July 27th, 2009
In any barrel there are bad apples to be found. There are always valuable lessons to be learned from hard times.
Tired of the cliches? There was a purpose however, for starting there. Due to the recent strife within the housing industry as a whole, from Fannie Mae and Freddie Mac’s very public money problems to the uprising of foreclosures linked to the sub-prime industry, the Reverse Mortgage segment is also under the microscope. This is not entirely because of a large percentage of fraud cases, but rather an astute focus on not allowing any part of the mortgage industry to get too far ‘out of whack’.
The question is now, how does this help or hurt seniors looking for a Reverse Mortgage option? Well, actually, it is both good and bad. Allow me to explain.
With the media focus and diligent research by potential clients, it is in the best interest of lenders to be ’squeaky clean’ right now. Legislation is being proposed in many states at various levels of stringency to install additional safety nets to further protect senior borrowers. All of these are a benefit for seniors.
Added levels of protection in lending laws are usually a bonus mortgage lending. This is the part where we lean toward the negative aspect, which is the tendency to over protect our seniors. In some states, legislation is being proposed that actually makes it more difficult to qualify or obtain a Reverse Mortgage for those in desperate need.
There is a fine line between keeping lenders honest and ethical and creating laws that inhibit seniors from accessing much needed resources. . . The best way to find balance between the positive and negative is to continue to be informed as a consumer and as a voter, after all, the baby boomers haven’t gotten to be where they are today by turning a blind eye!
Until the balance is found, you can believe there are lenders like us who prefer to operate with a sincere concern for each individual we encounter long before tighter legislation is put into place.
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July 23rd, 2009
According to the Associated Press, U.S. residents who are 65 and older make up 13% of the population. However, it is anticipated that number will double in the next 40 years. The world’s 65 and older population will triple in the same time frame making the world-wide senior demographic a ratio of 1 for every 6 persons, or in other terms, their growth rate is more than double the rate for the general population. By 2030 alone, seniors will comprise 1 in 5 in the U.S. population.
Due to to these numbers, the U.S. and other nations will be struggling to support the elderly population. With Medicare and Social Security facing uncertain futures, our seniors need viable retirement options that will sustain their lifestyles and compensate for diminished retirement accounts.
The new versatility with Reverse Mortgages may be the only option for some. By being able to utilize a Reverse Mortgage to stay in their home without the burden of monthly mortgage payments, many seniors will find the relief they need. For others, using the Home Equity Conversion Mortgage (HECM) for purchase may be their solution. This avenue will still relieve their monthly budgets of a mortgage payment, but it will also allow them to downsize or relocate at the same time.
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June 22nd, 2009
If understanding how a Reverse Mortgage works is not confusing enough, there is now a new way to use the program that adds one more level of information to learn. One principle that remains constant is that you may only borrow against your primary residence. So if you plan to use the Home Equity Conversion Mortgage, HECM, for purchase, you must live in the home you are planning to buy. You must also provide a down payment. Frequently, this down payment money is income from equity in a home that is being sold to buy the new one.
The difference in the Reverse Mortgage for Purchase program lies in the fact that on the balance owing on the home after applying the down payment you will not have to make new mortgage payments. The remaining guidelines are the same, the youngest home-owner must be at least 62 years of age, the home must qualify for an FHA appraisal, and income and credit are not factors for loan qualification. The same programs of ARM and a fixed rate are available with the same payment options. This can be an excellent choice for seniors wanting to downsize or relocate for retirement.
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January 26th, 2009
January 23rd, 2009
The Wall Street Journal posted a new article about how the demand for reverse mortgages has climbed as retirement savings have plunged during the recession. WSJ writer Jilian Mincer describes how the market is expected to grow significantly as baby boomers with inadequate savings tap their home equity to fund retirement.
“Americans have the bulk of their assets tied up in their homes, even now,” says Greg McBride, senior financial analyst at Bankrate.com. “The demand for reverse mortgages is increasing by the day.”
According to HUD’s most recent FHA Outlook report, HECM applications are up about 14% for FY 2009 compared to this time FY 2008.
“People who thought their retirements were set are finding out they don’t have the resource they thought they would,” says Bronwyn Belling, reverse mortgage specialist at the AARP Foundation, an affiliated entity of AARP. “It’s a really valuable way to help make ends meet and to stay in their own homes.”
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January 22nd, 2009
A Home Equity Conversion Mortgage, HECM, better known as a Reverse Mortgage, is a special type of loan that enables elder homeowners to convert part of the equity in their homes into tax-free cash without having to sell their home or give up title. Instead of making monthly payments to the lender, as with traditional equity loans, the lender makes payments to you! The source of the money is the equity in your home… and since your equity is your money, there are no restrictions on how you can use it!
The Reverse Mortgage was developed by the US Department of Housing and Urban Development in 1989 to offer financial security to all senior homeowners regardless of financial status. These loans are fully insured by the Federal Housing Administration.
A Mortgage Insurance Premium, MIP, is charged on every HECM loan. This insurance guarantees that you will receive your promised loan advances, and not have to repay the loan for as long as you live in our home regardless of how long that is or what happens to your home’s value. The MIP also guarantees that your total debt can never be greater than the value of your home if it is sold to repay the loan.
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