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Feb
05
Posted by Mark Clawson
Top Ten Things to Know if You’re Interested in
a Reverse Mortgage
Mark V Clawson - 702-351-7912 - markvclawson@gmail.com
Reverse Mortgages are becoming popular in America. The U.S. Department of Housing and Urban Development (HUD) created one of the first. HUD’s Reverse Mortgage is a federally-insured private loan, and it’s a safe plan that can give older Americans greater financial security.
1. What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD’s reverse mortgage provides these benefits, and it is federally-insured as well.
2. Can I qualify for a HUD reverse mortgage?
To be eligible for a HUD reverse mortgage, HUD’s Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own your home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan.
3. Can I apply if I didn’t buy my present house with FHA mortgage insurance?
Yes. It doesn’t matter if you didn’t buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.
4. What types of homes are eligible?
Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for individual condominiums units to qualify under the Spot Loan program.
5. What’s the difference between a reverse mortgage and a bank home equity loan?
With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less.
Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You don’t make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you “missed your mortgage payment.”
6. Can the lender take my home away if I outlive the loan?
No! You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home’s value.
7. Will I still have an estate that I can leave to my heirs?
When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. None of your other assets will be affected by HUD’s reverse mortgage loan. This debt will never be passed along to the estate or heirs.
8. How much money can I get from my home?
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.
9. Should I use an estate planning service to find a reverse mortgage?
HUD does NOT recommend using an estate planning service, or any service that charges a fee just for referring a borrower to a lender!
10. How do I receive my payments?
You have five options:
· Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
· Term - equal monthly payments for a fixed period of months selected.
· Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower’s choosing until the line of credit is exhausted.
· Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.
· Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.
Call me today or send me an e-mail and I would be happy to help you find out if this type of program will work for you. There may be other alternatives and I will help you find the best program that works for you.
Mark Clawson - markvclawson@gmail.com - 702-351-7912
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Jan
18
Posted by Mark Clawson
A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD’s reverse mortgage provides these benefits, and it is federally-insured as well.
I want to remind you that there are also some issues with reverse mortgages. Reverse mortgages can be expensive since the fees can be high. The loan officer can help to reduce these fees by accepting less than what is commonplace. I have always felt that the fees were too high and make adjustments on an individual basis based on the loan amount.Another issue that has recently emerged is the combination of a reverse mortgage and other inappropriate financial products. This seems to be double dipping for fees and may not be in the best interest of the homeowner.
The high costs associated with a reverse mortgage loan, make is very difficult to come out ahead using the proceeds to buy annuities, other insurance products, or securities. I would be wary of anyone who links a reverse mortgage pitch with a push to sell a senior something else. Borrowing money from a reverse mortgage for investment purposes is almost always a bad idea. Make sure that you consider not just the potential gains but the loan costs and tax effects of any investment deal.
Better yet, give me a call.
For more information on Reverse Mortgages click here.
Mark Clawson 702-351-7912
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Dec
14
Posted by Mark Clawson
Mark Clawson - 702-351-7912 - markvclawson@gmail.com
First of all, you have to look at where you are in your life. You may have the means to restructure your assets and avoid the use of a reverse mortgage. There are many things to consider and it is important to take your time before you jump.
That being the case, to qualify for a reverse mortgage you need to be 62 years of age. Your home needs to be your principal residence, and it should be free and clear or have a small mortgage that can be paid off with the proceeds from the reverse mortgage. You have to make sure that your property meets the standards set by HUD and you will need to need to discuss the program with a HUD approved counselor.
I think the counselling program makes a lot of sense, you need to know what you are doing and feel comfortable.
I have been referencing the HUD program because I think it makes more sense than a privately insured reverse mortgage. The HECM Reverse Mortgage loans (HUD program loans) generally provide the largest loan advances of any reverse mortgage. They also give you the most choices in how the loan is paid to you and you can use the money for any purpose. They can be costly, but HECMs are generally less expensive than privately-insured reverse mortgages. Other reverse mortgage may have smaller fees, but they generally have higher interest rates which means less money to you.
Many retirees are cash poor and home rich. The idea behind a reverse mortgage is unlocking the value in your home. Your payments of principal have created an equity pool that you can access.
A reverse mortgage is not an inexpensive loan. That is why it is important to review all of your other options. If those other options are not available then it can make sense. The loan fees are based on the maximum credit limit for the HUD lending area for the government Home Equity Conversion Mortgage (HECM). This means that you may be paying fees on a loan amount that is higher than your actual loan. It is important to have a trusted advisor who you can count on to give you a fair loan fee.
The loan also has an up-front mortgage insurance fee of 2% of the maximum lending limit. This mortgage insurance insures you that you will continue to receive payments even if your mortgage lender were to go out of business. You then have your normal costs of the appraisal, escrow, title fees, etc., and you get the idea.
While the costs seem high, the insurance on these loans are more for borrower protection than any other loan the government insures. This insurance protects the borrowers in two ways. First, if a lender ever goes out of business or fails to pay a borrower in a timely manner for any reason, HUD steps in and makes certain that the borrower receives a steady stream of payments. As you read about lenders going out of business, with a HUD insured loan, you never have to worry about whether or not your payments will be made to you. Also, HUD will insure that the borrower will never owe more than the property is worth regardless of how much money the borrower receives over the years, how much interest accrues, or what property values do in the future. Everyone hopes that values will continue to go up, but if the values should fall, the senior borrower and their heirs will never owe more than the property is worth.
There is an article entitled Top 10 Things You Should Know If Your Interested in a Reverse Mortgage on my menu bar or you can just click here. This should answer most of your questions. Though I do realize that everybody is an individual and their circumstances will be different.
What is mportant to know is that I am willing to work with you in any way that I can. I pride myself in being a trusted advisor and if this program doesn’t make sense for you I will let you know. This is all about helping people and finding some peace in life.
Mark Clawson - 702-351-7912 - markvclawson@gmail.com
