Wednesday, November 18, 2009
Reverse Mortgage Myth: Reverse mortgages only benefit desperate and "cash poor" senior citizens.
Fact: It is true that some seniors may have greater need than others for cash or an increased monthly income. It is also true that a reverse mortgage can be an excellent financial estate planning tool for any senior that has sizeable equity in their home.
Friday, November 13, 2009
Frequently Asked Questions
Will the lender take my house?
No, this is a misconception; a reverse mortgage is a loan against the property. The title remains in the name of the borrower(s) and the lender is only repaid the loan balance or home value, whichever is less.
Will I ever owe more than my home is worth?
No. All reverse mortgages are "non-recourse" loans, meaning the borrower can never owe more than the value of the home regardless of loan balance.
Can I get a reverse mortgage if there is already a mortgage on my home?
Yes, but any existing mortgages must be paid off at closing. The proceeds from the reverse mortgage may be used for that purpose.
Do I or my heirs have to sell the property to repay the loan?
No. Repayment can be accomplished by a refinancing of the existing reverse mortgage with a conventional mortgage loan.
When does the loan become due and payable?
The loan is due and payable when the last remaining borrower sells the property, permanently leaves the home, or passes away. Until these events take place you live in the home and make no payments to the lender.
If there are no payments, what are my responsibilities?
You are required to pay your property taxes, keep the property insurance current, maintain the home, and notify the lender if you will be away from the property for an extended period of time
No, this is a misconception; a reverse mortgage is a loan against the property. The title remains in the name of the borrower(s) and the lender is only repaid the loan balance or home value, whichever is less.
Will I ever owe more than my home is worth?
No. All reverse mortgages are "non-recourse" loans, meaning the borrower can never owe more than the value of the home regardless of loan balance.
Can I get a reverse mortgage if there is already a mortgage on my home?
Yes, but any existing mortgages must be paid off at closing. The proceeds from the reverse mortgage may be used for that purpose.
Do I or my heirs have to sell the property to repay the loan?
No. Repayment can be accomplished by a refinancing of the existing reverse mortgage with a conventional mortgage loan.
When does the loan become due and payable?
The loan is due and payable when the last remaining borrower sells the property, permanently leaves the home, or passes away. Until these events take place you live in the home and make no payments to the lender.
If there are no payments, what are my responsibilities?
You are required to pay your property taxes, keep the property insurance current, maintain the home, and notify the lender if you will be away from the property for an extended period of time
Tuesday, November 3, 2009
Money Found In Ohio House's Walls No Treasure
Question – Do you think burying your money in a coffee can or putting it into the walls of your house is a good financial plan?
That is essentially what we do when we pay off our mortgage, of course having no mortgage debt is nice if you have no other financial concerns.
Not taking advantage of a reverse mortgage is like having money buried in your walls.......
Excerpted from article:
Money Found In Ohio House's Walls No Treasure
By Joe Milicia
Associated Press
POSTED: 02:43 p.m. EST, Nov 05, 2008
CLEVELAND: In the end, a contractor who found $182,000 in Depression-era currency hidden in bathroom walls got just a few thousand dollars and, he feels, some vindication.
As for the 21 descendants of Patrick Dunne — a wealthy businessman who stashed money that was minted in a time of bank collapses and joblessness, only to have it divvied up decades later in a similar economic climate — they'll each get a fraction of the find.
Kitts would later call his discovery "the ultimate contractor fantasy."
He was tearing out the bathroom walls of an 83-year-old home near Lake Erie on spring day in 2006 when he discovered two green metal lockboxes suspended by a wire below the medicine chest. Inside were white envelopes with the return address for "P. Dunne News Agency."
"I ripped the corner off of one," Kitts said during a deposition in a lawsuit filed by Dunne's estate. "I saw a 50 and got a little dizzy."
He called Reece, who had hired him for a remodeling project, at work. She got there within 45 minutes.
They counted the cash, piled it on the dining room table and posed for photographs. Both grinned like lottery jackpot winners holding an oversized check.
But how to share? She offered 10 percent. He wanted 40 percent. From there things went sour.
He's often asked why he didn't keep his mouth shut and pocket the money. He simply answers that he wasn't raised that way.
"It was a neat experience, something that won't happen again," Kitts said. "In that regard, it was pretty fascinating; seeing that amount of money in front of you was breathtaking. In that regard, I don't regret it.
That is essentially what we do when we pay off our mortgage, of course having no mortgage debt is nice if you have no other financial concerns.
Not taking advantage of a reverse mortgage is like having money buried in your walls.......
Excerpted from article:
Money Found In Ohio House's Walls No Treasure
By Joe Milicia
Associated Press
POSTED: 02:43 p.m. EST, Nov 05, 2008
CLEVELAND: In the end, a contractor who found $182,000 in Depression-era currency hidden in bathroom walls got just a few thousand dollars and, he feels, some vindication.
As for the 21 descendants of Patrick Dunne — a wealthy businessman who stashed money that was minted in a time of bank collapses and joblessness, only to have it divvied up decades later in a similar economic climate — they'll each get a fraction of the find.
Kitts would later call his discovery "the ultimate contractor fantasy."
He was tearing out the bathroom walls of an 83-year-old home near Lake Erie on spring day in 2006 when he discovered two green metal lockboxes suspended by a wire below the medicine chest. Inside were white envelopes with the return address for "P. Dunne News Agency."
"I ripped the corner off of one," Kitts said during a deposition in a lawsuit filed by Dunne's estate. "I saw a 50 and got a little dizzy."
He called Reece, who had hired him for a remodeling project, at work. She got there within 45 minutes.
They counted the cash, piled it on the dining room table and posed for photographs. Both grinned like lottery jackpot winners holding an oversized check.
But how to share? She offered 10 percent. He wanted 40 percent. From there things went sour.
He's often asked why he didn't keep his mouth shut and pocket the money. He simply answers that he wasn't raised that way.
"It was a neat experience, something that won't happen again," Kitts said. "In that regard, it was pretty fascinating; seeing that amount of money in front of you was breathtaking. In that regard, I don't regret it.
Saturday, October 31, 2009
$625,500 loan limit extended
Did you hear that the $625,500 national HECM loan limit was extended through 2010? The bill was signed by congress yesterday and now we are just awaiting the presidents signature to make it official. This buys our industry much needed time to get the appropriations bill completed. If you want further clarification don't hesitate to contact me.
Reminder: Don't forget to FALL back, Sunday, November 1st is daylight savings!
Have a safe and Happy Halloween Weekend,
Sandy
Reminder: Don't forget to FALL back, Sunday, November 1st is daylight savings!
Have a safe and Happy Halloween Weekend,
Sandy
Thursday, October 29, 2009
Steps Involved in the Reverse Mortgage Process
Step By Step Process
1. Gather information and contact lenders to determine if a reverse mortgage is right for you. If necessary involve others that you trust, a family member, friend or adviser.
2. Counseling, HUD requires that you received third-party counseling from a HUD-approved agency. The counselor will ensure that you understand your reverse mortgage options. Counseling can be scheduled by calling a member of the National HECM Counseling Network or you can contact HUD directly.
3. Application, complete the application and determine how to receive payment. Options are as follows:
Lump Sum
Monthly Payments (your choice of loan advances for a specific period, or for as long as you live in your home)
Line of Credit (unscheduled payments or installments, at times and in amounts of borrower's choosing until the line of credit is exhausted), or
Any combination of the above three choices
4. Processing, application is processed by your lender who also orders an appraisal, title report, lien payoffs and credit report. The appraiser will determine the value of your home and uncover any structural defects or repairs that may be required following the closing of the loan.
5. Underwriting, upon receipt of necessary information and documentation your lender will finalize the parameters, package and submit loan for underwriting and final approval.
6. Closing, after loan approval a final signing is scheduled. The loan's initial interest rate is calculated and, in most cases, closing costs are financed by the loan. You are presented with closing papers and final figures for signing.
7. Disbursement, following closing you have three business days to cancel the loan. Once this period has passed the loan funds are disbursed and the loan has been applied to any previous debts on the property. You begin receiving payments according to your selected payment option.
8. Repayment, there are no monthly payments to be made during the life of your loan. The reverse mortgage becomes due and payable in full once: 1) the home is no longer being used as a primary residence, 2) it is sold, or 3) the borrower passes away. Upon the death of the borrower, the loan may be repaid from the sale of the home or by refinancing the existing reverse mortgage. All remaining equity belongs to the heirs/estate.
1. Gather information and contact lenders to determine if a reverse mortgage is right for you. If necessary involve others that you trust, a family member, friend or adviser.
2. Counseling, HUD requires that you received third-party counseling from a HUD-approved agency. The counselor will ensure that you understand your reverse mortgage options. Counseling can be scheduled by calling a member of the National HECM Counseling Network or you can contact HUD directly.
3. Application, complete the application and determine how to receive payment. Options are as follows:
Lump Sum
Monthly Payments (your choice of loan advances for a specific period, or for as long as you live in your home)
Line of Credit (unscheduled payments or installments, at times and in amounts of borrower's choosing until the line of credit is exhausted), or
Any combination of the above three choices
4. Processing, application is processed by your lender who also orders an appraisal, title report, lien payoffs and credit report. The appraiser will determine the value of your home and uncover any structural defects or repairs that may be required following the closing of the loan.
5. Underwriting, upon receipt of necessary information and documentation your lender will finalize the parameters, package and submit loan for underwriting and final approval.
6. Closing, after loan approval a final signing is scheduled. The loan's initial interest rate is calculated and, in most cases, closing costs are financed by the loan. You are presented with closing papers and final figures for signing.
7. Disbursement, following closing you have three business days to cancel the loan. Once this period has passed the loan funds are disbursed and the loan has been applied to any previous debts on the property. You begin receiving payments according to your selected payment option.
8. Repayment, there are no monthly payments to be made during the life of your loan. The reverse mortgage becomes due and payable in full once: 1) the home is no longer being used as a primary residence, 2) it is sold, or 3) the borrower passes away. Upon the death of the borrower, the loan may be repaid from the sale of the home or by refinancing the existing reverse mortgage. All remaining equity belongs to the heirs/estate.
Wednesday, October 28, 2009
Reverse Mortgage 101
The steps to a Reverse Mortgage are the same in a “Traditional (Forward) Mortgage as in the Reverse Mortgage.
…… the difference only lies in the qualification process and the repayment process.
1. The amount of equity you can access depends, in part, on your age. The older you are, the more money you qualify for. The age of the youngest person on title will determine how much money you are able to receive.
2. You do not need to own your home free-and-clear to consider a reverse mortgage. In fact, one of their most popular uses is the elimination of a monthly mortgage payment. As an example, a retired couple on a fixed income with a $1,200 per month mortgage payment would give themselves a $1,200 a month raise in cash flow if they replace their current mortgage. Many seniors that could not afford to retire because of a mortgage obligation have been able to do so after eliminating their monthly payment through a reverse mortgage.
3. Counseling by a HUD approved independent third-party is required for all borrowers undertaking a reverse mortgage as a consumer protection. Counseling may be conducted face-to-face or by telephone.
…… the difference only lies in the qualification process and the repayment process.
In a Reverse Mortgage:
There is “No Income” requirements for the reverse mortgage, no credit score… and
There is no repayment requirements for as long as continue to occupy the home.
1. The amount of equity you can access depends, in part, on your age. The older you are, the more money you qualify for. The age of the youngest person on title will determine how much money you are able to receive.
2. You do not need to own your home free-and-clear to consider a reverse mortgage. In fact, one of their most popular uses is the elimination of a monthly mortgage payment. As an example, a retired couple on a fixed income with a $1,200 per month mortgage payment would give themselves a $1,200 a month raise in cash flow if they replace their current mortgage. Many seniors that could not afford to retire because of a mortgage obligation have been able to do so after eliminating their monthly payment through a reverse mortgage.
3. Counseling by a HUD approved independent third-party is required for all borrowers undertaking a reverse mortgage as a consumer protection. Counseling may be conducted face-to-face or by telephone.
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