Reverse Mortgages
by Jeffrey L. Bangerter
August 28, 2010
A few years ago I help a husband and wife in Citrus Heights, CA get a reverse mortgage loan.
Their goal was to pay off a small current mortgage and make some needed repairs to the home they had lived in for around 30 years and finally take a dream vacation.
They did pay off their mortgage with the new reverse mortgage loan and for the first time in their lives they were able to live in their home with no monthly payments.
They also did make some needed and desired home improvements which made living in their home much more comfortable.
The thing that really made the difference in their lives was the dream vacation, they had always dreamed of taking a cruise to Alaska and during their working lives had never had the time and in retirement they never had the extra money.
The reverse equity mortgage gave them the money they wanted to take the vacation of their dreams.
When they returned they told me all about it and you could see the joy in their eyes as they spoke.
A few months after they returned they found out that the wife had cancer and they spent the next year fighting that terrible illness.
The husband told me of one of their visits to the doctor where they were told that the treatment would cost them $100.00 per pill after their health insurance deductible.
The wife commented that they could not afford her treatment, but the husband pointed out they could not before the reverse mortgage but they now had access to funds that would allow them to treat her.
They did get the treatment but in the end his wife passed on, his comment to me was that the reverse mortgage program allowed his wife to die in dignity.
They did not have to worry about money at a time when they needed to focus on her health and end of life needs.
For me as a reverse mortgage lender I feel sense of satisfaction in knowing that I made a big difference in their life, that the reverse mortgage allowed them to enjoy each other on their dream vacation and it offered them some personal dignity in death.
We all know that we will die and I encourage my elderly clients to embrace life while you are still healthy enough to enjoy it.
The equity in your home is yours to use just like any other money you may have accumulated, you can use it for your benefit and enjoyment or you can leave it to someone else to spend for their enjoyment.
To find out how much enjoyment you can spread around, call a live person or fill out the Reverse Mortgage Free Quote Form on the right of this page…
by Zachary Scott
Sep 21, 2009
There is so much bad information and misconceptions about what is a reverse mortgage that they take on a life of their own and become urban legends and myths. This myths cause good people to miss out on a great opportunity. In addition the reverse mortgage gets a bad rap because of the products that are sold in conjunction with the reverse mortgage. Yes there are side effects to everything we do but the cure may be worth it.
Below are some of the the most common myths I hear when I am out talking to my clients.
Shedding light on these urban legends and myths will give you a new perspective on this great opportunity and give you the confident to access some of the wealth you have accumulated over the years.
The Reverse Mortgage Lender owns my home!
No! You maintain your home as long as you continue to use it as your primary residence. The lender only gets paid when you leave the home, at which time it may go to your estate. Your estate may refinance the reverse mortgage, or just simply give it back to the lender, letting the lender dispose of the home. Any moneys above what is owed on the note will go back to your estate.
If the loan amount exceeds the value of the home I will owe more money!
No! You can never owe more than the value of your home. Reverse mortgages are Non-Recourse loans meaning the balance due will never be more than the value of the home, regardless of the amount borrowed.
My Social Security, Medicare, Medicaid and other benefits will be affected!
No! A reverse mortgage does not affect benefits earned by seniors so long as the funds are not accumulated. Programs vary by state and specific dollar amounts vary also and you can check with your local “Agency on Aging”, or similar organization.
My heirs are burdened
No! Actually by replacing or using the reverse mortgage over a traditional mortgage or refinance will unburden your heirs from having to make house payments and risking foreclosure. In addition, once you vacate the house, the heirs have the choice of selling, refinancing or walking away from the home without any obligation or penalty in which they would be held personally responsible for. Generally the lender gives a six month reprieve plus two 90 day extension before taking any action. Should the lender have to take the home back and foreclose upon it, the heirs are not held responsible for any funds that may not cover the balance.
I must be debt free to qualify for a Reverse Mortgage
No! You may have a mortgage and other debts on your home as long as these debts can be paid off with some or all of the proceeds of the reverse mortgage and/or other available funds.
I must be in good health to qualify
No! Reverse Mortgages have nothing to do with your health and there are no health requirements
I need to have good income and credit to qualify
No! A reverse mortgage loan has no income or credit requirements and will help by giving you more cash flow, it may even make your credit better if you payoff any high interest balances.
Only cash poor or desperate seniors can benefit from a Reverse Mortgage
No and this is the biggest missed opportunity for regular seniors! Because there is virtually no restrictions on how the funds can be used from your reverse mortgage, all seniors will benefit by accessing an asset that is dormant without risking losing that asset because of tradition borrowing and lending but this all really depends on your goals.
I will owe Taxes on the Income
No! Money received from a reverse mortgage is classified a loan and not as income so you are not taxed but ask your tax professional if you are still unsure.
It is going to cost a lot of money
Not Really! If you are going to borrow money from any source available then you are going to have to pay for the use of that money so the cost really comes down to the difference between the other sources. If you would to find out if it makes sense to do the reverse mortgage use the form on the right or…
Call Us Today at 866-309-6626..
by Zachary Scott
Sep 14, 2009
Are your retirement funds dwindling?
We all know Health Care costs are rising!
Is your pension plan being altered or safe?
With this economy retirees have taken notice and the reverse mortgage with guaranteed positive cash flow and no monthly payments has become an increasingly popular tool. .
A typical mortgage refinance involves either a cash-out mortgage refinance or a home equity loan.
Times change quickly and older American property owners just don’t have the time available to grow out of this downturn.
Since everyone’s 401(k) balances and pensions plans have decreased in size, people near retirement are looking at other financial options like reverse mortgages, the federal government’s Home Equity Conversion Mortgage program.
Don’t use your nest-egg, use your home equity first!
The recent trouble in the banking industry and the shakiness of the economy has left many of us feeling jittery and strapped for cash.
The reverse mortgage loan secured by the value of your home, requires no repayment of the loan until the borrower leaves the property.
In essence, you’re able to tap your home’s equity without having to make any payment.
This great for older borrowers who don’t want to use their Social Security funds too early.
You will also avoid making taxable withdrawals from their IRA and 401(k) accounts.
Advantages start in being able to stay home
The reverse mortgages biggest benefit is homeowners can enjoy their current lifestyles and remain in their homes.
The amount owed will be paid when the property is sold and if money remains after the sale the remaining balance is returned to the property owner or heirs.
You can receive payments as a lump sum, or a stream of regular payments to supplement a monthly income.
Many programs allow homeowners to change payment options as often as they wish.
We shop many different lending institutions to offer the best reverse mortgage for you and your loved ones.
We are approved by the U.S. Department of Housing and Urban Development (HUD) and your reverse mortgage will be insured by Federal Housing Administration insurance.
As times become uncertain, the reverse mortgage is becoming an increasingly perfect option for people 62 years of age and older.
The liquidity and no minimum payments allow you to enjoy your lifestyle today without tapping into retirement funds earmarked for tomorrow.
Call Us Today at 866-309-6626 or Use the Form on this page for a free Reverse Mortgage Quote.
by Zachary Scott
July 28, 2009
Check out any neighborhood in America and you will see foreclosure signs.
Foreclosure is rampant across the nation today, but a lot of seniors can avoid losing their homes by taking out a reverse mortgage.
Using the reverse mortgage is a simple 30 to 45 day process but you must first acknowledge their financial circumstances.
"Most seniors believe that it’s un-American to be foreclosed upon and that no one will ever take their house away from them, so they bury their heads in the sand.
Don’t ignore the foreclosure notices and think that it will all just go away.
Ask yourself, "Do you want to remain living in your home?"
If you do then it just make sence to do the reverse mortgage and do it fast.
Time is not on your side if you want to avoid foreclosure.
- HECM Counseling is required and we have a list.
– You will need to sign and date all HECM disclosure documents the we will submit the docs to FHA.
The "short pay-off from the senior’s lender" that is the tough part.
In order to stop the foreclosure, the reverse mortgage lender must free the property from the past-due forward-mortgage lien.
The negotiation between the reverse mortgage officer and the senior’s existing forward lender invariably boils down to how much less than the full balance will the forward lender accept to end the foreclosure proceedings – a discount known as a short pay-off.
Short pay-off negotiations are, by all accounts, time-consuming and frustrating, but there are strategies for increasing the likelihood of a deal with forward lenders.
Even before negotiations start, the reverse mortgage loan officer must find the right person to talk with at the senior’s forward loan provider.
A forward mortgage lender contemplating a short pay-off will request certain documentation from the senior, such as two recent bank account statements, tax returns, a conditional reverse mortgage approval document, reverse mortgage benefit summary, a recent mortgage statement, and an FHA appraisal.
Remember the has a 70% chance of this not working but it can happen.
Call us today to see if the reverse mortgage will work for you.
Just call…866-309-6626 or fill out the no obligation reverse mortgage loan quote form…
by Zachary Scott
July 10, 2009
Since this is a hot topic about the reverse mortgage loan and there is confusion and misunderstanding related to the Fees and Costs lets clear the air. (Check out our Reverse Mortgage Glossary)
Many of the same costs that someone pays to buy a house purchase loan, or to refinance their existing mortgage, apply to reverse mortgages too.
Below is a more in-depth explanation of each sort of fee.
The origination fee covers a bank’s operating expenses including office overhead, promoting costs, etc.for making the reverse mortgage loan.
Mortgage Insurance Premium (MIP), under the HECM program, borrowers are charged a mortgage insurance premium, equal to 2 % of the maximum claim amount, or home price, whichever is less, and a once a year premium afterward equivalent to 0.5 p.c of the loan balance.
The MIP guarantees that if the company managing your account commonly called the loan servicer goes into Chapter 11, the government will step in and ensure you have continued access to your reverse mortgage loan funds.
Additionally, the MIP guarantees that you’ll never owe more than the value of your house when the HECM must be repaid.
An appraiser is in charge of allotting a current market valuation to your home.
Appraisal fees sometimes range between $350-$500.
As well as placing a value on the home, an appraiser must also ensure there are no major structural defects,ie a bad foundation, leaky roof, or termite damage.
Fed regulations remit that your house be structurally sound, and go along with all home safety codes, for the reverse mortgage to be made.
If the appraiser discovers property defects, you must hire a contractor to finish the repairs.
Once the repairs are completed, the same appraiser is paid for a second visit to make certain the repairs have been completed.
The price of the repairs could be funded in the loan and completed after the reverse mortgage is made .
Appraisers often charge $50-$75 bucks for the follow-up examination.
Other closing costs that are typically charged to a reverse mortgage borrower, include;
Credit score fee, confirms any federal tax liens, or other judgments, handed down against the borrower. Decides whether the property is located on a federally designated flood plane. Cost : sometimes under $20
Escrow, Settlement or Closing fee, generally contains a title search and numerous other needed closing services. Cost : $150-$450
Document preparation fee, is charged to prepare the final closing documents, including the mortgage note and other recordable items. Cost : $75-$150
Recording fee, charged to record the mortgage lien with the County Recorder’s Office. Cost : $50-$100
Courier fee, covers the cost of any overnight mailing of documents between the bank and the title company or loan financier. Cost : Generally under $50
Title insurance, is insurance that protects the bank ( lender’s policy ) or the buyer ( owner’s policy ) against any loss coming from disputes over ownership of a property. Varies by size of the loan, though in general, the bigger the loan amount, the higher the price of the title insurance.
Pest Inspection, is generally not required but determines whether the house is infested with any wood-destroying organisms, for example termites. Cost : generally under $100
Survey, is generally not required, but determines the official boundaries of the property. It’s typically ordered to make sure that any adjoining property has not coincidentally encroached on the reverse mortgage borrower’s property. Cost : Generally under $250
Service Fee Set-Aside The service fee set-aside is an amount of money subtracted from the available loan proceeds at closing to cover the projected costs of servicing your account. The servicing put aside is just a calculation and not a charge. Fed rules allow the loan servicer ( that might or may not be the same company as the originating lender ) to charge a once a month fee that ranges between $30-$35. The quantity of cash set-aside is basically set by the borrower’s age and life expectancy.
Remember, the reverse mortgage loan has fees and cost that are going to effect the remaining value or your home when you sell, move or die but the short term value (no mortgage payments, increased cash flow and leverage), and long term value (not having to refinance multiple times and lower overall fees and cost compared to a traditional mortgage) should not be overlooked or discounted.
This is not about a free lunch, it is about looking at your options in a non-emotional way.
We shop multiple reverse mortgage companies, to get your best reverse mortgage, to find out how much money you are entitled to just call…866-309-6626 or fill out the no obligation reverse mortgage company quote form…Upper right of this page…Thanks
by Zachary Scott
June 24, 2009
As a Reverse Mortgage Loan Officer I am struck by the downright misconception of both the Forward/Traditional Mortgage and the Reverse Mortgage.
I am always hearing that the Reverse Mortgage is great but …Watch out for the scams.
The Reverse Mortgage Scam is being frighten out of doing the Reverse Mortgage Loan because of the "glass is half empty" thinking out there.
The Forward Mortgage is a leverage tool, with a little down you get more home than you would otherwise be able to afford.
The Reverse Mortgage Loan on the other hand is a financial planning tool, using a dormant asset (or liability) to do things that you could not enjoy without the extra money.
Both cost money to do, but you should ask yourself what is the actual dollar difference. (penny wise, pound foolish)
Case in point, I have clients that elected not to do the reverse mortgage because they mistakenly thought it cost to much, in favor of a Traditional Forward Mortgage and are now losing their homes.
I think it cost them just about everything, that makes the forward mortgage pretty expensive.
And, by the way not one of my Reverse Mortgage clients are losing their homes and most have a little extra cash.
Remember, you have so called experts that didn’t see this economy coming.
My main point is that if you are over 62 years old and are on a fixed income and are looking to borrow money, the only option that makes sense is the Reverse Mortgage.
The forward mortgage loan really can’t compete again the reverse mortgage loan!
To find out how much money you are entitled to just call please call…866-309-6626 or fill out the no obligation reverse mortgage company quote form…
by Zachary Scott
June 08, 2009
Lets touch on the tax issues first.
I am not a tax professional so please consult your tax preparer before making any tax decisions.
With that said;
A reverse mortgage is a loan, a very unique loan.
As a result, the proceeds from a reverse mortgage loan are not considered taxable income by the IRS and it will not have an effect on your social security and the interest on a reverse mortgage is tax deductible.
However, the tax deduction can only be claimed in the year in which the interest is repaid.
As a result, the size of the potential tax deduction builds up until the year when the reverse mortgage loan is repaid by the homeowner or their estate.
The reverse mortgage loan has no effect on your obligations to stay current on your property taxes, homeowner’s insurance, etc.
So, the homeowner must continue to pay these costs, you could request that these costs be put into an escrow account with the reverse mortgage, but this practice is rare due to the size of the equity that is set-aside.
What about My Estate and My Heirs Inheritance?
The big concern for homeowners considering a reverse mortgage is making sure that their heirs are not saddled with debt and will inherit the home.
When the home is worth more than the reverse mortgage balance your heirs can refinance the reverse mortgage into a traditional mortgage and keep the home or the heirs/estate can sell the home, pay the balance of the reverse mortgage, and keep the remainder of the home’s value.
The heirs/estate have six months to sale or refinance the home with the addition of two 90 day extensions-plus if needed, giving your loved ones one year-plus.
For example:
* A $300,000 home is inherited by the estate with a $125,000 reverse mortgage balance.
* The heirs decide not to keep the home.
* The heirs sell the home for $300,000, pay the lender $125,000, and pocket $175,000.
When the home is worth less than the reverse mortgage balance
the heirs or the estate have no obligation.
The home can be turned over to the lender who will sell the home to repay as much of the balance as possible or the heirs can refinance the reverse mortgage into a traditional mortgage and keep the home.
If you are unsure please call…866-309-6626 or fill out the no obligation reverse mortgage quote form…
by Zachary Scott
June 05, 2009
Everybody’s wants and desires are unique but a need to enjoy a full life is universal.
Generally this implies having enough cash to cover bills and relieve some of the stress that comes from figuring out a way to pay for medical and health-related costs.
As many seniors have recently found a reverse mortgage loan can be a superb money tool for generating additional revenue to cover these costs.
A reverse mortgage (HECM) enables owners 62 or older to convert part of the equity in their houses into tax free revenue while not having to sell the home, give up title, or take on a new monthly mortgage payment, it’s called a reverse mortgage as the flow of payments is reversed compared with a normal home mortgage.
The lender makes payments to you, or prepares a credit line that is available for your use.
This differs from a standard mortgage used to buy or refinance a home, in which you may make monthly home loan payments to a bank.
With a reverse mortgage loan, you keep title to your house and can’t be compelled to leave.
The reverse mortgage loan is paid back when you permanently leave your home.
The flexibility of reverse mortgages has been demonstrated by the thousands of seniors who have used this tool to relieve money worries or to just make their retirement more comfy.
We shop over 8 lenders to get you your best reverse mortgage loan so call or fill out the form on the right to find out how comfy you can be…
by Zachary Scott
May 26, 2009
Today seniors are
experiencing the recession in each facet of their livelihood.
Rising
living and housing costs and potential cuts in social security and losses in annuity values plus
skyrocketing health issues are hurting seniors.
Sadly, many owners are not conscious of
the opportunity the reverse mortgage loan provides them.
With no penalty to
the borrower and nothing personally to repay, the reverse mortgage is
roughly free cash as a return for the prior years spent paying a
mortgage.
In this recession, reverse mortgages become a lifeline to
seniors, helping them save their home and make the best of their
retirement years.
Many naysayers are under the belief that reverse mortgages are expensive.
Expensive compared to what?
Should be your next question.
Compared to having a house payment for the rest of your life.
Compared to leaving your heirs a house payment that they may not be able to afford.
The reverse mortgage has been about for decades,
helping senior householders who are battling to manage their rising
doctor’s bills and other costs during their retirement on top of home
loan payments.
The program permits these homeowners to convert equity
in their houses to a tax free revenue, without increased mortgage
payments, and without the chance or fact of having to sell their home
or sign over the title.
But what happens to even the most stable and
trustworthy of programs in the middle of an industrial recession?
When
it comes to Reverse Mortgages, they only gather strength and continue
to support borrowers.
The U.S. Dept of Housing and Urban Development (HUD) raised the reverse
mortgage boundaries to $625,500 to help the economy and supply
immediate relief to senior homeowners facing unaffordable payments.
Now is the best time in history to be accepted for a Reverse Mortgage Loan.
The implementation of this limit has increased fiscal options for
senior owners in this hard time and will noticeably reduce the burden
of retirement in the recession.
The new limit is just about double
that of the limit from before the last increase in 2008, which
consisted of a jump from $362,790 to $417,000.
The new national
lending limit increase arrives as a part of the American Recovery and
Reinvestment Act of 2009 ( ARRA ), and will be in effect till December
31, 2009.
The new limit is applicable to loans which have just been
licensed in 2009 as well as loans that were outstanding in 2008 so
long as they’d not receive credit approval before the new year.
Now is
the best time to enroll for a Reverse Mortgage, with the lowest rates
in history and a time where fiscal stability is most vital.
Seniors
simply can’t afford to overlook the advantages of a Reverse Mortgage
in a depression.
Seniors might be in the prime of their life, but
become more financially exposed and less resilient when outside
circumstances threaten their pension funds.
Seniors who own their home
may not realize they are sitting on a savings pot that might permit
them more financial independence in a recession than in a time of
industrial excess.
Getting a quote from us is free and easy and has no obligation, just fill out the form on the right of page or call us at 866-309-6626.
by Zachary Scott
May 22, 2009
Imagine for a second purchasing a home with a huge money deposit – say 40 p.c or so – and never having to make another home loan payment.
You might take advantage of a new reverse mortgage program, one of many monetary motivations and other goodies that were a part of the 2008 Housing and Industrial Recovery Act passed by Congress responding to the tanking U.S. Economy in the fading days of the Bush administration.
The Fed. Housing Administration program has some catches : Buyers have to be at least 62 ; the property being bought must be a principal residence and owner-occupied ; the program covers houses valued at close to $625,500 ; and the down payment is important, regularly more than twice that of the normal twenty % required of most standard financing packages.
In addition, reverse mortgage costs and charges are much higher than for traditional loans.
As it is an FHA program, buyers must pay two p.c of the property’s valued price – up to the maximum price of $625,500 – as a premium for Fed mortgage insurance.
That fee is on top of the standard closing costs. Nevertheless, the new program offers some creative options to home purchasers and house owners, even if they’re not yet 62.
It may be a livesaver and help you get a property that you normaly could not have afforded otherwise.
A Reverse Mortgage with a Twist.
Reverse mortgages have been around about twenty years, but they’ve had restricted appeal.
For one reason, they only worked for those that owned their properties outright or had serious equity ; for another, over time, the borrower gave up equity for regular money payments.
This decreases the value of what’s frequently the biggest single asset in an individual’s estate, their home.
Traditionally , reverse mortgages paid borrowers cash every month in return for an augmenting slice of the equity in their houses, thus the name "reverse. It’s a financing tool for seniors to age in place" without the angst of an once per month home loan payment.
When the owner or owners died or moved, the home would be sold and the bank recovered the cash paid out, and interest.
The left over money went to the owners, if they were still alive, or their successors.
HECM stands for Home Equity Conversion Mortgage, the FHA term for a reverse mortgage.
The new program, known as HECM for buying, permits those that qualify to make an enormous money down payment on a home or apartment and use the reverse mortgage as permanent financing for the remainder of the home price.
The dimensions of the down payment varies depending on the age of the purchaser and the interest rate of the loan.
The older the borrower, the bigger the quantity of the home price that may be sponsored.
Between the ages of 62 and sixty five, for instance, borrowers can qualify for roughly 52 p.c of the acquisition price at current mortgage rates.
So on a $300,000 property, the one off deposit would be $144,000 and closing costs.
Similarly , if rates fall, purchasers of the same age would be in a position to finance a bigger portion of the purchase price, reducing their money outlay.
After that, the owner or owners would only need to pay property taxes, insurance and upkeep costs for so long as they live in the home.
Like the older sort of reverse mortgage, no taxes are levied on the profits of the HECM for buying loan.
Creative Options Using a reverse mortgage to buy a home offers eligible buyers a number of new and creative strategies to get a principal residence.
One of the most typical eventualities concerning reverse mortgages is that of a pair who reaches retirement age – generally empty nesters – who want to downsize and eliminate home loan payments.
The HECM for sale program provides a chance for them to sell their existing home and use the equity to make the money down payment on a smaller one.
The purchase program, really doubles the buying power of eligible buyers.
Under the program, a pair with a $1,800 standard payment on a home in which they have $250,000 in equity could sell the house, use $150,000 of their equity to purchase a $300,000 apartment and never make another home loan payment.
They might then have $100,000 in money that might be used for any reason, for example bolstering their pension savings or allowance earnings.
Another example of an eligible couple who owns a home outright and comes to a decision to refinance using an HECM for buying mortgage, pulling $500,000 out in an one-off sum, which then can be employed for an all-cash acquisition of a holiday home.
The couple ends up owning both houses and makes no payments on either for the remainder of their lives.
Expansion potential regardless of the current desperate state of the money markets in the U. S.
Many industry commentators foretell that there’s a reverse-mortgage boom just round the corner that may only be sped up by the new HECM for sale twist.
The program should seriously expand the number of folks 62 and older across the nation who can afford houses at prices that were heretofore unattainable.
Suitability for HECM for sale loans Buyer :
– People and couples must be at least 62.
– Borrowers must occupy the property as their principal residence within sixty days of closing.
– There are no credit or revenue needs.
Sorts of dwellings :
– Existing single-family houses, apartments, made houses and 2-4 unit properties eligible.
– Co-operative units and bed-and-breakfasts are ineligible.
Source of funds :
– Savings, retirement accounts and proceeds from liquidation of private property of sale of current home.
– Unsatisfactory : Gifts, credit card advances, bridge loans, private loans, loans against private assets and subordinate liens.
See if you qualify today…Free quote from us is easy and has no obligation, just fill out the form on the right of page or call us at 866-309-6626.
by Zachary Scott
May 21, 2009
Many retired american seniors are jumping at the opportunity to get a home equity conversion mortgage (reverse mortgage) to tap into their home equity.
The nation’s Reverse Mortgage Lenders asserts more than 112,000 reverse mortgages were sold in 2008. A study by AARP discovered that most seniors who took out a reverse mortgage were happy they actually did.
But prior to signing up for the reverse mortgage program, it is important to understand precisely why you need or want a reverse mortgage.
If you are 62 or older, reverse mortgages can let you tap into your house equity tax free.
Reverse mortgages don’t need a homeowner with good credit history like a traditional mortgage.
Actually, reverse mortgage borrowers with blemished credit pay the same rate as those with ideal credit.
Relying on the program you might receive an one-off sum, a credit line, or regular payments.
Also, the cash will not need to be paid back till you sell your house, stop living in it, or die.
Reverse mortgages do come with costs but the value is financial freedom.
HUD’s HECM (Home Equity Conversion Mortgage) also includes mortgage insurance.
Whilst these costs are not as high as those related to selling your house, they’re serious.
Often , you can minimize the consequences of up front costs if you stay in the home.
If leaving an unfettered home to your successors is vital, remember a reverse mortgage can exhaust the equity from the home.
These are some questions AARP suggests you consider before joining up for a reverse mortgage: Why are you wanting a reverse mortgage?
Do you need to cash to help pay your regular debts or are you looking to make a big purchase,eg a holiday or car?
Typically it is not sensible to use long term financing for short term items but that depends on your situation.
Can you afford the reverse mortgage fees?
Do you have enough equity in your house for a reverse mortgage?
The uneasy home market saw many of us stripped of lots of the equity in their houses.
Is there an alternate way you can borrow the money you need,eg a home equity line, which might essentially cost less in the long run?
For smaller amounts, home equity loans are preferable.
How is your credit rating and income?
If you have credit issues or inadequate earnings, a reverse mortgage might be the least expensive ( or only ) option open to you because there’s no credit qualifying and you are not making any monthly payments.
If you think and feel a reverse mortgage is right for your situation, we shop multiple banks and lender to ensure you get your best reverse mortgage loan.
Getting a quote from us is free and easy and has no obligation, just fill out the form on the right of page or call us at 866-309-6626.
by Jeffrey Bangerter
April 16, 2009
Reverse Mortgages a Lifesaver For Some, But Beware Of Shady Lenders
Richard Burnett | Sentinel Staff Writer
March 27, 2009
Don Mulcahy, 68, of Orlando did a reverse mortgage and used the cash to pay off his regular mortgage. (CASSI ALEXANDRA, ORLANDO SENTINEL / March 27, 2009)
Once shunned by many as too risky, reverse mortgages have made a comeback as some cash-strapped seniors tap their home equity to replace savings battered by Wall Street’s meltdown.
Sales of reverse mortgages have increased at a double-digit rate recently and are on pace to set a record this year, according to the National Reverse Mortgage Lenders Association.
More than 112,000 were sold in 2008, up nearly 50 percent from 2006, the trade group reported.
Orlando now ranks seventh nationwide in reverse-mortgage sales, with more than 3,500 in 2008, according to federal regulators.
But seniors should still weigh the pros and cons carefully before they go forward with a reverse mortgage, experts say.
And as home values have plummeted, some will find they have little home equity left to tap.
At its best, a reverse mortgage offers people 62 and older a sweet source of cash as a monthly payout, line of credit or lump sum.
The money is tax-free, and the loan doesn’t have to be paid until borrowers die or sell their home.
Most reverse loans are also federally insured, which protects the payout even if the lender goes under.
But at their worst, reverse mortgages may come with confusing terms, high-pressure sales tactics and expensive fees.
Such practices have tainted reverse mortgages in the past, as some lenders were accused of trying to manipulate older homeowners into squandering their home equity.
‘It’s not for everyone’
Proponents insist that those days are long gone.
Don Mulcahy says his finances have run a lot smoother since he put his mortgage in reverse a few years back.
The 68-year-old former telephone salesman from Orlando used the proceeds to pay off his regular mortgage and save almost $1,000 a month.
He liked the idea so much he started selling reverse mortgages himself.
“It’s not for everyone,” Mulcahy said.
“But it turned out to be such a good deal for me, I figured others should know about it.
”
A federal law enacted last fall capped some major fees for reverse mortgages, required pre-loan consumer counseling and barred lenders from “cross-selling” annuities and other financial products.
The industry itself has also worked to improve its reputation by adopting conduct standards and responding to complaints.
“There are definitely more safeguards now,” said Joe Nunziata, chief executive officer of Orlando-based FBC Mortgage, the lending unit of Florida Bank of Commerce.
But the industry still has a way to go to get a clean bill of health, AARP says.
“Despite the new laws, we are already still hearing reports of reverse-mortgage lenders selling high-priced annuities and other investments to borrowers,” said Bronwyn Belling, a reverse-mortgage analyst for the AARP Foundation.
“Regulators are paying close attention to this problem, and we’re going to continue to watch it very closely.
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Many older homeowners are considering reverse mortgages for the first time, said Richard Schram, an executive with the Consumer Credit Counseling Service of Central Florida, which provides reverse-mortgage counseling.
Some are looking to supplement their retirement income, while others hope it will help them prevent financial disaster, he said.
“Unfortunately, we find a lot of seniors coming to us now in need of getting a reverse mortgage because otherwise they’re looking at personal bankruptcy,” he said.
“If they don’t have their home paid for, they’re trying to get out from under the monthly mortgage payments to avoid insolvency, save their homes and have money to pay other bills.
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But since home values have plummeted in the mortgage meltdown, many older people don’t have enough home equity left to tap with a reverse mortgage, said Christy Cowherd, a reverse-mortgage lender with Orlando’s First Commercial Bank of Florida.
“That can be a real blow to them,” she said.
“Some come in with expectations that are way too high.”
Even people who have paid off their homes and are otherwise in good shape financially have seen their home equity dissipate.
In some cases, their hopes to live off of their home’s value are gone, and their plans to sell it and buy a retirement condo have been put on hold.
Fewer qualify nowadays
Mulcahy said that only a couple of years ago, nearly everyone who applied for a reverse mortgage had enough home equity to make it work.
Now maybe half of the applicants can do it.
“A lot of people just waited too long,” said Mulcahy, who conducts reverse-mortgage seminars at the Marks Street Senior Center in Orlando.
“Even those who can take out a reverse mortgage now get less money than they would have a few years ago.
Me, I was lucky. My house today is not even worth near what it was then.
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In mulling a reverse mortgage, consumers should compare offers and check the lender’s credentials with state regulators and better-business agencies, said Frank Arnall, a financial planner with the Orlando office of United Planners Financial Services of America.
“I have helped some clients save easily thousands of dollars by getting multiple quotes from different lenders and bringing the fees down,” Arnall said.
“You have to shop around.”
by Jeffrey Bangerter
April 07, 2009
I took a call this past Friday from a woman that is trying to close her Reverse Mortgage with us, it is on her mobile home and it needed a permanent foundation installed in order to qualify under HUD Rules.
She proceeded to tell me that her current bank will start foreclosure proceedings this next Friday if we don’t close her new Reverse Mortgage before that.
She also told me that she not only needed the new Reverse Mortgage Loan to pay off her current loan and keep her secure in her home for the rest of her life but that with the remaining money she is going to buy a used car.
As of right now she has no car and is home bound because she cannot afford one unless or until we close her new Reverse Mortgage.
She went on to tell me that with her COPD she had to have a car to get around because she couldn’t drag around her oxygen tank even to go get groceries.
Every few days I hear someone tell me that the Reverse Mortgage is somehow a bad thing, yet I hear stories like this every week.
I guess if you have all the money you need or want, it may look like the Reverse Mortgage is expensive or that you are spending your children’s inheritance, but until you walk a mile in someone like this woman’s shoes you will never know.
I am proud of the fact that we at WSB Mortgage Services, Inc. have been able to help a few thousand senior’s live a more comfortable life.
To those negative people that only see the cost, I hope you will slow down for a minute and think about the person that is looking into a Reverse Mortgage Loan and try to put yourself in their situation.
Then ask yourself, should I continue to struggle for the rest of my life so my heirs get more or should I live a comfortable life and let my heirs have whatever is left?
If you know anyone like that, please submit the information so we can assist you in helping them.
by Riley Bangerter
April 01, 2009
Fannie Mae announced some significant pricing changes, just a few days before lenders will make the switch to mandatory delivery for live pricing.
The change brings higher margins to the reverse mortgage industry with some lenders offering HECMs with margins as high as 3.75%.
According to people who “in the know” Fannie Mae doesn’t want to be the only investor for reverse mortgages.
The significant change in pricing could signal that Fannie Mae is looking to attract other secondary market investors.
Our industry has relied almost entirely on Fannie Mae for the past 12 months and having one investor to sell loans to may not be a smart strategy.
So will the higher margins attract interest from other investors? People in the industry are confident it will.
“Long term, the changes are better for the industry,” said David Peskin, CEO of the Senior Lending Network.
He added, “By having more than one take out there is less risk for lenders and competition from other investors will help drive margins down for borrowers in the long run”.
Here at WSB Mortgage Services, Inc. we still like the idea of having eight or nine reverse mortgage lenders to pick from so we can find the most competitive reverse mortgage product for our customers; we shop the lenders so you know you have the best program.
One last point, don’t wait!
I had one of clients just today that wanted to wait until he was closer to his next birthday so he could qualify to get more money, because of the rate increase by Fannie Mae he is now getting $30,000 less.
I have never seen a situation that improves because the borrower waited to get their reverse mortgage, if you are thinking about it, take action now!
by Jeffrey Bangerter
March 31, 2009
One of the most interesting issues I have noticed as President of WSB Mortgage Services, Inc. is how many seniors decide not to do the Reverse Mortgage because they want to leave their home to their children, which means the senior is willing to do without so that their children will have more after Mom and Dad die.
Almost all of the children I have spoken to say they want their parents to enjoy their lives and use whatever monies they can to allow them to do whatever they want in their later years.
Here is the real thought I don’t understand; if your children are hurting now, if they are “Under Water” on their mortgage now, why wait until you die to help them?
If you are willing to do without so they can have more why not help them now while the economy is down and then when things pick up they will be even better off?
The New York Times article points to a report that estimated that 30 percent of homeowners aged 45 to 54 were in this predicament, known as being “under water.” (About 15 percent of older baby boomers, 55 to 64, fell into that category as well.)
The report also found that baby boomers in the 45-to-54 group saw their overall net worth plummet by about 45 percent over the last five years, to a median level of $94,200 from $172,400.
The report continues; Even baby boomers who aren’t under water could have a more difficult time affording retirement.
According to the center’s report, five years ago, the median baby boomer household, with people aged 45 to 54, had enough net assets to generate about $14,000 in annual interest once the homeowners reached age 65.
Now, that figure is just under $8,000.
If you really want to help your Adult Children, is waiting until you die really the best solution?
Get a Reverse mortgage quote today and see if you can’t provide a solution for your family now.
by Zachary Scott
March 30, 2009
As a Reverse Mortgage Loan Officer I find that all the debate about interest rates are really a mute point.
How can you say that, you ask?
Interest rates are a mute point because the value that the reverse mortgage offers is what you are really buying.
Interest rates, percentages and terms do not tell the whole story, they don’t even tell part of the story.
You live life, not interest rates and the reverse mortgage is about living your life.
In living your life you may have a need or want to borrow money that you know you are going to have to pay for.
If you sell your home you are going to have to pay to sell it and then pay to live somewhere else.
Or, do nothing and put up with the situation you are in which also has a cost you must bear.
In all the situations above you need to determine the different in the cost related to your situation now and into the future.
It goes back to the pay me now or pay me later, which I have a few clients losing their homes because they thought the reverse mortgage cost to much when in reality that 1% no cost loan is now costing them their home. (Now that is expensive!)
So beware of all the interest rate fear mongering as it should not be the only factor in your decision to do the reverse mortgage.
Remember you need to understand the value the reverse mortgage offers to you and the value to your loved ones, not whether the interest rate is 3.105%, 3.113% or 4.123%.
Call me today or fill out the form on the right and we can have an informed conversation about whether the reverse mortgage is the right thing to do based on your situation.
by Jeffrey Bangerter
March 22, 2009
When OneWest Bank announced that it had closed on the deal to purchase IndyMac, the company said it would continue to operate Financial Freedom but didn’t mention anything about laying off some of its employees.
Earlier this month there was a conference call where a script was read to announce layoffs and was followed by an HR woman to answer questions.
It’s not clear how many Financial Freedom employees were laid off yet, but reports estimate layoffs of at least 20 percent of its staff.
Notices were sent out today to alert brokers that Financial Freedom Senior Funding is changing its name to Financial Freedom Acquisition LLC but there was no mention of layoffs.
Any new loan application received by Financial Freedom on or after March 20, 2009 will be processed and closed in the new name.
“We will continue to offer and service reverse mortgages under the Financial Freedom brand and you will experience the same exceptional customer service and reverse mortgage expertise,” said the alert from Financial Freedom.
WSB Mortgage Services, Inc. represents between six and eight lenders at all times to help manage the volatility in the Mortgage and Banking industry, this way if things change with one lender we can take our clients to one of our other lenders.
This is not to say that the change at Financial Freedom is a bad one, it just illustrates how the current problems in our economy make it prudent that we are sure that if a lender stopped doing Reverse Mortgage business it would not affect our clients.
Use us to shop for your best Reverse Mortgage.
by Jeffrey L. Bangerter
January 06, 2009
The Federal Deposit Insurance Corporation (FDIC) has announced the sale of failed S&L IndyMac to a new owner, IMB Management Holdings LP.
Included in the transaction is Financial Freedom, the number one reverse mortgage lender/home equity conversion mortgage (HECM) for seniors.
The FDIC says Financial Freedom is a reverse mortgage platform “with $1.5 billion of reverse mortgages and MSRs representing an unpaid principal balance of $20.2 billion” (MSRs = mortgage servicing rights).
For reverse mortgage borrowers and retired seniors the continuation of Financial Freedom should be seen as a positive event because more competition is always good for senior borrowers and Financial Freedom has been a major player in the reverse mortgage loan marketplace.
The purchase price will be roughly $13.9 billion.
The FDIC says it “has agreed to share losses on a portfolio of qualifying loans with New IndyMac assuming the first 20% of losses after which the FDIC will share losses 80/20 for the next 10% of losses and 95/5 thereafter.”
What this means in potential cash liabilities for the FDIC is unclear.
The new owners will also put in $1.3 billion in fresh capital.
In addition, the new owners will continue the FDIC’s existing loan modification/mortgage modification program and the FDIC will receive a majority of all cash flows generated from approximately $2 billion portfolio of construction and other loans.
We shopped 8 now 6 Reverse Mortgage Lenders and do most of our Reverse Mortgage business with Financial Freedom and they have always been honest and fair.
May they have continued success.
Updated by reversemortgage4u.com
December 22, 2008
This New Home Purchase Program that is avaliable January 01, 2009 is very exciting below are a few Frequently Asked Questions-If you are still uncertain please call us at 866-309-6626 to see if this Program will fulfill your needs.
- What is HECM for Purchase?
HECM for Purchase allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.
- What is the purpose of the program?
The program was designed to allow seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction by eliminating the need for a second closing. The program was also designed to enable senior homeowners to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc.
- What activities can be performed prior to January 1, 2009?
Lenders may take application but they may not process or perform services that would result in a charge to a prospective mortgagor.
- Can lenders refer clients, who are interested in a HECM for purchase transaction, to a HUD-approved housing counseling agency before January 1, 2009?
No. Counseling on HECM for purchase transactions will become available January 1, 2009. Counselors need time to adjust to the new provision
- Can a lender lock-in the expected average mortgage interest rate on applications that are taken prior to January 1, 2009?
Yes. Lenders choosing to lock-in at initial application will do so at their own risk of knowing that the 120-day clock begins on the day the FHA case number is issued January 1st or later.
- What property types are eligible?
Existing one-to-four unit properties where construction has been completed and the property is habitable.
- Can a HECM for purchase be used to satisfy outstanding payment obligations associated with a land contract?
Yes, if the property will be used as collateral for the HECM and the mortgage will be held in fee simple, or on a leasehold under a lease for not less than 99 years which is renewable, or under a lease having the remaining period of not less than 50 years beyond the date of the 100th birthday of the youngest mortgagor.
- Can a lender take application on a property that is under construction and not habitable?
No. The lender may only take application once the Certificate of Occupancy or its equivalent has been issued.
- What property types are ineligible?
- Cooperative units;
- Newly constructed residence where a Certificate of Occupancy or its equivalent has not been issued by the appropriate local authority;
- Boarding houses;
- Bed and breakfast establishments;
- Existing manufactured homes built before June 15, 1976; and
- Existing manufactured homes built after June 15, 1976 that fail to conform to the Manufactured Home Construction Safety Standards, as evidenced by affixed certification labels (e.g., data plate and HUD certification label) and/or lack a permanent foundation as required in HUD’s Permanent Foundations for Manufactured Housing Guide.
- Are set asides for property charges (i.e., tax and insurance) allowed?
Yes
- If the lender suspects the senior has become involved in a property flipping scam, who should be contacted?
If a lender suspects a senior has become a victim to a property flipping scam, the Processing and Underwriting Division of the local HOC should be contacted.
Complaints may be reported to HUD’s Inspector General Hotline at:
HUD Office of Inspector General Hotline, GFI
451 7th Street, SW
Washington, DC 20410
Toll free: 1-800-347-3735
TDD: (202) 708-2451
- Are gifts an acceptable source of funding?
No. Prospective mortgagors may only use their own money or money obtained from the sale of assets. FHA prohibits the use of loan discount points, interest rate buy downs, closing cost assistance, builder incentives, gifts or personal property given by the seller or any other party.
- What would be an “allowable FHA funding source” for gap financing of the equity portion?
A withdrawal from the mortgagor’s savings or retirement account would be an acceptable funding source.
- Can prospective mortgagors apply credit card cash advances towards the required monetary investment or closing costs?
No. This would be a violation of 24 Code of Federal Regulations 206.32(a), which requires all outstanding obligations connected to the HECM transaction, purchase or otherwise, to be satisfied prior to or on the date of closing.
- Are seller concessions allowed?
No. Seller concessions are applicable to forward mortgages only.
- Is seller financing permitted?
No
- Is the Real Estate Certification required?
Yes
- When purchasing a new principal residence, if the HECM proceeds do not cover the sales price, can part or all of the property’s indebtedness be subordinated behind the first and second HECM liens if the existing lien holder is willing to execute a subordinate agreement?
No. All existing liens must be satisfied at the HECM closing.
- Can prospective mortgagors obtain a secured or non-secured loan from another asset (i.e., car, home equity line of credit, or investment property or second home) to satisfy the monetary investment or closing costs?
No. Consistent with existing policy, bridge loans and other interim financing methods associated with HECM transactions are prohibited, unless the unpaid or outstanding obligation can be satisfied prior to or on the day of closing.
- Should the lender obtain a credit report for non-borrowering spouses?
Yes. Although one spouse will become the HECM mortgagor, the lender must obtain the credit report for a review of financial obligations, monetary judgments and liens that could jeopardize the HECM lien status/clear and marketable title.
- Under what conditions may a senior cancel the purchase transaction?
The senior may decide to cancel the purchase transaction at any time prior to the date of closing. If the senior decides to cancel the transaction, he/she must notify all parties in writing. Where earnest money has been provided, the senior should review the sales contract to determine if the earnest money is refundable. The Federal Reserve Board of Governors should be contacted for right of rescission and Truth in Lending Act guidance.
- Can the HECM mortgage participate in a rent back/leaseback agreement with the seller?
No. When purchasing a new principal residence, the HECM mortgagor has 60 days to occupy the home. Unlike a forward mortgage, there is an increased risk to FHA when the home is not occupied by the HECM mortgagor. Prior to closing, the HECM mortgagor and seller should agree to a date for physical occupancy of the property and the lender should confirm occupancy prior to their submission of the case binder to the local HOC for endorsement.
- Are the mortgage proceeds paid to the seller through escrow?
The title company (settlement agent) is responsible for disbursing funds in accordance with State law.
- Are there special procedures for foreclosure homes that will serve as collateral for a purchase transaction?
No. FHA has sufficient valuation guidelines related to comparable sales and declining markets to address the resale of foreclosed properties. HUD has imposed a standard of accountability to which lenders, sponsor lenders, and loan correspondents will be held is the same as the standard used to impose civil money penalties for program violations, and that standard is one of knowing (actual knowledge) or had reason to know.
- Does FHA have special eligibility requirements for first-time homebuyers?
No. FHA encourages all first-time homebuyers to meet with a reverse mortgage counselor that offers pre-purchase counseling to educate themselves on the responsibilities of becoming a homeowner. Prior to signing a sales contract, FHA encourages a home inspection of all properties that will serve as collateral for HECM for purchase transactions. The inspection serves two purposes, to determine the magnitude, if any, of repairs and/or rehabilitation the home as well as helps the buyer to negotiate the purchase price in situation where a home requires repair or rehabilitation.
by Riley Bangerter
December 04, 2008
The one thing I absolutely love about the Reverse Mortgage business is the ability to truly change someone’s life. I’m sure many of you have seen this as well.
Here is a story of one of my recent clients that really made me feel that what I am doing is more than a reverse mortgage job or career it is truly a calling.
My client Miss Kelley was recently widowed after a long fulfilling marriage.
She has seen the ups and downs of the economies through her lifetime, but was always assured that her husband could and would provide for her and her children.
As with most marriages each spouse has specific responsibilities and Mr. Kelley handled the finances, so much so the Miss Kelley became unaware of what money they had or where they had it.
After fighting a battle with cancer Mr. Kelley passed away last year leaving his wife to sort out the finances, something she hadn’t had to do in over 50 years.
The recent economic slow down has hit Miss Kelley very hard.
Not only did she lose her husband but she has lost every penny of savings and could no longer afford her monthly obligations on her fixed income.
When I first met with Miss Kelley and her daughter I could see that she was truly scared of what the future holds.
Adding to this dilemma Miss Kelley’s daughter and her husband both worked in the construction industry and both have lost their jobs due to downsizing and are unable to help with the monthly obligations.
After explaining the reverse mortgage loan to the family I know they saw the benefits, but it really did take quite awhile to make Miss Kelley comfortable enough to make a financial decision.
Remember she hasn’t had to do that in over 50 years!
The family decided to move forward and we have closed the reverse mortgage loan eliminating Miss Kelley’s mortgage payments and increasing her monthly income with the Lifetime payments the reverse mortgage provided.
I got a call from Miss Kelley’s daughter Samantha and she started crying on the phone because she was so grateful that our paths crossed and that I was able to walk her and her Mother through the process.
I know deep down that I have changed the lives of these people and I have made new friends while doing so.
As I said before, the Reverse Mortgage is more than a Job or a Career. It is a Calling!