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The Hype Behind Reverse Mortgages

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What is a Reverse Mortgage? Perhaps you’ve seen the commercials on tv or maybe a friend, family member, or neighbor was telling you about it. A Reverse Mortgage is an FHA, Government-insured loan that allows homeowners, age 62 and above, access to the equity that they’ve already invested into their property. Commonly known as the HECM (Home Equity Conversion Mortgage) Reverse Mortgage, this loan type is specific to senior homeowners and is primarily used to pay off any remaining mortgage balance while remaining in the property for as long as they’d like. That’s right, no more monthly mortgage payments! Homeowners who pay off their remaining mortgage balance and still have adequate equity in their property could also be entitled to receiving their proceeds as an additional source of income. The payout options include a lump sum option, giving the homeowner all of their available equity up front; monthly payments, the homeowner would receive a certain amount per month for the life of the loan; or opening up a line of equity which would allow the homeowner to access as much or as little money that is needed at any time, or any combination of these options.

Not everyone qualifies for a Reverse Mortgage. One qualifying factor is that anyone on title for the property must be 62 years of age or older. Another factor that makes a homeowner eligible is that the property they’re taking the Reverse Mortgage out on must be considered their primary residence. The last qualification for the HECM Reverse Mortgage is that homeowners must have some sort of equity already invested in their home. The loan limitations are dependent on the borrower’s age, current interest rate, appraised value of the property, and government imposed lending limits. Reverse Mortgages do not need to be repaid until the last surviving homeowner permanently moves out of the home or passes away.

If you were thinking about relocating and making a move you could also purchase a home with a HECM Reverse Mortgage. Borrowers, age 62 and older, would put down a percentage of the purchasing price in cash based on the loan limitations mentioned and they would never have to make a mortgage payment for as long as they lived in the home.

I know what you’re thinking, “What’s the catch?”. While a Reverse Mortgage can help some homeowners achieve the financial freedom they desire during their golden years, some homeowners might not find it suitable for their family long term. It’s no secret some people have something to say about reverse mortgages!

The lenders fees for reverse mortgages have been noted as being rather costly. Along with higher lenders fees, the loan balance increases over time. The interest of the loan is added to the outstanding balance which, in time, reduces the remaining equity in the home. This, in turn, reduces what you can potentially leave to your heirs or use for future expenses you may incur. In addition, the homeowner is still responsible to pay their own property taxes and homeowners insurance. If both the property taxes and homeowners insurance go unpaid, the homeowner will default on the loan and must pay back the full loan amount.

When do I have to pay back this loan? As long as the homeowner is living in the property they do not have to repay the loan amount. However if the homeowner sells the property, needs to move in with family members, or is moved into a nursing home or living in a long term health care facility for more than 12 months, the loan must be repaid.

Studies have shown that about 80% of seniors would prefer to remain in their current home to live out the rest of their days. Some supporting reasons are the safety they feel, the memories and time shared in the home, the friendships and neighborhood they built and love, along with the independence and freedom of living on their own.

For some homeowners, the Reverse Mortgage Program will help them save their homes and put more money in their pocket. For others, a Reverse Mortgage may prove to be more of a hassle in the long run rather than a ‘save all’. Whatever it is that you’re considering, speak to a knowledgeable professional with Reverse Mortgage Space before making any decisions. Let them answer any questions you may have and give you the extra certainty you need to make sure you’re making the most beneficial choice for your future.

Reverse Mortgages for California

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Reverse Mortgages have always been a very viable option for senior homeowners looking to tap into their most valuable asset, their home. In most cases, the equity they have built up in their home can allow them to maximize their comfort throughout their golden years. California has long been known as having some of the highest property values in the country as well as the highest lending limits allowed by the Federal Housing Association(FHA).

Newport Beach homes are shown in reference to California reverse mortgage.Some of the highest property values in the state of California lie within San Diego, Orange, Los Angeles, San Bernardino, Ventura, Santa Barbara, Monterey, Santa Cruz, San Francisco, Marin and Napa counties. The amount of equity is calculated by subtracting the amount of mortgage(s) from the value of the property. The result is the amount of equity in your home.

It is important to know the qualifications required to obtain a Reverse Mortgage, not only in California, but nationwide. The first requirement being that at least one borrower must be at least 62 years old. The second requirement being that the property is occupied as their primary residence. The third and most important requirement is having equity in the home. Other requirements include the property being a 1-4 Unit home, a FHA approved condominium or a Manufactured home that meets FHA standards.

Knowing your options and educating yourself as a consumer greatly benefits the homeowners as to what kind of options are available to them. www.reversemortgagespace.com is a great tool to help senior homeowners calculate the amount of equity available to them as well as help compare different lenders that offer Reverse Mortgages in California. Most senior homeowners are more comfortable dealing with local, reputable lenders that are available through Reverse Mortgage Space’s network of approved lenders. The company focuses on the education of Reverse Mortgage’s for senior homeowners and their loved ones.

If you or one of your family members is interested in a Reverse Mortgage in California, be sure to look into Reverse Mortgage Space’s tools that can help make an educated decision that much easier. Be sure to have the above mentioned information ready, such as, youngest borrowers age, current mortgage(s) amount, and estimated property value. Lastly, if you or your loved one lives in California and is considering a Reverse Mortgage, Reverse Mortgage Space can assist in getting a estimate on the true value of the property in question. It will allow for you or your loved one to get a estimate that is much more realistic. Happy Hunting!!!

 

 

Mortgage & Finance News!

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My name is Tom Rogers from San Clemente, California and I have been in the Mortgage & finance industry for over 25 years. I have been married to my wonderful wife Georgine for over 35 years and have 2 Beautiful daughters, Jenna and Nicole. I am also the proud grandfather of 3 boys Connor, 11, Edward, 7 and Nicholas 3.

I have been actively writing third party blogs for over 5 years and decided to start writing my own blog at www.adsatdemo2.com recently. The main reason I am writing is to help educate and inform consumers as to new changes and updates to current financial programs available to them. Living in the great State of California has made me appreciate and understand the financial markets here in Orange County as well as the surrounding counties of San Diego County, Los Angeles County, Riverside County, San Bernardino County, Ventura County and Santa Barbara County.

In my downtime, I enjoy posting new information to my blog and keeping the information fresh and up to date. When you are seeking information when it comes to Mortgages, Reverse Mortgages, Home Equity loans or any type of Mortgage, it is always recommended to educate and inform yourself on the full range of products and options available to you.

My blog at www.adsatdemo2.com is a consumer friendly blog that I always recommend any feedback on. The blog is offered with no cost or obligation to consumers ever and will continue to be offered as a free service. When reading the information posted, please keep in mind, their has been an extensive amount of research that has been done to make sure consumers can save the time and energy doing it themselves. I appreciate the support and feedback I have received and look forward to receiving any and all feedback. Thank you for taking the time to check out my blog, and keep your eyes and ears open for constant updates!!!

Reverse Mortgage Pros

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According to Investopedia, managing your available retirement funds to help live out your golden years without struggling to maintain your lifestyle, is a challenge that many senior homeowners and baby boomers alike struggle with. The Government insured Reverse Mortgage has afforded many senior homeowners the opportunity to do just that while maintaining their quality of life by staying in their home or giving them the option to stay in their home as long as the maintain it as their primary residence. Some of the best features or pros, associated with doing a reverse Mortgage are as follows:

The ease of qualifying for a Reverse Mortgage. Their are really only 4 main qualifications associated with obtaining a Reverse Mortgage. First and Foremost, at least one borrower must be at least 62 years of age or older. Second, the property must be occupied as your primary residence. Third, the property must be a single family residence, a 2-4 unit multiple family home that is occupied in 1 unit by the borrower(s), an FHA approved condominium, or a manufactured home that meets certain criteria by the Federal Housing Administration. The fourth, and probably most important qualification, is that you must have sufficient equity in your property. Equity is defined as the difference between the amount of existing lien(s) on the property and the appraised value of the property. The amount of equity required to qualify for a Reverse Mortgage is based on the age of the youngest borrower.

Another feature or pro of obtaining a Reverse Mortgage is the understanding that it is a Non-recourse loan, meaning their will never be any additional debt passed on to the family or heirs of the senior homeowner(s). This allows the senior homeowner to have peace in knowing that a debt will be passed on after their demise. This feature is offered on any Reverse Mortgage that is insured by HUD, The Department of Housing and Urban Development, which insures 98% of Reverse Mortgages today.

Perhaps, the best feature or pro when obtaining a Reverse Mortgage is the lack of income or credit requirements currently. Most senior homeowners living on a fixed income could not qualify for a any other type of mortgage based upon their debt to income ratio. The lack of credit score requirement also help senior homeowners due to the lack of credit or low credit score based upon the lack of use.

The above features or Pro’s are something that every Senior Homeowner trying to obtain a Reverse Mortgage should know!!!

Reverse Mortgages are heating up again!!

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Advertised as a path to affordable retirement, Home Equity Conversion Mortgages are showing signs of a rebound, drawing scrutiny of regulators seeking to reduce historically high default rates that have cost the government billions.

Industry analysts expect strong growth as the housing market improves, particularly in once hard-hit Sun Belt areas including Phoenix, Miami and San Diego, and aging Americans find value in growing old in their homes.

They are also being boosted by high-appreciation, gentrifying neighborhoods in older cities such as New York’s Brooklyn borough.

Analysts say they expect continued interest as the leading edge of 78 million baby boomers approach 70, the age when a person typically begins to consider a reverse mortgage. A poll by Gallup in April found that 68 percent of Americans ages 50 to 64 said they were “very” or “moderately” worried about having enough money in retirement.

A reverse mortgage allows borrowers 62 or older to receive a line of credit or lump-sum or monthly cash payments off the accumulated equity in their homes. The loan comes due when the borrower dies, moves or sells the house. The borrower’s heirs are not liable if the loan balance exceeds the value of the home — the Federal Housing Administration covers the risk. Reverse mortgages have been pitched in slick TV ads featuring actor Henry Winkler and former U.S. Sen. Fred Thompson.

Philadelphia has ranked at the top for reverse mortgages awarded since 2011, according to an analysis of FHA data for The Associated Press by Reverse Market Insight, a California-based company. This year, Philadelphia was followed by Los Angeles, Washington and Chicago.

After retiring from his newspaper ad sales job two years ago, Myles Griffin and his wife took out a reverse mortgage in May to supplement their Social Security income. The couple took out loans worth nearly $30,000 on the home they have lived in for 40 years in northeast Philadelphia. The money will help pay off credit card bills and remodel their kitchen — leaving open the option to tap into some of the remaining equity later if needed.

“We had a look at whether we wanted to move into a senior living facility, but that was more expensive, so we decided to stay with the house,” Griffin said. “We like our neighbors very much so this was the best way to go.”

Reverse mortgages haven’t always worked well. After the housing boom, many Americans took advantage of flexible lending terms to quickly draw large amounts of cash, later falling into financial trouble during the extended economic downturn.

In the coming weeks, the FHA, a division of the Housing and Urban Development Department, is expected to complete its proposed rule requiring loan applicants to undergo a detailed financial assessment. It’s aimed at reducing a current default rate of 10 percent, roughly double the level of regular mortgages.

The agency also has limited the amount of upfront payments a borrower can receive and recently reissued stern guidance to lenders to curtail deceptive marketing of reverse mortgages.

FIGURES TO KNOW

To cover projected losses of $70 billion over a 30-year period, the FHA was forced last year to receive a $1.7 billion emergency cash infusion from the Treasury, due in large part to losses from reverse mortgages during the downturn. The total projected losses, the most recent available, don’t reflect recent home-price increases, decreasing losses on its portfolio and other changes. Congress last year gave the agency new authority to tighten lending rules.

AGENCY ‘KEEPING A WATCHFUL EYE’

While HUD has power to issue warning letters, revoke a lender’s approval or initiate other sanctions, the Government Accountability Office and Consumer Financial Protection Bureau suggested in 2009 and 2012 that HUD may not have actively monitored marketing practices during the run-up of reverse mortgages in the late 2000s.

• The latest guidance is intended to ensure “lenders know we’re keeping a watchful eye on their marketing and advertising practices,” said FHA Commissioner Carol Galante.

• In the first half of the year, 27,648 reverse mortgages were issued worth $7.2 billion, according to FHA data. Although lower than the same period in 2013, Reverse Market Insight, which analyzed the data, said it expected this year’s total value to exceed the low in 2012, when 52,883 reverse mortgages were issued at a value of $12.7 billion.

• Overall loan volume and applications have also been up in recent months, a leading indicator of increases in reverse mortgages, the company said