Equity Loan

The major difference between a RAM and a home equity loan is when the loan balance is due. With a RAM, the mortgage balance will need to be fully paid once you stop living in the property. You dont have the monthly payments of an equity loan and it is much easier to qualify for the mortgage since you dont have to show any prove of income to make monthly payments.

Payouts Options

There are several payout options that you can choose from. A ‘tenure policy’ provides equal monthly payments to the borrower as long as he or she lives on the property itself. A “term policy’ gives fixed monthly payments for a set period of time. A line of credit enable the borrower to withdraw funds only when needed. A modified tenure combines a line of credit with life long monthly payments while a modified term provides a line of credit with fixed monthly payments.

Beware Of Scams

There are several scams related to reverse mortgages that you should be aware of. You should not pay thousands for information about a RAM and should get them from HUD and legitimate mortgage lenders. You should also avoid any terms that require payments before you sell or that sell your house within so many years.

Hud Reverse Mortgage : Who is eligible?

  • Posted on May 3, 2010 at 9:17 am

When looking for additional funds for retirement, seniors can turn to a financial tool called HUD reverse mortgages. Seniors can have access to their equity from their homes without the worries of making monthly repayments.

In order to be eligible for a HUD reverse mortgage, there are a few basic requirements to fulfill. Homeowners must meet the following criteria in order to be eligible for a HUD reverse mortgage:

1.) The home must be a principal residence.

2.) Homeowner must be age 62 or older.

3.) The home must be owned free and clear or have a mortgage balance that can be paid from equity.

4.) The property must be a single-family home, a one-to-four unit dwelling with one unit occupied by the applicant, a manufactured home (mobile home), or a unit in condominiums or Planned Unit Developments.

5.) The property must meet minimum property standards.

Homeowners that qualify can receive payments in a lump sum, on a monthly basis, or on an occasional basis as a line of credit. At a later date the payment options can be restructured if circumstances change.

The amount that can be borrowed on a HUD reverse mortgages is determined by the borrowers age which in any case the older the borrower the more that can be borrowed against the value of the home and the lower the interest rate the more that can be borrowed.

There is no hard limit for home value to qualify for a HUD reverse mortgage, but the amount that may be borrowed is capped by the maximum FHA mortgage limits for an area. This means that owners of a high priced home can’t borrow any more than the owners of homes valued at the FHA limit. There are no asset or income limitations on borrowers receiving a HUD reverse mortgage.

Unlike ordinary home loans, a HUD reverse mortgage does not require repayment as long as the home remains the borrowers primary residence. When the home is sold the Mortgage company recovers their principal, plus interest, and the remaining value of the home goes to the homeowner or to his or her survivors. Should the sales proceeds not cover the amount owed, HUD will pay the mortgage company for any shortfall.

Benefits Of A Reverse Mortgage

  • Posted on April 5, 2010 at 9:17 am

A home loan that you do not have to pay back for as long as youre alive or for as long as you live there? That sounds too good to be true, but thats what reverse mortgages do.

A reverse mortgage is a loan that you make where you do not have to pay back anything for as long as you still own that property you have bought. Reverse mortgages provide you with money for you to invest. By turning the value of your home into cash, reverse mortgages gives you virtually unlimited funds without having to move and even without repaying the loan every month.

There are several ways tthe cash is given out from reverse mortgages. You can get cash from a reverse mortgage all at once or in a single lump sum. With a reverse mortgage, you can also opt to receive a fixed monthly cash pay out.

In addition, a reverse mortgage can offer you cash as a credit extension to your account. This creditline account from will let you get the amount of money you want whenever the need arises. And if none of these suits you, reverse mortgage cash may be given to you using any combination of the abovementioned.

Whether or not you want your cash from a reverse mortgage be paid to you in lump or in installment, the main thing is that you do not have to pay anything back until you die, sell your home, or permanently move. Reverse mortgages usually cater to homeowners who are 62 years old and older.

Reverse Mortgage vs. Other Home Loans

In most other loans, a systematic check on your income and assets is done in order to pre-qualify for the mortgage. This is done as an assurance to the lender that you will be able to afford the monthly payments tied with a loan. Since reverse mortgages do not involve any monthly repayments, you not have to go through these prequalification procedures. To qualify there is no minimum income required and no monthly repayments.

In every story, there is always the other side of the coin. While reverse mortgages have their advantages, they also have its ugly side. As you know already, reverse mortgages do not require monthly paybacks. This means that you are actually taking out equity from your home and turning it into cash.

Heres how it works. Other mortgages require a person to make a down payment when buying a home. As years go on, they use their income to pay back the money they borrowed in making the purchase which decreases their debt and increases the value of their home.

With a reverse mortgage, everything works in the other way round. You have your home. You convert its equity value into cash. And then you take out that cash as and when you need it and this will increase your debt steadily and reduce your home equity as you go.

This is not always the case with reverse mortgages. If your home value grows quite consistently or you only have one particular loan on your home, theres every chance that your equity could increase over time.

Avoiding A Reverse Mortgage Scam

  • Posted on March 29, 2010 at 9:17 am

Reverse mortgages are gaining in popularity as more senior’s start looking for ways to supplement their retirement incomes. And as the interest in reverse mortgages increase, so are the cases of reverse mortgage fraud and scams. Many seniors are finding that they have been conned of their hard earned equity to these reverse mortgages scams. Since reverse mortgages typically involve your most valuable asset (your home), this type of fraud can have a serious effect on your retirement.

Reverse Mortgage Scams

The are several types of reverse mortgage scams that can end up costing you thousands and even tens of thousands of dollars in equity in your home if you become a victim.

Several estate planning companies have been charging thousands of dollars for information provided free from HUD. Typically these companies charge for this information as part of an estate planning program. Seniors that take up these programs are unaware that these firms are collecting huge sums of money by charging a fee of 6 to 10 percent of the total amount borrowed. HUD has recently issued a directive to lenders that issued reverse mortgages insured by the Federal Housing Administration (FHA) to stop doing business with these companies.

Pushing reverse mortgages as a way to pay for purchases

Some companies that sell large ticket items or services, like annuities or insurance products, may try to suggest using a reverse mortgage as a way fund these purchases.

When the extra cost of the reverse mortgage is hidden into the purchase, it often ends up costing the homeowner more than its benefits.

Unethical reverse mortgage terms

Some lenders slip in excessive fees and terms into their contracts. These terms can have a a detrimental effect on a Seniors’ equity. In some cases, lenders have used shared equity or shared appreciation terms, which gives the lender the right to collect a portion of the appreciation when the home is sold or refinanced. These type provisions can run into a cost of tens of thousands as the home appreciates in equity value. These rising cost provisions swallow up equity without providing any additional benefit to the homeowner.

Protecting yourself from reverse mortgage scams

If you are looking into reverse mortgages, there are several things that you can do to protect yourself from falling victim to these types of scams.

1. Contact a HUD approved reverse mortgage counselor. The counselor will help you understand reverse mortgages and help you evaluate your situation.

2. Obtain several offers from different reverse mortgage lenders in order to compare different options. The rule of thumb is to get three separate propsals in order to mark a good comparison.
3. You will need to understand all the terms and conditions within the reverse mortgage contracts with your mortgage counselor assisting you in elaborating the details.

4. You generally have 3 business days after signing the loan document to cancel it for any reason.

File a complaint with your State Attorney General’s office, banking regulatory agency and the Federal Trade Commission (FTC) at www.ftc.gov if you suspect that a company violating the law.

Top

Copyright © Mortgageclassic