The basics:
A reverse mortgage is a type of home loan that lets you convert a portion of the equity in your home into cash.
The requirements:
Age: You must be 62 or older.
Living status: The home has to be your primary residence.
Equity: You'll need about 40% equity in your home.
Additional costs: No mortgage, but you'll have to pay the cost of property maintenance, taxes and insurance.
Legacy: Leaving the home to an heir is a less likely option than with a regular mortgage because it can use up the equity in your home. Often, you or your heirs give up the home when the loan comes due (soon after you move out or die).
Is your credit mortgage-ready? Get your free credit score at myBankrate.
You're a candidate for a reverse mortgage if:
You want to live in your home until you die.
There are no heirs to leave your home to.
You can afford to maintain the home.
You want a line of credit or an increase in monthly cash flow.
Choices of accessing your equity:
A lump sum of cash at closing.
Equal monthly payments for as long as you live in the home.
Read more: http://www.bankrate.com/finance/mortgages/reverse-mortgage-cheat-sheet.aspx
Showing posts with label reverse mortgages. Show all posts
Showing posts with label reverse mortgages. Show all posts
Monday, September 21, 2015
Wednesday, August 26, 2015
Fox News Delves into Reverse Mortgage Successes, Changes
Following a column published late last week by Fox News’ Bob Massi, the network also produced a video segment featuring reverse mortgages this week.
In his look into reverse mortgages, “How to Have a Reverse Mortgage Success Story,” Massi interviews two couples who have successfully used reverse mortgages to improve their retirement situations. In one case, a married couple is using the reverse mortgage as a way to delay drawing down on stock market investments, and in the other case, the borrowers have used the reverse mortgage for medical expenses, among other items.
Massi also interviews reverse mortgage professional Josh Shein of Home Point Financial; a lender that acquired Maverick Funding in a deal announced late last year.
The reverse mortgage is “one of the most misunderstood items in real estate,” Massi says in the segment, which covers specific misunderstandings such as the idea that the bank takes the home from the borrowers.
“When it comes down to it, it’s just a loan,” Shein says. “… the balance of that loan grows over time.”
Massi also covers recent reverse mortgage changes, including willingness and capacity requirements that apply through the financial assessment that is now part of the origination process.
source: http://reversemortgagedaily.com/2015/08/25/fox-news-delves-into-reverse-mortgage-successes-changes/
In his look into reverse mortgages, “How to Have a Reverse Mortgage Success Story,” Massi interviews two couples who have successfully used reverse mortgages to improve their retirement situations. In one case, a married couple is using the reverse mortgage as a way to delay drawing down on stock market investments, and in the other case, the borrowers have used the reverse mortgage for medical expenses, among other items.
Massi also interviews reverse mortgage professional Josh Shein of Home Point Financial; a lender that acquired Maverick Funding in a deal announced late last year.
The reverse mortgage is “one of the most misunderstood items in real estate,” Massi says in the segment, which covers specific misunderstandings such as the idea that the bank takes the home from the borrowers.
“When it comes down to it, it’s just a loan,” Shein says. “… the balance of that loan grows over time.”
Massi also covers recent reverse mortgage changes, including willingness and capacity requirements that apply through the financial assessment that is now part of the origination process.
source: http://reversemortgagedaily.com/2015/08/25/fox-news-delves-into-reverse-mortgage-successes-changes/
Thursday, July 16, 2015
Don't be suckered into buying a reverse mortgage
Reverse mortgages sound enticing: The advertisements you see on television, in print and online give the impression that these loans are a risk-free way to fill financial gaps in retirement. However, the ads don’t always tell the whole story.
A reverse mortgage is a special type of home equity loan sold to homeowners aged 62 and older. It takes part of the equity in your home and converts it into cash payments. The money you get is usually tax-free and generally won’t affect your Social Security or Medicare benefits. The loan doesn’t have to be repaid until you or your spouse sells the home, moves out, or dies. Also, these loans, usually called Home Equity Conversion Mortgages (HECMs), are federally insured.
But while a reverse mortgage may increase your monthly income, it can also put your entire retirement security at risk. And, according to a report from the Consumer Financial Protection Bureau, many advertisements are incomplete or contain inaccurate information.
To learn about more ways to tap your home equity read, "Reverse Mortgages and Their Alternatives."
The reverse mortgage market makes up approximately one percent of the traditional mortgage market, but this figure is likely to increase as the Baby Boom generation—those born from 1946 to 1964—retires. That’s because an increasing number of Americans are retiring without pensions and, according to the Employee Benefit Research Institute, nearly half of retired Baby Boomers will lack sufficient income to cover basic expenses and uninsured health care costs. Women, in particular, have a greater likelihood of outliving their assets due to lower savings and pensions.
This makes them all the more vulnerable to sales pitches for reverse mortgages from trusted celebrities such as Robert Wagner, Pat Boone, Alex Trebek, former Senator Fred Thompson and Henry Winkler, who played the lovable cut-up “Fonzie” on Happy Days.
Yet, the CFPB study found, many of these ads were characterized by ambiguity about the true nature of reverse mortgages and fine print that is both difficult to read and written in language that is difficult to comprehend. Many ads did not mention information about interest rate or repayment terms. “The incompleteness of reverse mortgage ads raises heightened concerns because reverse mortgages are complicated and often expensive,” the report states.
Here’s what you need to know to avoid being misled by reverse mortgage advertisements:
A reverse mortgage does not guarantee financial security for the rest of your life.
You don’t receive the full value of loan. The face amount will be slashed by higher-than-average closing costs, origination fees, upfront mortgage insurance, appraisal fees and servicing fees over the life of the mortgage. In addition, the interest rate you pay is generally higher than for a traditional mortgage.
Interest is added to the balance you owe each month. That means the amount you owe grows as the interest on your loan adds up over time. And the interest is not tax-deductible until the loan is paid off.
You still have to pay property taxes, insurance, utilities, fuel, maintenance, and other expenses. If you don’t pay your property taxes, keep homeowner’s insurance or maintain your home in good condition, you can trigger a loan default and might lose your home to foreclosure.
Reverse mortgages can use up all the equity in your home, leaving fewer assets for you and your heirs. Borrowing too soon can leave you without resources later in life.
see more: http://www.consumerreports.org/cro/news/2015/07/don-t-be-suckered-into-buying-a-reverse-mortgage/index.htm
Monday, July 6, 2015
Reverse mortgage comes due when borrower dies
As more seniors turn to reverse mortgages, their adult children might be puzzled or concerned about what will happen to that debt when their parents die.
Nearly all reverse mortgages are home equity conversion mortgages, or HECMs, which are insured by the Federal Housing Administration. HECMs are subject to some rules that might not apply to non-HECMs.
The first thing adult children should know about HECMs is that these reverse mortgages technically become due and payable when the borrower dies.
The word “technically” is important because it’s understood that a borrower’s heirs can’t possibly refinance or sell the home on the day of death to satisfy the debt, said Beth Paterson of Reverse Mortgages SIDAC, a division of Greenleaf Financial in St. Paul, Minn.
Instead, what usually happens is that the loan servicer sends a letter that Paterson said might seem insensitive but is intended to inform the heirs of the rules and ascertain their intentions for the loan and property.
“The servicing companies have had issues with people not notifying them and trying to stay in the home, so that’s why it needs to be harsh,” Paterson said.
Servicers use a number of resources to find out that a borrower has died. These include the Social Security death index, proprietary databases and annual occupancy letters that typically are sent to reverse mortgage borrowers.
“If they don’t get the letter of occupancy back or property taxes or insurance aren’t paid, they start doing the next steps: contacting an alternate contact, searching other records or sending someone out to inspect the property and see if someone is living in the house,” Paterson said.
The borrower’s heirs aren’t required to sell the home to pay off the reverse mortgage, said Cara Pierce of ClearPoint Credit Counseling Solutions in Fresno, California.
But if heirs want to keep the home, they’ll have to pay off the loan.
“If they want to get a loan in their own name and pay off the reverse mortgage, they can,” Pierce said. “But if they can’t and there are no other assets, like life insurance, other property or a 401(k), that they could use to pay off the loan, they will have to sell the property.”
When heirs sell, they typically can choose their own real estate broker. The heirs manage the sale and keep any capital gain after the loan and closing costs have been paid.
The borrower’s personal belongings and furnishings can be removed. Fixtures, as defined by state law, can’t.
A tenant living in the home might have certain rights and protections under state law
see more: http://www.detroitnews.com/story/business/personal-finance/2015/07/05/reverse-mortgage-comes-due-borrower-dies/29744861/
Nearly all reverse mortgages are home equity conversion mortgages, or HECMs, which are insured by the Federal Housing Administration. HECMs are subject to some rules that might not apply to non-HECMs.
The first thing adult children should know about HECMs is that these reverse mortgages technically become due and payable when the borrower dies.
The word “technically” is important because it’s understood that a borrower’s heirs can’t possibly refinance or sell the home on the day of death to satisfy the debt, said Beth Paterson of Reverse Mortgages SIDAC, a division of Greenleaf Financial in St. Paul, Minn.
Instead, what usually happens is that the loan servicer sends a letter that Paterson said might seem insensitive but is intended to inform the heirs of the rules and ascertain their intentions for the loan and property.
“The servicing companies have had issues with people not notifying them and trying to stay in the home, so that’s why it needs to be harsh,” Paterson said.
Servicers use a number of resources to find out that a borrower has died. These include the Social Security death index, proprietary databases and annual occupancy letters that typically are sent to reverse mortgage borrowers.
“If they don’t get the letter of occupancy back or property taxes or insurance aren’t paid, they start doing the next steps: contacting an alternate contact, searching other records or sending someone out to inspect the property and see if someone is living in the house,” Paterson said.
The borrower’s heirs aren’t required to sell the home to pay off the reverse mortgage, said Cara Pierce of ClearPoint Credit Counseling Solutions in Fresno, California.
But if heirs want to keep the home, they’ll have to pay off the loan.
“If they want to get a loan in their own name and pay off the reverse mortgage, they can,” Pierce said. “But if they can’t and there are no other assets, like life insurance, other property or a 401(k), that they could use to pay off the loan, they will have to sell the property.”
When heirs sell, they typically can choose their own real estate broker. The heirs manage the sale and keep any capital gain after the loan and closing costs have been paid.
The borrower’s personal belongings and furnishings can be removed. Fixtures, as defined by state law, can’t.
A tenant living in the home might have certain rights and protections under state law
see more: http://www.detroitnews.com/story/business/personal-finance/2015/07/05/reverse-mortgage-comes-due-borrower-dies/29744861/
Tuesday, June 23, 2015
'The Fonz' might not be giving all the details about reverse mortgages
No advertisement tells the full story about a product or service.
There are practical reasons for that, such as limited air time or print space. And for obvious reasons, information about costs or risks often is omitted, downplayed or buried in the fine print that flashes quickly across the screen or is in minuscule type.
That's why a recent study critical of reverse mortgage advertisements didn't shock me.
The Consumer Financial Protection Bureau, which seems to be turning up the heat on the reverse mortgage industry, said its research revealed the ads often leave false impressions and don't highlight critical details.
"Perhaps most concerning of all, the ads left the consumers believing that if they purchase a reverse mortgage loan, they will be able to rest assured that they can live in their homes and enjoy financial security for the rest of their lives," bureau Director Richard Cordray told reporters on a conference call. "But a reverse mortgage does not carry such guarantees."
The agency called on potential borrowers to keep their guards up so they aren't misled or confused. While that could happen with any advertisement, the significance here is magnified because these ads target older people who often are vulnerable, on fixed incomes and could be desperate for cash. They may live alone and not have anyone to consult about a reverse mortgage, and not be adept at searching for information online.
You must be at least 62 years old to qualify for a reverse mortgage, which is when the bank or lender pays you, based on the value of the equity in your home, instead of you paying the bank. You still own the home, but the lender holds a lien.
Borrowers are charged fees and interest that accrue monthly, increasing their outstanding balance, but payments aren't required until the loan becomes due. That happens when the borrower sells the home, moves, dies or defaults on the loan by not paying property taxes or homeowners insurance.
Reverse mortgages may be a good fit for some seniors but not a wise move for others, which is why it's important to understand them.
Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, told me people had better get used to reverse mortgages because not only are they here to stay but they also are going to become more common. People are living longer and don't have the savings to fund those golden years but do have equity in their homes, he said.
"It's a product that makes a lot of sense and whose time has come and will be growing," Bell said.
read more: http://www.mcall.com/news/local/investigations/mc-reverse-mortgage-ads-warning-watchdog-20150620-column.html
There are practical reasons for that, such as limited air time or print space. And for obvious reasons, information about costs or risks often is omitted, downplayed or buried in the fine print that flashes quickly across the screen or is in minuscule type.
That's why a recent study critical of reverse mortgage advertisements didn't shock me.
The Consumer Financial Protection Bureau, which seems to be turning up the heat on the reverse mortgage industry, said its research revealed the ads often leave false impressions and don't highlight critical details.
"Perhaps most concerning of all, the ads left the consumers believing that if they purchase a reverse mortgage loan, they will be able to rest assured that they can live in their homes and enjoy financial security for the rest of their lives," bureau Director Richard Cordray told reporters on a conference call. "But a reverse mortgage does not carry such guarantees."
The agency called on potential borrowers to keep their guards up so they aren't misled or confused. While that could happen with any advertisement, the significance here is magnified because these ads target older people who often are vulnerable, on fixed incomes and could be desperate for cash. They may live alone and not have anyone to consult about a reverse mortgage, and not be adept at searching for information online.
You must be at least 62 years old to qualify for a reverse mortgage, which is when the bank or lender pays you, based on the value of the equity in your home, instead of you paying the bank. You still own the home, but the lender holds a lien.
Borrowers are charged fees and interest that accrue monthly, increasing their outstanding balance, but payments aren't required until the loan becomes due. That happens when the borrower sells the home, moves, dies or defaults on the loan by not paying property taxes or homeowners insurance.
Reverse mortgages may be a good fit for some seniors but not a wise move for others, which is why it's important to understand them.
Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, told me people had better get used to reverse mortgages because not only are they here to stay but they also are going to become more common. People are living longer and don't have the savings to fund those golden years but do have equity in their homes, he said.
"It's a product that makes a lot of sense and whose time has come and will be growing," Bell said.
read more: http://www.mcall.com/news/local/investigations/mc-reverse-mortgage-ads-warning-watchdog-20150620-column.html
Sunday, June 14, 2015
Feds: Beware the Sugar-Coated Reverse Mortgage
If you believe the advertising hype, a reverse mortgage looks like an easy, risk-free way of bridging financial gaps in retirement. But that’s often not the reality, the Consumer Financial Protection Bureau warns.
“While reverse mortgages can help some older homeowners meet financial needs, they can jeopardize retirement security if not used carefully,” the CFPB said in a new report on reverse mortgage advertising.
In a nutshell, a reverse mortgage is a type of loan that allows older homeowners (ages 62 and up) to borrow against the accrued equity in their homes. It’s a way for seniors to convert their home equity into cash, while still keeping their home. It can be a good option for retirees who have a lot of home equity, but little income.
But here’s the deal: Reverse mortgages need to be repaid if the borrower dies, moves or no longer lives in the home. And seniors could lose their homes if they fail to meet the requirements of the loan, such as paying homeowners insurance and property taxes.
Plus, with seniors living longer than ever before, reverse mortgage borrowers risk outliving their loans.
Unfortunately, many ads for reverse mortgages only tout their benefits – cash to help you enjoy your golden years – without mentioning the risks, the CFPB said. What’s worse, some advertising contains inaccurate, incomplete and confusing information about reverse mortgages that misleads consumers and puts them even more at risk.
The CFPB encourages seniors to consider these facts about reverse mortgages:
Reverse mortgages are not a government benefit. A reverse mortgage is essentially a home loan with fees and compounding interest that need to be repaid.
You could lose your home. If you fail to meet the requirements of the reverse mortgage, you could trigger a loan default and potentially lose your home.
You could outlive your loan money. Americans are living longer today than ever before. If you tap into your home equity too early, you risk outliving the loan and draining a potential source of income you may need later in retirement. “It’s important for those considering a reverse mortgage to understand how long their loan proceeds will last them given the loan’s interest rate, their living expenses, home equity balance, and age,” the CFPB said.
“While reverse mortgages can help some older homeowners meet financial needs, they can jeopardize retirement security if not used carefully,” the CFPB said in a new report on reverse mortgage advertising.
In a nutshell, a reverse mortgage is a type of loan that allows older homeowners (ages 62 and up) to borrow against the accrued equity in their homes. It’s a way for seniors to convert their home equity into cash, while still keeping their home. It can be a good option for retirees who have a lot of home equity, but little income.
But here’s the deal: Reverse mortgages need to be repaid if the borrower dies, moves or no longer lives in the home. And seniors could lose their homes if they fail to meet the requirements of the loan, such as paying homeowners insurance and property taxes.
Plus, with seniors living longer than ever before, reverse mortgage borrowers risk outliving their loans.
Unfortunately, many ads for reverse mortgages only tout their benefits – cash to help you enjoy your golden years – without mentioning the risks, the CFPB said. What’s worse, some advertising contains inaccurate, incomplete and confusing information about reverse mortgages that misleads consumers and puts them even more at risk.
The CFPB encourages seniors to consider these facts about reverse mortgages:
Reverse mortgages are not a government benefit. A reverse mortgage is essentially a home loan with fees and compounding interest that need to be repaid.
You could lose your home. If you fail to meet the requirements of the reverse mortgage, you could trigger a loan default and potentially lose your home.
You could outlive your loan money. Americans are living longer today than ever before. If you tap into your home equity too early, you risk outliving the loan and draining a potential source of income you may need later in retirement. “It’s important for those considering a reverse mortgage to understand how long their loan proceeds will last them given the loan’s interest rate, their living expenses, home equity balance, and age,” the CFPB said.
source: http://www.moneytalksnews.com/feds-beware-the-sugar-coated-reverse-mortgage/
Friday, May 29, 2015
5 Ways Reverse Mortgages Can Serve as Retirement Planning Tool
In today’s world, Americans face a looming retirement crisis — one that has been well-documented over the past several years and which has created a new purpose for the reverse mortgage.
Gone are the days when reverse mortgages were considered a loan of last resort. Now, the product is gaining steam among financial planners as a retirement tool that can hedge against future costs and provide much-needed income during borrowers’ post-career days.
By using a reverse mortgage to tap into home equity and fund retirement expenses, homeowners can effectively defend against the imminent retirement crisis, research shows.
“A lot of times people have not accumulated [savings] in a disciplined way, but at the same time the value of their homes has appreciated dramatically,” said Dennis Channer, principal at Cornerstone Investment Advisors, LLC, during a recent webinar hosted by Reverse Mortgage Funding (RMF) and the Financial Experts Network. “A great deal of their wealth is tied up in that value. [Home equity] becomes another available resource in the long range forecast of being successful [in retirement].”
And that’s just what Wednesday’s webinar, “Standby Reverse Mortgages: A Portfolio Longevity Strategy,” was focused on teaching. Its purpose was to educate financial advisors on how a home equity conversion mortgage (HECM) could be used as a portfolio protection strategy.
“The ideas are endless on the different angles we can take on using the [reverse mortgage],” said Dr. John Salter, an associate professor of financial planning at Texas Tech University, who has educated financial planners on reverse mortgages for years. “There’s nothing wrong with the product.”
While the ways to use a reverse mortgage may be endless, Salter explained five strategies, in particular, for financial planners to keep in mind when clients are approaching retirement.
1. Use Reverse Mortgage Instead of HELOC
There are benefits borrowers can get from using a reverse mortgage that they can’t get from using a HELOC, Salter said. Among those benefits are line of credit growth, no monthly principle or interest payment, and the loan is not cancelable as long as requirements are met.
“If you’re looking for flexibility in repaying [the loan], you get that in a reverse mortgage; you don’t get that in a HELOC,” he added.
A HECM is also non-recourse, meaning the borrower or their estate will never owe more than the value of the home upon sale or death.
The only downside of a reverse mortgage is the age requirement, as there is no restriction on age when using a HELOC.
see more: http://reversemortgagedaily.com/2015/05/28/5-ways-reverse-mortgages-can-serve-as-retirement-planning-tool/
Gone are the days when reverse mortgages were considered a loan of last resort. Now, the product is gaining steam among financial planners as a retirement tool that can hedge against future costs and provide much-needed income during borrowers’ post-career days.
By using a reverse mortgage to tap into home equity and fund retirement expenses, homeowners can effectively defend against the imminent retirement crisis, research shows.
“A lot of times people have not accumulated [savings] in a disciplined way, but at the same time the value of their homes has appreciated dramatically,” said Dennis Channer, principal at Cornerstone Investment Advisors, LLC, during a recent webinar hosted by Reverse Mortgage Funding (RMF) and the Financial Experts Network. “A great deal of their wealth is tied up in that value. [Home equity] becomes another available resource in the long range forecast of being successful [in retirement].”
And that’s just what Wednesday’s webinar, “Standby Reverse Mortgages: A Portfolio Longevity Strategy,” was focused on teaching. Its purpose was to educate financial advisors on how a home equity conversion mortgage (HECM) could be used as a portfolio protection strategy.
“The ideas are endless on the different angles we can take on using the [reverse mortgage],” said Dr. John Salter, an associate professor of financial planning at Texas Tech University, who has educated financial planners on reverse mortgages for years. “There’s nothing wrong with the product.”
While the ways to use a reverse mortgage may be endless, Salter explained five strategies, in particular, for financial planners to keep in mind when clients are approaching retirement.
1. Use Reverse Mortgage Instead of HELOC
There are benefits borrowers can get from using a reverse mortgage that they can’t get from using a HELOC, Salter said. Among those benefits are line of credit growth, no monthly principle or interest payment, and the loan is not cancelable as long as requirements are met.
“If you’re looking for flexibility in repaying [the loan], you get that in a reverse mortgage; you don’t get that in a HELOC,” he added.
A HECM is also non-recourse, meaning the borrower or their estate will never owe more than the value of the home upon sale or death.
The only downside of a reverse mortgage is the age requirement, as there is no restriction on age when using a HELOC.
see more: http://reversemortgagedaily.com/2015/05/28/5-ways-reverse-mortgages-can-serve-as-retirement-planning-tool/
Tuesday, May 5, 2015
What Is a Reverse Mortgage?
A reverse mortgage is a type of home loan that doesn't require any payments until after you die, as long as you continue living in your home. If you move out or decide to sell your house while still alive, the reverse mortgage comes due immediately. You can receive the loan proceeds in one lump sum or in monthly income payments.
Who Can Benefit From a Reverse Mortgage?
It's important to be aware of the age restrictions for reverse mortgages: Everyone listed on the deed of the house, even if they don't sign the loan, must be at least 62 years old for the house to qualify for a reverse mortgage. Also, reverse mortgages aren't useful if you still owe a lot on your regular mortgage. For example, if you owe $100,000 on your house, and you get a reverse mortgage for $125,000, you would only receive $25,000. The rest of the reverse mortgage proceeds would be immediately applied to your regular mortgage. Here is a more in-depth explanation of how reverse mortgages work.
The main pros and cons of reverse mortgages are:
Pros of Reverse Mortgage
One big advantage to reverse mortgages is that credit checks are minimal. Since you don't have to make loan payments during your lifetime, your credit score or monthly income are mostly irrelevant. However, new laws require lenders to set aside a certain amount of the loan funds if it looks like you won't be able to afford property taxes, home repairs or mortgage insurance premiums.
The value of your home may have risen dramatically since you bought it. Reverse mortgages give you access to this profit while allowing you to remain in your home.
If you have limited income, a reverse mortgage can provide you with greater self-sufficiency and comfort.
Cons of Reverse Mortgage
You (or your spouse, if he or she also signed the loan) must be living in your home to keep the reverse mortgage in place. You can't be absent for longer than 12 months, even if you have to go into a long-term care facility or move away to care for a family member. Longer absences result in the termination of the loan, and any money you received must be repaid immediately, with interest.
You must commit to maintaining your home and to keeping property tax and insurance payments up to date. Before the loan closes, the house is inspected, and you must sign a binding agreement to complete all recommended repairs by a specified date. The bank inspects your home to certify that you have completed these repairs as agreed.
A reverse mortgage usually makes it impossible to leave your house to your children. When all borrowers have passed away, the reverse mortgage must be repaid in full. In most cases, this requires the sale of the house. The only way to avoid this is if your heirs have enough personal wealth to pay off the reverse mortgage without needing to sell the house.
read more: http://www.huffingtonpost.com/simple-thrifty-living/what-is-a-reverse-mortgag_b_7200038.html
Who Can Benefit From a Reverse Mortgage?
It's important to be aware of the age restrictions for reverse mortgages: Everyone listed on the deed of the house, even if they don't sign the loan, must be at least 62 years old for the house to qualify for a reverse mortgage. Also, reverse mortgages aren't useful if you still owe a lot on your regular mortgage. For example, if you owe $100,000 on your house, and you get a reverse mortgage for $125,000, you would only receive $25,000. The rest of the reverse mortgage proceeds would be immediately applied to your regular mortgage. Here is a more in-depth explanation of how reverse mortgages work.
The main pros and cons of reverse mortgages are:
Pros of Reverse Mortgage
One big advantage to reverse mortgages is that credit checks are minimal. Since you don't have to make loan payments during your lifetime, your credit score or monthly income are mostly irrelevant. However, new laws require lenders to set aside a certain amount of the loan funds if it looks like you won't be able to afford property taxes, home repairs or mortgage insurance premiums.
The value of your home may have risen dramatically since you bought it. Reverse mortgages give you access to this profit while allowing you to remain in your home.
If you have limited income, a reverse mortgage can provide you with greater self-sufficiency and comfort.
Cons of Reverse Mortgage
You (or your spouse, if he or she also signed the loan) must be living in your home to keep the reverse mortgage in place. You can't be absent for longer than 12 months, even if you have to go into a long-term care facility or move away to care for a family member. Longer absences result in the termination of the loan, and any money you received must be repaid immediately, with interest.
You must commit to maintaining your home and to keeping property tax and insurance payments up to date. Before the loan closes, the house is inspected, and you must sign a binding agreement to complete all recommended repairs by a specified date. The bank inspects your home to certify that you have completed these repairs as agreed.
A reverse mortgage usually makes it impossible to leave your house to your children. When all borrowers have passed away, the reverse mortgage must be repaid in full. In most cases, this requires the sale of the house. The only way to avoid this is if your heirs have enough personal wealth to pay off the reverse mortgage without needing to sell the house.
read more: http://www.huffingtonpost.com/simple-thrifty-living/what-is-a-reverse-mortgag_b_7200038.html
Tuesday, March 17, 2015
The long, dorky history of politicians selling junk food, reverse mortgages and cures for diabetes
Former Arkansas governor Mike Huckabee (R) became known during the 2008 presidential campaign for his affability, a guy willing to leaven his conservative politics with a quality joke or two, putting him into sharp relief against Sen. John McCain (R-Ariz.) on both fronts. Huckabee parlayed that likability into a TV show on Fox News, and, more recently, into acting as a paid spokesperson.
The Times drew attention to one gig Huckabee accepted: promoting dubious informational packets on how to "reverse diabetes." You can view the spot at a Web site maintained by Barton Publishing. "I used the same techniques" as those in Barton's materials, he says, "to lose 110 pounds of fat, get my own blood sugar under control, and completely reverse my type 2 diabetes."
Huckabee is not the first former presidential candidate to shill for an iffy product; and neither is this the first iffy product for which Huckabee has shilled. (Earlier this year, his email list plugged a cure for cancer based on the Bible.) But it may be the worst combination of high-profile and low-quality that American politics has seen.
And we say that after actually having done the research to back it up. Here are other politicians' ads, ranked on a scale of 1 to 10 on two metrics: The questionability of the product and the level of recognition of the spokesman. Huckabee's diabetes system gets an 9 on questionability and a 7 on recognition, for a score of 15. As you'll see, that's the high.
see more: http://www.washingtonpost.com/blogs/the-fix/wp/2015/03/16/the-long-dorky-history-of-politicians-shilling-for-products/
The Times drew attention to one gig Huckabee accepted: promoting dubious informational packets on how to "reverse diabetes." You can view the spot at a Web site maintained by Barton Publishing. "I used the same techniques" as those in Barton's materials, he says, "to lose 110 pounds of fat, get my own blood sugar under control, and completely reverse my type 2 diabetes."
Huckabee is not the first former presidential candidate to shill for an iffy product; and neither is this the first iffy product for which Huckabee has shilled. (Earlier this year, his email list plugged a cure for cancer based on the Bible.) But it may be the worst combination of high-profile and low-quality that American politics has seen.
And we say that after actually having done the research to back it up. Here are other politicians' ads, ranked on a scale of 1 to 10 on two metrics: The questionability of the product and the level of recognition of the spokesman. Huckabee's diabetes system gets an 9 on questionability and a 7 on recognition, for a score of 15. As you'll see, that's the high.
see more: http://www.washingtonpost.com/blogs/the-fix/wp/2015/03/16/the-long-dorky-history-of-politicians-shilling-for-products/
Monday, March 16, 2015
REAL ESTATE: Pilot program to help seniors struggling with reverse mortgages
Keep Your Home California has launched a pilot program to help low- and moderate-income senior homeowners avoid foreclosure on their reverse mortgage.
Seniors at risk of losing their California home to foreclosure because of delinquent property expenses associated with a Federal Housing Administration insured reverse mortgage could qualify for up to $25,000 in assistance.
The program is aimed at helping California homeowners who are 62 or older and have a FHA Home Equity Conversion Mortgage in distress to get special counseling or financial assistance to manage delinquent property expenses.
For those who qualify, financial help may even take the form of property taxes or homeowner’s insurance.
Keep Your Home California, a program established in 2011 after California received nearly $2 billion from the U.S. Treasury’s Hardest Hit Fund, has reserved $25 million to assist to about 1,400 homeowners with their reverse mortgages.
To learn more, visit: www.KeepYourHomeCalifornia.org A Spanish language version of the website is available at www.ConservaTuCasaCalifornia.org
COLD CALL ALERT
The California Department of Business Oversight has put out a consumer alert to warn of companies which are cold-calling people in Southern California and other areas of the state to tell them they are a victim of investment fraud.
read more: http://www.pe.com/articles/california-762326-reverse-help.html
Seniors at risk of losing their California home to foreclosure because of delinquent property expenses associated with a Federal Housing Administration insured reverse mortgage could qualify for up to $25,000 in assistance.
The program is aimed at helping California homeowners who are 62 or older and have a FHA Home Equity Conversion Mortgage in distress to get special counseling or financial assistance to manage delinquent property expenses.
For those who qualify, financial help may even take the form of property taxes or homeowner’s insurance.
Keep Your Home California, a program established in 2011 after California received nearly $2 billion from the U.S. Treasury’s Hardest Hit Fund, has reserved $25 million to assist to about 1,400 homeowners with their reverse mortgages.
To learn more, visit: www.KeepYourHomeCalifornia.org A Spanish language version of the website is available at www.ConservaTuCasaCalifornia.org
COLD CALL ALERT
The California Department of Business Oversight has put out a consumer alert to warn of companies which are cold-calling people in Southern California and other areas of the state to tell them they are a victim of investment fraud.
read more: http://www.pe.com/articles/california-762326-reverse-help.html
Thursday, March 12, 2015
What you should know before you take out a reverse mortgage
When you have most of your wealth tied up in your home, it’s referred to as being “house rich, cash poor.”
Many seniors who find themselves in this position may be enticed by the commercials offering salvation. They are wooed by a chance to tap into their home’s equity with a reverse mortgage. Smooth television ads make it appear to be a no-brainer. It’s actually much more complicated.
he most appealing quality of this type of loan is that, unlike a traditional mortgage, you don’t have to make monthly payments. The lender doesn’t collect until the homeowner moves, sells or dies. Once the home is sold, any equity that remains after the loan is repaid is distributed to the person’s estate.
To qualify, you have to be 62 or older. The reverse-mortgage market isn’t huge — about 1 percent of all mortgages — but reverse-mortgage lenders are likely to pump up the volume in coming years as more seniors retire. For a lot of people, the only source of big money for them is the equity in their homes, the Consumer Financial Protection Bureau says.
In 2013, a typical household had only $111,000 in 401(k) or IRA savings, according to the Center for Retirement Research at Boston College. The center found that too many people are dipping into their retirement accounts during their working years, causing what is called a “leakage.”
But a lot of seniors have equity in their homes — about $3.84 trillion, according to one mortgage-industry survey. They can tap into that equity by selling or taking out a home equity loan or line of credit. But selling isn’t an option if they want to stay put, and they would have to make payments on the line of credit or loan. Given those options, it’s no wonder a reverse mortgage can be appealing.
see more: http://www.washingtonpost.com/business/get-there/what-you-should-know-before-you-take-out-a-reverse-mortgage/2015/02/10/ce0719b6-b163-11e4-827f-93f454140e2b_story.html
Many seniors who find themselves in this position may be enticed by the commercials offering salvation. They are wooed by a chance to tap into their home’s equity with a reverse mortgage. Smooth television ads make it appear to be a no-brainer. It’s actually much more complicated.
he most appealing quality of this type of loan is that, unlike a traditional mortgage, you don’t have to make monthly payments. The lender doesn’t collect until the homeowner moves, sells or dies. Once the home is sold, any equity that remains after the loan is repaid is distributed to the person’s estate.
To qualify, you have to be 62 or older. The reverse-mortgage market isn’t huge — about 1 percent of all mortgages — but reverse-mortgage lenders are likely to pump up the volume in coming years as more seniors retire. For a lot of people, the only source of big money for them is the equity in their homes, the Consumer Financial Protection Bureau says.
In 2013, a typical household had only $111,000 in 401(k) or IRA savings, according to the Center for Retirement Research at Boston College. The center found that too many people are dipping into their retirement accounts during their working years, causing what is called a “leakage.”
But a lot of seniors have equity in their homes — about $3.84 trillion, according to one mortgage-industry survey. They can tap into that equity by selling or taking out a home equity loan or line of credit. But selling isn’t an option if they want to stay put, and they would have to make payments on the line of credit or loan. Given those options, it’s no wonder a reverse mortgage can be appealing.
see more: http://www.washingtonpost.com/business/get-there/what-you-should-know-before-you-take-out-a-reverse-mortgage/2015/02/10/ce0719b6-b163-11e4-827f-93f454140e2b_story.html
Monday, March 9, 2015
Mortgage: These seniors chose reverse mortgages
Mike Ryan liked what a reverse mortgage could give him: the ability to take equity out of the house, tax free and with no monthly payments. But he was skeptical, too. He thought about it for two years.
Then, Beth Paterson, executive vice president at Reverse Mortgages SIDAC, a division of Greenleaf Financial, in St. Paul, Minnesota, told Ryan he could sell his current home and use a reverse mortgage to buy a new home.
With that in mind, he was sold.
Reverse mortgage
A home equity loan in which the borrower is not required to make payments. The homeowner must be at least 62 years old. A reverse mortgage accrues interest and does not have to be repaid until the homeowner dies or moves out of the house. The Federal Housing Administration calls it a HECM, for home equity conversion mortgage.
A long climb from the garage
At the time, in mid-2013, Ryan and his wife lived in a home with a tucked-under garage and 15-step staircase to the main level.
"We wanted a single level so my wife didn't have to traverse steps up and down. Every time we went to get groceries, we had to bring them up the 15 steps and vice versa," he said.
New home
The reverse mortgage paid off an existing loan on that home and, combined with the equity from the sale, enabled the Ryans to buy their new residence.
"The old house sold for $240,000," Ryan said, "and that afforded me enough to actually put a few bucks in my pocket at the end of the day."
The Ryans' new home, bought for $400,000 in November 2013, also has two levels, but the main living area is on the first level, just two steps up from the garage. The lower level is a walk-out basement that contains storage space and a guest bedroom.
No worries
The up-front fees and interest costs were "one of the drawbacks," Ryan said, but he adds that he and his wife had no concerns about using their home equity.
"We're the perfect candidates for a reverse mortgage because there's no one for us to be leaving our money to," he said. "The idea is: Why shouldn't I enjoy the fruits of my labor when I was younger in my old age if it makes it a little easier for me? It's the perfect tool."
So far, Ryan said, he has no regrets about the reverse mortgage, although it was difficult to move out of the home where he and his wife had lived 38 years.
read more: http://www.chron.com/news/article/Mortgage-These-seniors-chose-reverse-mortgages-6105516.php
Then, Beth Paterson, executive vice president at Reverse Mortgages SIDAC, a division of Greenleaf Financial, in St. Paul, Minnesota, told Ryan he could sell his current home and use a reverse mortgage to buy a new home.
With that in mind, he was sold.
Reverse mortgage
A home equity loan in which the borrower is not required to make payments. The homeowner must be at least 62 years old. A reverse mortgage accrues interest and does not have to be repaid until the homeowner dies or moves out of the house. The Federal Housing Administration calls it a HECM, for home equity conversion mortgage.
A long climb from the garage
At the time, in mid-2013, Ryan and his wife lived in a home with a tucked-under garage and 15-step staircase to the main level.
"We wanted a single level so my wife didn't have to traverse steps up and down. Every time we went to get groceries, we had to bring them up the 15 steps and vice versa," he said.
New home
The reverse mortgage paid off an existing loan on that home and, combined with the equity from the sale, enabled the Ryans to buy their new residence.
"The old house sold for $240,000," Ryan said, "and that afforded me enough to actually put a few bucks in my pocket at the end of the day."
The Ryans' new home, bought for $400,000 in November 2013, also has two levels, but the main living area is on the first level, just two steps up from the garage. The lower level is a walk-out basement that contains storage space and a guest bedroom.
No worries
The up-front fees and interest costs were "one of the drawbacks," Ryan said, but he adds that he and his wife had no concerns about using their home equity.
"We're the perfect candidates for a reverse mortgage because there's no one for us to be leaving our money to," he said. "The idea is: Why shouldn't I enjoy the fruits of my labor when I was younger in my old age if it makes it a little easier for me? It's the perfect tool."
So far, Ryan said, he has no regrets about the reverse mortgage, although it was difficult to move out of the home where he and his wife had lived 38 years.
read more: http://www.chron.com/news/article/Mortgage-These-seniors-chose-reverse-mortgages-6105516.php
Tuesday, March 3, 2015
When You Should (and Shouldn’t) Get a Reverse Mortgage
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ADVERTISER DISCLOSURE
When You Should (and Shouldn’t) Get a Reverse Mortgage
by MJ Knoblock on March 2, 2015 | posted in Library - Mortgages
There’s comfort in owning a home, especially when you’ve lived there for many years. Reverse mortgages are a special kind of home equity loan designed to help you stay in your home in your senior years while providing you with cash for living expenses.
How reverse mortgages work
You must be at least 62 years old to qualify. As with a traditional home equity loan, your ability to borrow hinges on the equity value you’ve built up in the property. The more equity you have, the lower the interest rate on what you borrow. You can choose to receive the loan as a lump sum, a fixed monthly payout or a line of credit that lets you draw out money as needed. Unlike a traditional home equity loan, a reverse mortgage comes without a credit check. This is balanced with additional upfront fees, as well as interest.
You don’t have to repay the loan for as long as you live in your home. You repay when you move out. If you die while still living in the home, your heirs must repay the loan. In either case, the loan is usually repaid simply by selling the home. According to the Consumer Financial Protection Bureau, neither you nor your heirs will have to repay more than the home is worth.
Benefits
The main advantage is the extra money it puts in your pocket. This can be used to pay off debt or live more comfortably. Reverse mortgages work for a wide range of needs. They offer wiggle room for those living on fixed incomes, covering unexpected medical bills or traveling. If you hope to stay in your home for several more years, a reverse mortgage can help you make it happen.
Drawbacks
Property taxes and insurance remain your responsibility; you can lose your home if you fail to pay these costs, as the lender can foreclose. If you start taking out money too early, you may run out of equity unless your home’s value increases substantially. The loan principal and interest continue to grow until you pay off what you’ve borrowed or sell the home. Finally, a reverse mortgage may make it impossible to pass the home to your heirs, if neither you nor they have the resources to pay off the loan without selling the property.
Considerations
A reverse mortgage isn’t a good fit for everyone.
Most reverse mortgage lenders prefer that you own your home outright. If you don’t, you may be required to use some of the money from a reverse mortgage to pay off other home loans.
Money from a reverse mortgage can potentially bump you into a higher tax bracket or disqualify you for certain government programs. Research your financial status carefully.
If you find budgets annoying and tend to spend money freely as long as it’s available, a reverse mortgage probably isn’t for you.
When you’re planning to stay in your home for a while, a reverse mortgage loosens the restraints of fixed income and debt that many seniors face.
read more: https://www.nerdwallet.com/blog/fi-library/fi-library-mortgages/reverse-mortgage/
Home
Library - Mortgages
ADVERTISER DISCLOSURE
When You Should (and Shouldn’t) Get a Reverse Mortgage
by MJ Knoblock on March 2, 2015 | posted in Library - Mortgages
There’s comfort in owning a home, especially when you’ve lived there for many years. Reverse mortgages are a special kind of home equity loan designed to help you stay in your home in your senior years while providing you with cash for living expenses.
How reverse mortgages work
You must be at least 62 years old to qualify. As with a traditional home equity loan, your ability to borrow hinges on the equity value you’ve built up in the property. The more equity you have, the lower the interest rate on what you borrow. You can choose to receive the loan as a lump sum, a fixed monthly payout or a line of credit that lets you draw out money as needed. Unlike a traditional home equity loan, a reverse mortgage comes without a credit check. This is balanced with additional upfront fees, as well as interest.
You don’t have to repay the loan for as long as you live in your home. You repay when you move out. If you die while still living in the home, your heirs must repay the loan. In either case, the loan is usually repaid simply by selling the home. According to the Consumer Financial Protection Bureau, neither you nor your heirs will have to repay more than the home is worth.
Benefits
The main advantage is the extra money it puts in your pocket. This can be used to pay off debt or live more comfortably. Reverse mortgages work for a wide range of needs. They offer wiggle room for those living on fixed incomes, covering unexpected medical bills or traveling. If you hope to stay in your home for several more years, a reverse mortgage can help you make it happen.
Drawbacks
Property taxes and insurance remain your responsibility; you can lose your home if you fail to pay these costs, as the lender can foreclose. If you start taking out money too early, you may run out of equity unless your home’s value increases substantially. The loan principal and interest continue to grow until you pay off what you’ve borrowed or sell the home. Finally, a reverse mortgage may make it impossible to pass the home to your heirs, if neither you nor they have the resources to pay off the loan without selling the property.
Considerations
A reverse mortgage isn’t a good fit for everyone.
Most reverse mortgage lenders prefer that you own your home outright. If you don’t, you may be required to use some of the money from a reverse mortgage to pay off other home loans.
Money from a reverse mortgage can potentially bump you into a higher tax bracket or disqualify you for certain government programs. Research your financial status carefully.
If you find budgets annoying and tend to spend money freely as long as it’s available, a reverse mortgage probably isn’t for you.
When you’re planning to stay in your home for a while, a reverse mortgage loosens the restraints of fixed income and debt that many seniors face.
read more: https://www.nerdwallet.com/blog/fi-library/fi-library-mortgages/reverse-mortgage/
Sunday, February 22, 2015
The Debt Trap: Borrowers should make sure they understand reverse mortgages
HALTOM CITY
Editor’s note: The Debt Trap is a collaborative project by the Star-Telegram, WFAA and the Austin American-Statesman aimed at shining a light on loans that either help the economically disadvantaged or devastate them, depending on whom you ask. This installment explores reverse mortgages. An upcoming installment will look at student loans.
Josalyn Cassatt lost her mother in 2014 after a long illness. Now, she’s about to lose her home.
Cassatt spent the last decade living at her mother’s Haltom City house, taking care of her ailing mother full-time. She thought she would simply inherit the house after her mother died, but she discovered paperwork showing her mother had taken out a reverse mortgage in 2006.
With a reverse mortgage, heirs can keep the property if they pay off the outstanding loan balance in full or if they buy the property for 95 percent of the appraised value. Cassatt couldn’t afford to pay off the loan or the required 95 percent of the current appraised value, $103,500, which she says had increased by about 25 percent in the nine years since the reverse mortgage.
Around December first or fourth, I get a letter saying the house is going on auction Jan. 6 — foreclosed on by the reverse mortgage because she is deceased,” Cassatt said.
Opponents of reverse mortgages dislike the many ways — more than a dozen — to default on one. On the other hand, Michael Jones, a branch manager and loan originator at Georgetown Mortgage in Dallas, and other proponents say the loans should be considered a retirement funding tool.
A client of his, 69-year-old David Alley of Dallas, figures he’s saving $1,000 a month with his reverse mortgage, which he considers “perfect” for his situation.
Cassatt suspects her ailing, elderly mother didn’t understand how the reverse mortgage worked.
“I really don’t think she understood what she was doing,” Cassatt said. “She always wanted to make sure I had a roof over my head.”
Read more http://www.star-telegram.com/news/local/article10777121.html
Editor’s note: The Debt Trap is a collaborative project by the Star-Telegram, WFAA and the Austin American-Statesman aimed at shining a light on loans that either help the economically disadvantaged or devastate them, depending on whom you ask. This installment explores reverse mortgages. An upcoming installment will look at student loans.
Josalyn Cassatt lost her mother in 2014 after a long illness. Now, she’s about to lose her home.
Cassatt spent the last decade living at her mother’s Haltom City house, taking care of her ailing mother full-time. She thought she would simply inherit the house after her mother died, but she discovered paperwork showing her mother had taken out a reverse mortgage in 2006.
With a reverse mortgage, heirs can keep the property if they pay off the outstanding loan balance in full or if they buy the property for 95 percent of the appraised value. Cassatt couldn’t afford to pay off the loan or the required 95 percent of the current appraised value, $103,500, which she says had increased by about 25 percent in the nine years since the reverse mortgage.
Around December first or fourth, I get a letter saying the house is going on auction Jan. 6 — foreclosed on by the reverse mortgage because she is deceased,” Cassatt said.
Opponents of reverse mortgages dislike the many ways — more than a dozen — to default on one. On the other hand, Michael Jones, a branch manager and loan originator at Georgetown Mortgage in Dallas, and other proponents say the loans should be considered a retirement funding tool.
A client of his, 69-year-old David Alley of Dallas, figures he’s saving $1,000 a month with his reverse mortgage, which he considers “perfect” for his situation.
Cassatt suspects her ailing, elderly mother didn’t understand how the reverse mortgage worked.
“I really don’t think she understood what she was doing,” Cassatt said. “She always wanted to make sure I had a roof over my head.”
Read more http://www.star-telegram.com/news/local/article10777121.html
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