I Am Leaving My Home To My Kids!
by Jeffrey L. Bangerter
November 17, 2008
How are your children and grandchildren doing financially right now?
How is your retirement or future retirement doing right now?
Unfortunately we are in tough economic times right now and it is likely to continue to be bad or get worse.
If you have always planned on leaving your home to your heirs that is great, but couldn’t you help them more NOW than after you die?
Just from the financial prospective, if you could help them pay down their mortgage or cars or even other debt, wouldn’t their lives be much better?
From a more personal perspective, think of the joy you could receive while you are alive of providing the much needed release of the financial pressure your family is under, if you wait until you die you get no joy from giving the gift and it may be too late to help them keep their home or avoid bankruptcy. ...continue reading>>
Home Equity Conversion Mortgage for "Home Purchase" Frequently Asked Questions!
from HUD, reformatted by Zachary Scott
November 13, 2008
Q. What is HECM for Purchase or Reverse Mortgage Purchase?
A. HECM for Purchase allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.
Q. What is the purpose of the home purchase program?
A. The home purchase 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 home to meet their physical needs, i.e., handrails, one level properties, ramps, wider doorways, etc.
Q. What activities can be performed prior to January 1, 2009?
A. Lenders may take application but they may not process or perform services that would result in a charge to a prospective mortgagor.
Q. Can lenders refer clients, who are interested in a HECM for purchase transaction, to a HUD-approved housing counseling agency before January 1, 2009?
A. No. Counseling on HECM for purchase transactions will become available January 1, 2009. Counselors need time to adjust to the new provisions
Q. Can a lender lock-in the expected average reverse mortgage interest rate on applications that are taken prior to January 1, 2009?
A. 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.
Q. What property types are eligible?
A. Existing one-to-four unit properties where construction has been completed and the property is habitable.
Q. Can a HECM for purchase be used to satisfy outstanding payment obligations associated with a land contract?
A. 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.
Q. Can a lender take application on a property that is under construction and not habitable?
A. No. The lender may only take application once the Certificate of Occupancy or its equivalent has been issued.
Q. What property types are ineligible? ...continue reading>>
Reverse Mortgages for Dummies Book Review!
by Jeffrey L. Bangerter
November 07, 2008
| Reverse Mortgage for Dummies |
Reverse Mortgages for Dummies is a pretty good book although I think it goes into more detail than is necessary for most people.
This book like many of the books written about reverse mortgages is getting a little dated, but I am more concern about a couple of mistakes it has.
The first mistake may just be a type-o but on page 77 there are two points talking about the Mortgage Insurance Premium (MIP) paid on the Home Equity Conversion Mortgage (HECM) reverse mortgage, this is the FHA Insured loan, the book says the MIP is 2% of the home value or lending limit whichever is more and it is actually 2% of whichever of those is less.
This could be a major difference since the lending limit as of November 1, 2008 is $417,000 Nationwide and if your home is worth $200,000 your fee is $4,000 not $8,340!
A small mistake in the book but anyone doing the math might go into major shock unnecessarily. ...continue reading>>
Reverse Mortgages get Better says Kiplinger.com?
by Jeffrey L. Bangerter
November 06, 2008
There is a decent article today on Kiplinger.com but it has a mistake in the first paragraph! “Retirees concerned about their decimated savings should take a second look at reverse mortgages.
As of November 1, 2008, homeowners everywhere may borrow up to $417,000.
Previously, the Home Equity Conversion Mortgage program assigned various lending limits, ranging from $200,160 in rural areas to $362,790 in the most expensive housing markets.” Now the facts, you cannot borrow up to $417,000 the numbers are incorrect for the old rules as well.
HUD (US Department of Housing and Urban Development) places a maximum home value that it allows reverse mortgage lenders to use to calculate how much money we can lend you and that number is now $417,000 in the continental US.
That is a lot different than saying that you can borrow up to $417,000 because the calculation for the reverse mortgage loan amount is based on the age and current expected interest rate blended with the new $417,000 limit. ...continue reading>>
How Safe is Your Reverse Mortgage?
by Jeffrey L. Bangerter
November 05, 2008
The HECM insurance guarantees that you will receive your promised loan advances and not have to repay the loan for as long as you live in your home, no matter:
- how long you live there;
- what happens to your home's value; and
- what happens to your lender.
If you have chosen the Home Equity Conversion Mortgage (HECM) Reverse Mortgage, ...continue reading>>
The New Reverse Mortgage Formula Book Review!
by Jeffrey L. Bangerter
November 04, 2008
| The New Reverse Mortgage Formula |
The New Reverse Mortgage Formula How to Convert Home Equity into Tax-Free Income written by Tom Kelly is an excellent book to help you understand how the reverse mortgage works.
In Chapter 1 Tom points out that "Right Now, an American turns 50 every seven seconds."
He goes on to point out that "The pressure on baby boomer households to generate income and maintain lifestyle in the traditional retirement years will take on a new focus."
I agree since this last week I understand that one of our Presidential Candidates is thinking about removing the tax deduction on 401k contributions and as I am writing this on November 1st 2008 the stock market has eliminated about 40% of most people's retirement assets, the need for alternative retirement sources is greater than ever. ...continue reading>>
You Can Purchase a Home with a Reverse Mortgage!
by Jeffrey L. Bangerter
November 03, 2008
Starting January 1st 2009 you can use a reverse mortgage to finance the purchase of a home to be used as your primary residence.
The Federal Housing Administration (FHA) defines “HECM for Purchase” as a real estate purchase where title to the property is transferred to the HECM mortgagor, which the mortgagor will occupy as a principal residence, and, at the time of closing, the HECM first and second liens will be the only liens against the property.
HECM mortgagors must occupy the property within 60 days from the date of closing.
Lenders are required to ensure all outstanding or unpaid obligations incurred by the prospective mortgagor, in connection with the HECM transaction, are satisfied at closing. ...continue reading>>
Reverse Mortgage Useful in Tight Market!
by Jeffrey L. Bangerter
October 30th 2008
The Spectrum Online has a nice article about seniors using the reverse mortgage as an alternate financial tool while home prices are dropping.
“Many of these senior homeowners rely on the family home as their ultimate source of financial security and stability.
“For most people, their home is their best financial asset,” said David Peskin, CEO of Senior Lending Network.”
I agree with this quote from David Peskin of Senior Lending Network which is one of the reverse mortgage lenders WSB Mortgage Services, Inc. offers to our senior borrowers. ...continue reading>>
The Credit Crunch and Reverse Mortgage Loans!
by Jeffrey L. Bangerter
October 24th 2008
The reverse mortgage is a falling equity, rising debt mortgage in that the borrower receives payments from their home and therefore, the borrower is not in risk of defaulting on the mortgage payments as there are no monthly payments for the borrower to make.
So when there is talk of a credit crunch from the standpoint of borrowers not obtaining credit due to their inability to repay the obligation, reverse mortgage borrowers do not have that same concern.
The credit crunch does affect reverse mortgage borrowers in other ways.
We have already seen the exodus of almost every jumbo or proprietary reverse mortgage product that was available to senior homeowners with very high valued properties. ...continue reading>>
Reverse Mortgage Book Review:
by Jeffrey L. Bangerter
October 13th 2008
| Reverse Mortgages |
In his book "Reverse Mortgages Cash for the Rest of Your Life!" the author, Greg Patti –CPA, MBA, CSA, makes some good comments right off the bat, in his note to readers he points out “The Number 1 Questions on the mind of retirees is: Will the money last?”
He goes on to explain that “Reverse mortgages offer a direct answer to that question – and that answer is yes!”
He continues to help readers understand that “Reverse mortgages represent the beginning of a revolutionary, and permanent, change in the home finance industry.
These no-payment loans provide tax-free retirement income that does not have to be repaid for as long as you live in your home.”
I agree with his position that “If you are a senior citizen, the adult child of a senior citizen, or just someone who is planning to retire one day, you owe it to yourself to check out all the options for financing the years ahead.” ...continue reading>>
Another “Reverse Mortgage News Article” That Comes Close?
by Jeffrey L. Bangerter
October 10th 2008
An article on National Consumer Law Center’s web site claims that a reverse mortgage “transaction is likely to be quite confusing” and “could also put a lot of your money in someone else’s pocket.”
Really, someone is going to get paid to work, what an outrage!
The article also says that on a $250,000 home the cost will be $25,000.
With a little bit of checking the writer of the article might have found that the FHA Mortgage Insurance Premium charged by the government is 2% of the home value up to the maximum lending limit for that county or $5,000. ...continue reading>>
Don’t Get Tripped Up By Greedy Salespeople!
by Jeffrey L. Bangerter
September 19th 2008
I was just reading an old article on CNNMoney.com where they try to make the point that you should not get a reverse mortgage and then put the money into an annuity or use it to buy Long-Term Care Insurance.
I like the idea behind the article but they really had to stretch to make the point and then they missed the mark on some of the issues, in my opinion.
They use a calculation showing the reverse mortgage interest at 7% and an annuity paying 5% and then graph it out to show that you will lose money, no kidding paying 7% and only earning 5% is a bad idea? ...continue reading>>
Borrower Paid Reverse Mortgage HUD Counseling...
by Jeffrey L. Bangerter
September 17th 2008
The Department of Housing and Urban Development (HUD) published Mortgagee Letter 2008-28 which prohibits mortgagee funded HECM/reverse mortgage counseling.
The mortgagee letter implements the section of the Housing and Economic Recovery Act of 2008 which restricts reverse mortgage lenders from paying for reverse mortgage counseling.
HUD requires that the HECM/reverse mortgage must be executed by a mortgagor who received counseling from an independent third party that is not either directly or indirectly associated or compensated by a party involved in: ...continue reading>>
Reverse Mortgages Are Viable Way To Unlock Home Equity?
by Zachary Scott
September 16th 2008
With all of the disarray in the financial markets Seniors are finding out that what seemed like a sure thing (Home Equity Rising) is risky at best.
Seniors fortunate enough to see past all the misinformation about Reverse Mortgages and used this financial tool are now benefiting (peace of mind).
How are they benefiting? Gary and Susan are a good example, three years ago they looked into a California Reverse Mortgage to payoff some credit cards, a small tax lien and remodel their kitchen.
They decided against the HECM Reverse Mortgage because they thought the Reverse Mortgage was way to expensive. ...continue reading>>
What is the Process to Get a Reverse Mortgage?
by Jeffrey L. Bangerter
September 15th, 2008
One question I hear from my Reverse Mortgage Clients is, "What is the process to get a Reverse Mortgage?"
Below I have listed in general a detailed list on how the steps will occur in setting up your Reverse Mortgage.
Step 1. Action
You contact us to get the information you need, to decide if the Reverse Mortgage is right for you.
Step 2. Application/Documentation
Once you decide that a Reverse Mortgage is beneficial for you, together we fill out and sign the application disclosures and select the payment option: Monthly payments, credit line, lump sum payment or combination thereof, your choice.
Step 3. Counseling
The Wall Street Journal Right Again, About the Reverse Mortgage Loan
by Jeffrey L. Bangerter
September 12th, 2008
There is an excellent article in The Wall Street Journal that points out that if you stick with a Government Insured Home Equity Conversion mortgage (HECM) type of reverse mortgage then you have no risk of the lender going out of business and you no longer receiving your payments from the bank.
In fact the payments would then start coming from HUD if your lender went out of business.
The article does a great job of pointing out that a reverse mortgage loan “can help older homeowners with mortgage payments, home maintenance, property taxes, among other expenses.” ...continue reading>>
The Death of the Jumbo Reverse Mortgages?
by Jeffrey L. Bangerter
September 11th, 2008
By now, if you have been watching the news at all you’ve either read or heard all about the bankruptcy of Lehman Brothers.
Lehman was the source for one of the two remaining proprietary or jumbo reverse mortgage loan programs in the market for senior borrowers.
2008 has seen the exit of all but one proprietary program which we at WSB Mortgage still offer. ...continue reading>>
AARP Article “A First Look at Older Americans and the Mortgage Crisis”
by Jeffrey L. Bangerter
September 10th, 2008
A new report from AARP shows that “about 634,000 Americans age 50 and older are between 30 an 180 days late on a first mortgage.” http://assets.aarp.org/rgcenter/econ/i9_mortgage.pdf
AARP purchased a 2.5 million person list from a much larger database to compile the data.
The report shows that “Foreclosure rates are higher for African American and Hispanic homeowners, than for Caucasian homeowners, in all age brackets.”
Maybe someone should be telling these folks to get a reverse mortgage so they will always have a home to live in. ...continue reading>>
Reverse Mortgage aren't for Everyone?
by Zachary Scott
September 9th, 2008
I hear and read that the Reverse Mortgage loan is not for everyone and this may or may not be true, but usually all the bad press about the Reverse Mortgage Loan are associated with the word annuities.
I believe that annuities have a place in a persons financial or retirement plan along with long term care insurance, life insurance and other financial tools.
I also believe that the FHA Reverse Mortgage Loan has a place in a persons financial or retirement plan ...continue reading>>
The Reverse Mortgage in the Beginning
by Jeffrey L. Bangerter
September 8th, 2008
The reverse mortgage loan was created by the Federal Home Loan Bank in January 1979.
Its mission was to fund installments to reverse mortgage borrowers that would use existing equity in the home as collateral.
The reverse mortgage lender would receive repayment when the property was sold. The reverse mortgage loan program has always been an attempt to alleviate the shortfall in a senior’s budget.
Arrangements could be made to receive either monthly payments or a lump sum from the reverse mortgage lender.
Although it was possible to apply for a reverse mortgage loan from 1979 to 1989, it was very difficult to get one.
On July 24th, 1989 the Federal Housing Administration (FHA) introduced ...continue reading>>
I Want To Stay in My Home
by Jeffrey L. Bangerter
September 5th, 2008
Studies show that most seniors do not want to leave their home.
Half of the people over age 65 have lived in the same home for more than 20 years.
They have little or no interest in making a move even though a new living environment would seem to be more desirable.
Many seniors have paid off their mortgages and after reaching such an important goal once, it is not surprising that many seniors are resistant to any type of new mortgage on the property.
When there is a pressing need for additional income in order to continue residing in the home, however, there is a way to make use of that built up equity.
The reverse mortgage loan offers an excellent solution ...continue reading>>
Personal Reverse Mortgage Experience
by Jeffrey L. Bangerter
September 04th, 2008
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, ...continue reading>>Are You Ready For Retirement? A Reverse Mortgage Could Help!
by Jeffrey L. Bangerter
September 2nd, 2008
A study by the Center for Retirement Research (CRR) at Boston College shows that shows that 61 percent of today’s workers will be at risk for not being financially prepared to retire. Could a reverse mortgage help solve this problem for you?
The 17-point increase from the previous Index number of 44 percent –- released in July 2007 — demonstrates how the surging cost of health care is having a significant effect on retirement savings, says the CRR. The index, underwritten by a grant from Nationwide Insurance, is a percentage measurement of how many working Americans are ‘at risk’ of being unable to maintain their standard of living in retirement. ...continue reading>>
What if a Disaster Strikes?
by Jeffrey L. Bangerter
September 01st, 2008
U.S. News & World Report has an interesting reverse mortgage article entitled "How the Housing Law Affects Reverse Mortgages".
It states that “even after taking out a reverse mortgage, you remain responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. If you don’t maintain homeowner’s insurance, for example, you risk the loan becoming due and payable. ‘If there is hurricane or flood damage to the home that you can’t repair, the loan is due,’ cautions Prescott Cole, an attorney and elder-care advocate who has worked with numerous reverse-mortgage borrowers. ‘If you can’t repay the loan, you will lose your house.’”
This information would have been better had it mentioned that an FHA-insured reverse mortgage is a non-recourse loan. ...continue reading>>
Media and Mortgage Reform
by Jeffrey L. Bangerter
August 29th, 2008
Kiplinger’s headline tells us that “Seniors Get a Gift from the New Housing Law” while TheStreet.com headline explains that “Senior Homeowners Get Lift from Housing Bill.” ...continue reading>>
What is a Reverse Mortgage?
A reverse mortgage is a loan that enables homeowners 62 and older, to convert home equity into tax-free income without selling, giving up title, or having monthly mortgage payments.
The payment stream is “ reversed ” and the lender makes payments to you.
Eligible property types are single-family homes, manufactured homes built after June 1976, qualified condominiums, and townhouses.
If you are looking for a:
- Arizona Reverse Mortgage
- Arkansas Reverse Mortgage
- Alabama Reverse Mortgage
- California Reverse Mortgage
- Colorado Reverse Mortgage
- Connecticut Reverse Mortgage
- Florida Reverse Mortgage
- Georgia Reverse Mortgage
- Idaho Reverse Mortgage
- Kansas Reverse Mortgage
- Louisiana Reverse Mortgage
- Mississippi Reverse Mortgage
- Missouri Reverse Mortgage
- Nevada Reverse Mortgage
- New Mexico Reverse Mortgage
- Oklahoma Reverse Mortgage
- Oregon Reverse Mortgage
- Pennsylvania Reverse Mortgage
- Texas Reverse Mortgage
- Utah Reverse Mortgage
- Washington Reverse Mortgage
Browse our site and see how you may benefit.
Reverse Mortgage Enhances Your Retirement Years?
You can use the funds from the reverse mortgage for anything:
- daily living expenses
- home repairs or modifications
- health care expenses, including prescription drugs or in-home care
- pay-off of existing debts
- lifestyle enhancement
- prevention of foreclosure
- payoff your first or second mortgage
- and any other needs you may have
There are no income or medical requirements to qualify.
What are Your Payment Options?
You can choose how to receive the money from a reverse mortgage:
- all at once (lump sum)
- fixed monthly payments (for up to life)
- a line of credit
- or a combination of these
The amount of money you get from a reverse mortgage depends on:
your age,
- type of reverse mortgage selected
- appraised home value
- current interest rates
- and where you live
The funds from a reverse mortgage are tax-free; it's your money, not additional income.
A reverse mortgage will not affect your Social Security or Medicare benefits.
Contact me to see how much money is available to you and if a reverse mortgage makes sense.
Paying Back Your Loan?
No monthly payments are due on a reverse mortgage while it is outstanding.
The loan is repaid only when you:
- no longer occupy the home as your principal residence (the last remaining spouse, in cases of couples)
- pass away,
- sell the home,
- or permanently move out.
The amount owed can never exceed the value of your home.
When the home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to you or your estate.