Posted on August 14, 2012 by Rohith
The Consumer Financial Protection Bureau (CFPB) recently released a purely negative report that degraded the use of reverse mortgages. However, there are actually many benefits of a reverse mortgage.
First off, in order to qualify for a reverse mortgage, you must own and reside in your home and be a senior 62 years of age or older. (In most cases second homes, apartment buildings and homes less than a year old are not eligible for a reverse mortgage.)
Reverse mortgages must be considered with all other options like selling the home, downsizing, or moving to an assisted living facility. These types of loans are long term decisions because there are insurance fees and mortgage interest that gets added to the loan balance every month. So someone that plans on selling in 5 years will have less equity.
For anyone who chooses to participate in a reverse mortgage program, they can take their money in regular payments for a fixed term, a line of credit, or select some combination of these choices by receiving the entire amount in a lump sum.
These special types of loans might be good options for homeowners that still have a mortgage, credit card debt, or need to make necessary repairs to their home. And with any financial decision, it is important to talk with trusted financial advisors to help make your decision.
The bottom line is this: reverse mortgages may not work for everyone but dismissing the service completely might prove to doom many households to poverty in old age.
Visit newretirement.com for a number of free services:
Posted on August 10, 2012 by Rohith
With a downward spiraling economy, there are a few realities that you need to keep in mind and take into consideration in order to land a safe and successful retirement.
- The first strategy is working in retirement. According to experts, 70 is the new 65, in retirement terms at least. Working in retirement will keep paychecks coming and hopefully provide you with benefits such as health insurance and retirement account contributions. Finally, continuing to work may also provide you the ability to delay claiming your Social Security benefits – for each year up to 70, your increase by about 8%.
- Another strategy that can be taken to plan for a successful retirement is the Social Security claiming strategy. As mentioned above, delaying your social security benefits will result in an 8% increase each year. It may also be possible for one spouse to begin drawing half of the other spouse’s Social Security benefits while still delaying his or her own claiming date (and thus enjoying those 8 percent annual benefit increases).
- Taking a reverse mortgage could be they key to plan for a successful retirement. A Reverse Mortgage, or Reverse Home Mortgage, is a great financial product for seniors to use in their retirement plan.When looking for ways to get cash from their home, most people consider selling their house or borrowing against their home equity and making monthly loan repayments on a home equity loan. To be eligible for most Reverse Mortgages, you must own and reside in your home and be a senior 62 years of age or older. (In most cases second homes, apartment buildings and homes less than a year old are not eligible for a reverse mortgage.)
- Spending retirement assets is another consideration to take into account when planning for retirement. The standard advice given by a financial adviser is not to spend more than 4% of your assets a year. However, in reality, whatever number makes sense to you needs to be accompanied by a strategy to actually manage your retirement assets to produce whatever level of payouts you’ve selected.
Resources:
Continue here to find a prescreened Reverse Mortgage lender
Use our free Newretirement Retirement Calculator to plan for a safe retirement
—–> https://www.newretirement.com/retirement-calculator/default.aspx
Use our free Reverse Mortgage Calculator to see how much you qualify for
—–> https://www.newretirement.com/Services/Reverse_Mortgage_Calculator.aspx
Use our free Social Security Calculator to find out when is the best time to take your benefits
—– >https://www.newretirement.com/Services/Social_Security_Start_Age_Calculator.aspx
Click here to be matched up with a financial advisor to help you plan for a safe retirement
Posted on July 24, 2012 by Rohith
If you own a mobile home and are interested in a Reverse Mortgage, good news! We have found a lender who is now offering Reverse Mortgages on mobile homes.
However, to qualify you must own the land on which your home exists – the land cannot be leased — and your home must be:
- A doublewide sized at 800 square feet or larger
- Built after 1996
- On a permanent foundation
RESOURCES:
Posted on May 9, 2012 by Rohith
MetLife Inc. owned over 20 percent of the reverse mortgage business in the U.S., according to Reverse Mortgage Insight, and On April 26, the largest U.S. life insurer and reverse mortgage lender sold its reverse mortgage business as part of its exit from banking-related activities to Nationstar Mortgage LLC. Chief Executive Officer of MetLife, Steven Kandarian, has also agreed to sell about $7.5 billion of deposits to General Electric Co. (GE) and said in January he would stop originating traditional home loans. This announcement came immediately after MetLife reported a $174 million net loss for the first quarter, amounting to 16 cents per share and compared with a profit a year earlier of $701 million, or 66 cents per share. This sale could have been foreseen, as MetLife had been actively shedding its banking and mortgage operations to drop its bank holding company charter.
Posted on January 26, 2010 by Julius
A Washington Post article published this past weekend entitled “Reverse Mortgages Are Not the Next Subprime” highlights the benefits of a reverse mortgage for seniors as well as how it is completely different from the subprime fiasco. While initially reverse mortgages carried with them a senior’s fear of losing his or her home, after 1989, with the home equity conversion mortgage (HECM) program, as long as you pay the property taxes, maintain the property, and don’t change the name on the deed, you can remain in your home permanently. Also, if your lender fails, the unmet payment is taken over by the Federal Housing Authority.
Furthermore, according to a 2006 AARP study, 93 percent of people who received a reverse mortgage were happy with their choice, while only 3 percent said the effect of the reverse mortgage was mostly negative. So, if you are considering a reverse mortgage click here to find out some more information.
Posted on December 17, 2009 by Julius
A study by the National Alliance for Caregiving and the AARP shows that nearly one third of the US population are caregivers, defined as providing unpaid care to an adult or a child with special needs. On average these caregivers are providing care for 20 hours a week, which creates a great deal of stress. Many caregivers had to pass up promotions, leave jobs, and cut back on time at work to provide care. A surprising amount of caregivers (53%) reported loneliness and isolation by having to cut back on time with friends and family.
A reverse mortgage could not only help keep parents out of a nursing home and provide money for paid caregiving, but could also help prevent stress upon the child caregiver.
Use our new reverse mortgage calculator to see if a reverse mortgage is right for you.
Posted on October 14, 2009 by Julius
California Governor Arnold Schwarzenegger, more or less fondly known as The Governator, signed seven mortgage finance-related bills into state law this past Monday. These laws are designed to cut down on fraudulent mortgage practices.
Senate Bill (SB) 36: regulates the licensing requirements for residential loan originators in compliance with the federal Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act.
SB 237: requires appraisal management companies (AMCs) and appraisers register with the Office of Real Estate Appraisers and subjects appraisers to the provisions of the Real Estate Appraisers’ Licensing and Certification Law.
SB 239: raises the crime of mortgage fraud from a misdemeanor to a felony and makes it easier for prosecutors to obtain fraudulent loan documents to investigate cases.
Assembly Bill (AB) 260: places restrictions on subprime loans and prohibits originators from “steering” borrowers, or encouraging borrowers to buy riskier loan products when they are eligible for affordable products. It also gives state regulatory agencies the authority to suspend or revoke the licenses of real estate lenders and mortgage brokers that violate the state’s lending laws.
AB 329: sets guidelines for reverse mortgages originated for elderly borrowers — those over 65 years old — requiring specific disclosures and offering counseling service referrals. Originators are also prohibited from selling other financial products to a reverse mortgage borrower.
AB 957: gives the buyers of foreclosed property the right to choose local escrow officers to complete transactions. It prohibits the seller of a residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller.
AB 1160: requires originators to provide borrowers with a mortgage summary document translated in the language the contract was verbally negotiated.
Posted on October 5, 2009 by Julius
Posted on February 20, 2008 by Editorial Team
How Much Money You Can Get for a Reverse Mortgage Will Increase and Qualifying for a Reverse Mortgage Will Get Easier with the FHA Modernization Bill
The FHA Modernization Act is designed to improve the Federal Housing Authority’s ability to help Americans obtain safe and affordable home loans and many see the Act as an answer to some of the woes of the subprime debacle. The Act is a bipartisan measure and has the support of the Bush Administration as well as both consumer and industry groups.
S. 2338, the Federal Housing Authority (FHA) Modernization Act, is good news for borrowers interested in a Reverse Mortgage. The Bill has been passed by the Senate by an overwhelming majority (93 to 1) and many hoped that it would be tacked onto the Economic Stimulus Package and be signed into law this week. However, it was not and is now waiting to be voted on by the House of Representatives. The House version of this Bill differs in many ways, but on HECM Reverse Mortgage issues, the House and Senate versions are identical.
The FHA Modernization Act Will Improve the Terms of Reverse Mortgages
The FHA Modernization Act will change the HECM program (HECM is the most popular type of Reverse Mortgage) in the following ways:
- Offer a Single National Loan Limit: Currently the actual amount you can qualify for with a HECM Reverse Mortgage varies depending on your county. The FHA Modernization Bill sets a single national limit of $417,000.. For most borrowers this means more money is available to them.
- Eliminate of the Authorization Cap: Currently only a set number of Reverse Mortgage loans may be granted. The FHA Modernization Act eliminates this limit, enabling the FHA to authorize as many loans as the market demands.
- HECM Could Be Used for Home Purchase: Currently Reverse Mortgage borrowers must reside in their home for at least one year before they can get a Reverse Mortgage on it. The FHA Modernization Act enables borrowers to actually purchase a home with a Reverse Mortgage — assuming an adequate down payment. This change makes a Reverse Mortgage an appealing loan for retirees who are downsizing and others.
- HECMs Could Be Used on Coops: Currently only single family homes are eligible.
As a whole, these changes should mean more money and better terms for seniors doing a Reverse Mortgage.
Learn More About FHA Modernization and Contact Congress Now
If you wish to see the FHA Modernization Act become law, consider contacting your Congressperson. You can locate them here: http://www.house.gov/
To learn more about The FHA Modernnization Act, visit here:
http://www.opencongress.org/bill/110-s2338/show
Posted on January 10, 2008 by Steve
As I’m sure you’re aware there is a rising tide of foreclosures that is threatening up to 2 Million households. This is affecting all age groups and unfortunately it doesn’t look like the Hope Now plan to freeze some mortgage rates will bail out many people. However, some housing advocates and legal-aid attorneys are suggesting a new alternative for senior households: taking out a reverse mortgage and using the proceeds to settle current distressed mortgages.
Reverse mortgages are mortgages whereby the payment streams of traditional mortgages are reversed. Instead of the bank lending you a sum of money to finance a new house and you paying the loan back over time (a forward mortgage), a reverse mortgage is structured such that the bank either makes monthly payments to you, gives you a lump sum or issues you a line of credit (all based on your home equity) and the loan is repaid with interest when you either sell your home or die. The big difference with a reverse mortgage is that it is a non-recourse loan – the amount due on the loan can never exceed the value of your house (which is good for the borrower). The lending bank takes the risk that the loan amount won’t grow faster than the equity in your home.
The major drawback of a reverse mortgage is that you will lose some or all of the equity you have built up in your home when you move or pass away. But if you are struggling to make high interest payments and face foreclosure, taking out a reverse mortgage may be an option to prevent the loss of your house. The major qualification for a reverse mortgage is that you have built up enough equity in your home and that you and your spouse are both 62 years old – there are no credit or income requirements.
It used to be difficult to find lenders willing to issue reverse mortgages and buy products other than the plain vanilla government-backed HECM (Home Equity Conversion Mortgage), especially at reasonable costs. Now, more than a dozen large banks and mortgage lenders, the largest issuers being Wells Fargo and Financial Freedom, offer a variety of reverse mortgage products, and there are thousands of smaller lenders throughout the nation. Costs have gone down – although they are still high, with fees typically more than 5% of the home value – and some issuers have reduced the minimum age requirement to take out a reverse mortgage to below 62. It has also given people more flexibility. For example, government-backed mortgages are subject to government rules, one of which prevents homeowners from cashing out above a certain limit (borrowing limits are capped based on where the homeowner lives). But private lenders who have stepped into the reverse mortgage business, such as Banc of America Corp., allow homeowners to borrow more than the limit on HECMs.
As competition in the market increases – expect to see lower fees and more innovation in the reverse mortgage market. Large lenders have become interested in creating a secondary market for securities backed by reverse mortgages; they have started to buy these products and plan to securitize them and sell them to investors on Wall Street. This means more available credit for reverse mortgages, which will decrease the costs of these products.
But more choices, especially with the increased availability of proprietary products offered by private lenders, result in more homework for the consumer. It is essential that distressed homeowners who are looking to purchase a reverse mortgage investigate the options available. It is important for the client not to blindly follow a salesperson’s recommendations, and that appropriate and challenging questions are asked to ensure suitability. Don’t fall into the trap of predatory lenders; this is hopefully one of the lessons learned from the subprime mortgage crisis.
