Reverse Mortgages

Are reverse mortgages really a good deal?

2007-03-16T05:27:00.000-07:00

A growing number of senior homeowners, age 62 and older, seem to think they are a good deal. Their popularity is increasing every year and is on record pace for this year.

A reverse mortgage is a special loan that can provide extra money to help seniors supplement their income - an increasingly important necessity considering today's rising costs, like health care. The reverse mortgage can provide a monthly check for the borrower for the rest of their life, or until they sell or move away from the residence. Or the reverse mortgage can be paid out as a lump sum or line of credit.

The most popular type of reverse mortgage is the home equity conversion mortgage, insured by the Federal Housing Administration. There were 76,351 of these reverse mortgages sold last year, up from 43,131 in 2005. The number of sales is obviously growing at a rapid clip, and a bill was passed recently by the U.S. House of Representatives that would temporarily suspend the cap of the number of HECMs that can be insured by the FHA. That cap is now 275,000 HECMs.

The key reason for the rapid growth in sales of HECMs is the dramatic increase in home values. In a very short time, equities in homes have increased substantially, making it possible for senior homeowners to access a larger flow of income from HECM payments. Also, rising costs of almost everything makes it more important to generate added income. And seeing the potential for added profits, more lenders are now offering reverse mortgages.

But are the a good deal?

Before rushing out to purchase a reverse mortgage, study it carefully and shop around to more than one firm offering it as the Terms and fees can vary greatly with different companies. Also understand the fees involve, because they can be substantial. Most lenders are quick to point out that the fees can be rolled into the loan, but they are still being paid which will reduce the amount of money that you will receive from the reverse mortgage.

Beware of advisor shilling 'lump-sum' reverse mortgage

2006-08-28T05:01:00.000-07:00

Here is another great question and answer article from Bob Russ that cautions about listening to any advisor that pushes lump-sump reverse mortgages for investment purposes:

Q: I began getting Social Security last February. This year I lost my job. A financial advisor suggests I take a reverse mortgage ''lump sum'' and invest it to supplement my Social Security income. I have no other income and no heirs. My home is worth about $400,000 with a $77,000 mortgage at 4.25 percent interest, which adjusts by 2 percent next year. I love my home and want to stay here as long as possible. Do you think a reverse mortgage will work for me?

A: Yes. But I am very worried that so-called financial advisor might have suggested you take a reverse mortgage lump sum so he can sell you an annuity or other investment to earn himself a large sales commission.

If you want to receive monthly lifetime income from a reverse mortgage to supplement your Social Security income, you can elect that choice direct from the reverse mortgage lender. You don't need that financial advisor to help you.

However, you will need to use $77,000 of your reverse mortgage entitlement to pay off your current mortgage. Then you won't have any more monthly mortgage payments. The balance of your reverse mortgage can be taken as lifetime monthly income, a credit line (except in Texas), lump sum or any combination.

Robert J. Bruss is a California lawyer and licensed real estate broker. Leave your questions at www.bobbruss.com

Reverse Mortgage Costs

2006-08-21T10:49:00.000-07:00

People interested in getting a reverse mortgage, need to know the typical costs that are involved in order to make an educated choice. Just like most home loans, the typical mortgage fees apply to reverse mortgages. Typically you will be chareded an origination fee, up-front mortgage insurance premium (HECM loans), an appraisal fee, and other standard closign fees.

In many cases, these fees can be financed as part of the reverse mortgage. This makes it even more important to look at the fees because you will not be paying them upfront, so they can be easy to look over. Here is a quick run down of the typical fees:

Origination Fee
The origination fee is charged by the lender to cover certian operating expenses like administrative costs, marketing costs related to the reverse mortgage.

For HECM reverse mortgages, which account for 90 percent of all reverse mortgages made in the U.S., the origination fee will be set to the greater of $2,000 or 2 percent of the maximum claim amount. Currently the limites vary by county, from $200,160 up to $362,790. This means the 2 percent origination fee will generally be between $4,003 and $7,256. Home Keeper reverse mortgages from Fannie Mae charge borrowers an origination fee that may not exceed 2 percent of the value of the home. With either product, the entire amount of the origination fee may be financed as part of the mortgage.

Mortgage Insurance Premium
For HECM reverse mortgages, borrowers are charged a mortgage insurance premium equal to 2 percent of the maximum claim amount, or home value, whichever is less, plus an annual premium equal to 0.5 percent of the current loan balance.

The mortgage insurance guarantees that if the company managing your reverse mortgage goes out of business, the government will step in and make sure you have continued access to your loan funds. In addition, the mortgage insurance guarantees that you will never owe more than the value of your home when the HECM must be repaid.

Appraisal Fee
As with any home loan, an appraisal will be ordered to determine the current market value for your home. Appraisal fees generally range from $250 to $400.

Standard Closing Costs
Here is a list of other standard costs that you will typically be charged as a reverse mortgage borrower:

Credit report fee (~$20): Verifies any federal tax liens, or other judgments, handed down against the borrower.

Flood certification fee (~$20): Determines whether the property is located in a federally designated flood plane.

Escrow, Settlement or Closing fee ($150-$450): Generally includes a title search and various other required closing services.

Document preparation fee ($75-$150): Fee charged to prepare the closing documents, mortgage note, and other recordable items.

Recording fee ($50-$100): Fee charged to record the mortgage lien with the County Recorder's Office.

Courier fee (~$50): Fee to cover the cost of any overnight mailing of documents between the lender and the title company or loan investor.

Title insurance (based on loan amount): Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against any loss arising from disputes over ownership of a property.

Pest Inspection (~$100): Determines whether the home is infested with any wood-boring organisms, such as termites.

Survey ($150-$250): Determines the official boundaries of the property.

Service Fee Set-Aside
The service fee set-aside is an amount of money deducted from the available loan proceeds at closing to cover the projected costs of servicing your account.

Federal regulations allow the loan servicer to charge a monthly fee that ranges between $30-$35. The amount of money set-aside is largely determined by the borrower's age and life expectancy. Generally, the set-aside can amount to several thousand dollars. (Note: The servicing set aside is just a calculation and not a charge. The only amount added to your loan balance is the monthly servicing fee, which ranges from $30-$35.)

Renting Your Reverse Mortgaged Home?

2006-08-21T08:57:00.000-07:00

The following article from Bob Bruss contains some excellent information on what happens when someone with a reverse mortgage moves into a nursing home. In this case, this could mean having to sell her home.

Q: DEAR BOB: My 90-year-old mother-in-law, who recently moved into a nursing home, has a reverse mortgage on her home to pay her living costs. My husband is to inherit her house after she dies. We plan to demolish the house and put a new house on the property. What are the financial ramifications of renting the house to tenants until her death? My husband is reluctant, but I don't want to see the house sitting there vacant, when it could bring in $2,000 monthly rent. -- Elaine H.

A: DEAR ELAINE: Because your mother-in-law moved out of her principal residence, her reverse mortgage will become due and fully payable in full after 12 months of her not occupying the house. Reverse mortgage lenders periodically check up on their borrowers to see if they are still alive and are occupying their primary residence, except for absences less than 12 months.

If the house is rented to a tenant, when the reverse mortgage lender discovers the owner no longer lives there, the lender can require the loan balance be paid in full or it will be put into foreclosure. For more details, read the reverse mortgage documents and consult a lawyer.

Readers with questions should write Robert J. Bruss at 251 Park Road, Burlingame, Calif. 94010, or contact him via his Web page, http://www.bobbruss.com

Reverse Mortgage Specialist Sentinel launches in South Africa

2006-08-18T06:42:00.000-07:00

Reverse mortgage (home equity release) specialist Sentinel has just launched in South Africa.

Its South African company is a joint venture to be known as "Senior's Finance", with financial services company the Alexander Forbes Group. The company is already well established in its home country New Zealand, Australia, and Ireland with its reverse mortgage model.

Sentinel sees South Africa as an ideal market for home equity release, as house prices have grown very strongly over recent years, but seniors have very little savings and pensions. Due to the low savings rate, the company estimates that 90% of retirees will not be able to maintain their pre-retirement lifestyles during retirement.

Sentinel is planning two further launches in the pipeline.

House Passes National Reverse-Mortgage Loan Limit

2006-08-18T06:27:00.000-07:00

Last month, the U.S. House of Representatives passed the Expanding American Homeownership Act of 2006 (H.R. 5121). This new bill would create a single national limit for the HECM (Home Equity Conversion Mortgage) program equal to the conforming Freddie Mac loan limit, which is $417,000 for 2006.

Under the current law, the location of the home dictates the maximum loan amount, which varies by county. These amounts range from $200,160 to $335,800. The new bill would set one national rate that would allow seniors to take out much larger reverse mortgage loans.

The Expanding American Homeownership Act also would provide other improvements to the FHA HECM program. The new legislation calls for a "home purchase" option that would allow people to use a reverse mortgage to purchase newer housing that better suits their needs (currently only Fannie Mae offers a reverse mortgage home purchase program.) It would also remove the current volume cap on the number of HECM loans that FHA can insure (currently at 250,000 loans.)

Reverse mortgages have already exploded in popularity over the last couple of years, but with the passage of this act, we could see even larger increases in the number of seniors utilizing this powerful program.

Reverse Mortgages on the Rise

2006-08-16T06:15:00.000-07:00

The popularity of reverse mortgages in the U.S. seems to be exploding as more and more people begin to use their home equity to help fund retirement. Just take a look at these reverse mortgage statistics from HUD.

The U.S. Department of Housing and Urban Development endorsed a total of 7,572 reverse mortgages in June. And it has endorsed 55,659 reverse mortgages thru the nine months of FY 2006 ending June 30.

To put that in prospective the FHA endorsed only 43,131 reverse mortgage loans for all of FY 2005. In fact year-to-date totals represent a 83 percent increase over the 30,404 loans endorsed during the same period last year. That is impressive growth for any industry.

Korean Goverment to Back Reverse Mortgages

2006-08-15T13:00:00.000-07:00

The South Korean government has decided to provide loan guarantees next year to financial institutions that sell reverse mortgages as part of its efforts to promote the products, the Ministry of Finance and Economy said.

These reverse mortgage loans will allow people to receive a certain amount of money on a regular basis from financial institutions using their homes as collateral, and the ownership of the home is taken over by the lender after the term of this kind of mortgage ends.

According to the ministry, the scheme, introduced in May last year, will help resolve the problems faced by the elderly with low incomes and strengthen the countrys social safety net. Also, the government plans to provide a variety of tax incentives for the products.

Reverse mortgage misconceptions: SEQUAL

2006-07-19T12:23:00.000-07:00

Industry body the Senior Australian Equity Release Association of Lenders (SEQUAL) has voiced its concerns that myths and misinformation surrounding reverse mortgages and equity release products is stopping retirees from enjoying a more comfortable lifestyle.

Executive director of SEQUAL, Kieren Dell, said that with the booming proportion of the population entering their 60s the equity stored in the home may be critical to funding retirement. Yet, many retirees would rather live poor than use part of the equity to fund a better lifestyle because of their false fears and misconceptions of reverse mortgages.

Some of the concerns spelled out by SEQUAL include:

Home ownership issues - many believe they will lose ownership of their homes when taking out a reverse mortgage.

Loss of capital growth - some believe that they will not be entitled to the appreciation in their homes upon getting a reverse mortgage.

SEQUAL wants to dispel these myths and let homeowners understand that a reverse mortgage is simple a loan against the home and the homeowner retains complete ownership of their home.

There are many myths surrounding reverse mortgages in the retirement community, but provided you deal with a reputable lender who is a member of SEQUAL, fear of these myths should not stop retirees from using these products in the right circumstances, Dell said.

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Better Business Bureau warns of Reverse Mortgage Scams

2006-07-19T11:45:00.000-07:00

The Better Business Bureau is urging homeowners in financial trouble to explore their options before signing papers transferring their deed to a third party or signing up for what they believe is a reverse mortgage application.

All Better Business Bureaus in the U.S. and Canada are issuing an international alert to help combat the growing incidences of real estate fraud, the local office said Tuesday in a news release.

Its understandable that people panic when facing the loss of their home, said Michael Coil, northeastern Indiana president and chief executive. Yet this is a situation that calls for clear-headed thinking. The BBB urges homeowners who are in financial distress to explore every alternative to keeping their home and falling victim to easy solutions.

Some scams can lead to consumers losing their homes and all the equity they had in it. Their best first step is to talk to their mortgage lender, the local office said. If a repayment schedule can't be worked out, they should consider hiring a real estate agent and selling the house to pay off the debt, the release said.

Reverse Mortgage for Home Purchase

2006-06-12T08:43:00.000-07:00

Most people assume that a reverse mortgage can only be used for getting money out of a home they already own. But a specialized Reverse Mortgage from Fannie Mae allows seniors to purchase a new home. This is great for seniors looking to sell their current large home and move into a smaller home with no monthly mortgage payments.

The Fannie Mae reverse mortgage home purchase program does require the purchaser to put pay a small downpayment and then the proceeds from the reverse mortgage covers the remainder of the purchase price. Here are some of the benefits to using a reverse mortgage to purchase a new home:

No borrower income limits and no credit requirements. The loan is based on your age and the value of the home being purchased.

You can lower your down payment and keep more of your cash by choosing to use all or part of the loan proceeds toward your home purchase.

No monthly payments for as long as your life in the new home.

Loan proceeds do not affect Social Security or Medicare benefits. (If you receive Supplemental Security Income or Medicaid, these benefits may be affected.)

You do not pay back the loan until you sell your home, no longer use it for your primary residence, or pass away.

You will never owe more than the value of the home at the time of repayment, even if the loan balance exceeds the value of your property. This means no debt will ever be passed along to your estate or your heirs.

Source: www.fanniemae.com

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Reverse Mortgage Case Study - Home Environment Modification

2006-06-09T06:52:00.000-07:00

A 74 year old wife needs a way to help her husband stay in their home. Her 76 year old husband has been wheel-chair bound by a debilitating stroke that has left him partially paralyzed on his left side. Their current home will not accomodate a wheel-chair and the wife does not want her husband put into a nursing home.

One solution is for them to take out a reverse mortgage on thier current home and use the reverse mortgage proceeds to add on a wheel-chair accessible addition to the home. The reverse mortgage would provide them with a $95,000 line of credit, part of which would be used to build the new addition.

They remaining part of the reverse mortgage line of credit could be used to cover any additional expenses needed to help care for her husband.

With the reverse mortgage, the husband and wife would be able to stay in their home together. The wife would not have to worry about making payments on the reverse mortgage while caring for her sick husband.

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Ready for Retirement?

2006-06-07T07:26:00.000-07:00

Millions of Americans - 43 percent of all working-age households - are at risk of lower living standards when they reach 65, according to a new National Retirement Risk Index released Tuesday by the Center for Retirement Research at Boston College. Even two-earner households are at risk, because Social Security replaces less of their preretirement income.

The retirement risk index is drawn primarily from analysis of the federal government's Survey of Consumer Finances, which is updated every three years. By applying research methods to the federal surveys since 1983, the center found we're in substantially worse shape than we used to be.

The retirement risk index is based on a best-of-all-possible worlds scenario. It assumes workers don't retire until they are 65, that they spend down the equity in their homes by getting a reverse mortgage and that they create their own pensions by putting all their savings in an inflation-adjusted annuity at retirement - three things most Americans don't do.

Change those assumptions to workers retiring at 63, not tapping into home equity and investing their assets themselves, and a whopping 66 percent of working-age households are at risk.

One reason retirement readiness has declined over the last two decades is that fewer workers can count on a traditional pension plan. Instead, many have retirement savings plans, such as 401ks, which they have to fund and manage themselves.

Younger people and those in low-income households are most at risk of being unable to support their current lifestyles when they reach retirement age. Retiring later and saving more are ways to tackle the problem.

Source: Center for Retirement Research at Boston College

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Financial Planners Say Retirement Income Market Will Grow Slowly

2006-06-06T06:29:00.000-07:00

The 2006 FPA Financial Advisors' Attitudes and Perceptions survey about
the Retirement Income Distribution Market, sponsored by OppenheimerFunds
Inc. and produced by the Diversified Services Group, Inc. (DSG), indicates that
the majority of financial planners believe that the retirement income market will grow substantially, but at a slow pace.

"Regardless of the pace of growth, retirement continues to evolve into
a more and more complex financial planning issue," said Kathleen Beichert,
Senior Vice President of Retirement Plans at OppenheimerFunds, Inc.

Key findings of the study:

Systematic withdrawal strategies and dividend-paying investments are by far the most commonly recommended retirement income solutions.

Specific income-generating products such as annuities and Certificates of Deposits (CDs) are recommended far less frequently.

60 percent of the planners surveyed have recommended reverse mortgage products at some point, however, only 6 percent recommend them often.

75 percent of those surveyed use some type of retirement income planning software program. Two-thirds of these programs are modified accumulation programs or were designed by the planners themselves.

Respondents typically rely on existing clients to fuel their retirement income business. It appears that this group waits for their clients to reach retirement age and/or leverages their existing relationships for referrals.

"While existing clients and referrals are always a good way to target this market, there is a real opportunity for planners to reach out toothers who need help with retirement planning," said Beichert. "Planners should look for ways to partner with financial services companies and expand their retirement income client base."

About the Financial Planning Association:
The Financial Planning Association(R) (FPA(R)) connects those who need, support and deliver financial planning. We believe that everyone is entitled to objective advice from a competent, ethical financial planner to make smart financial decisions. FPA members demonstrate and support a professional commitment to education and a client-centered financial planning process. For more information on FPA, visit http://www.fpanet.org.

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Free Reverse Mortgage Informational DVD

2006-05-31T08:08:00.000-07:00

Reverse Mortgage of America, a division of Seattle Mortgage Company, today announced the release of a new informational DVD to help seniors and their families better understand reverse mortgages. This free DVD, titled "Understanding Reverse Mortgages", will address frequently asked questions and dispel myths and misperceptions related to reverse mortgages.

"Understanding Reverse Mortgages" features several one-on-one interviews with senior homeowners who have completed the reverse mortgage process, thus providing insight into the process from the homeowners perspective. It also presents industry experts as they weigh in on how a reverse mortgage can serve as a useful financial tool. The 18-minute informative video explores all aspects of the lending process, including mandatory counseling, matters for consideration and the benefits of a reverse mortgage loan.

"Seniors across the nation are eagerly seeking alternate sources of additional income," says Sarah Hulbert, Senior Vice President and National Director of Reverse Mortgage of America. "It is important that seniors understand and fully examine their options. As our population ages, reverse mortgages will supplement retirement and enhance the quality of life for many more of our community's senior homeowners."

Seattle Financial Group, a growing network of innovative financial services, is dedicated to constantly meeting the consumer's ever-changing needs. Comprised of Seattle Mortgage, Seattle Savings Bank, Seattle Escrow, Seattle Capital, Reverse Mortgage of America and other brands, the company provides real estate financing, savings products, and associated services for all stages of life. General information about the company can be found at www.seattlefinancialgroup.com or by calling 800-643-6610.

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Fifth Record Year for Top Reverse Mortgage Lender

2006-05-25T11:52:00.000-07:00

Financial Freedom, a subsidiary of IndyMac Bank F.S.B. (Indymac Bank), the nation's largest lender of reverse mortgages, announced that 2005 was its fifth consecutive year for a record number of reverse mortgage loan fundings and applications. Last year, Financial Freedom closed 30,991 loans, representing a 56 percent increase over 19,817 in 2004.

"The number of loans closed this year clearly demonstrates the increasing consumer understanding and appreciation of reverse mortgages as an answer to a wide range of seniors' financial needs," said Jim Mahoney, CEO of Financial Freedom.

Even more impressive then the increase in the number of reverse mortgages funded, was the most dramatic increase in volume dollars. In 2005, Financial Freedom closed $2.9 billion in loans, compared with $1.6 billion in the same period ending December 31, 2004. This represents an 81 percent increase, which indicates that in addition to closing more loans, the average home value per loan has increased as well.

Financial Freedom's loan volume is comprised mainly of two types of loans: FHA's Home Equity Conversion Mortgage or (HECM), the predominant reverse mortgage product in the marketplace; and the Financial Freedom Cash Account, which is the only jumbo reverse mortgage available and designed for homes in excess of $450,000 in value.

ABOUT FINANCIAL FREEDOM: Financial Freedom is a founding member of the National Reverse Mortgage Lenders Association. NRMLA is a nonprofit trade association, based in Washington, DC, whose mission is to support the continued evolution of reverse mortgages as an important financial option for senior homeowners while educating both its members and consumers about the varied applications of this unique loan. For more information, visit the Financial Freedom Web site at www.financialfreedom.com.

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Dealer Group Count Takes Stock of Reverse Mortgages

2006-05-24T06:40:00.000-07:00

The Dealer Group Count has added reverse mortgages to its recommended product list. Speaking at the groups annual conference held in New Zealand this week, chief operating officer, Marianne Perkovic, discussed why reverse mortgages were added to the recommended product list.

According to Perkovic, the aging population and changing retirement landscape were the main drivers behind adding Reverse Mortgages to its recommented product list. "Due to strong consumer interest and a changing marketplace, we have chosen a panel of lenders with quality and cost-effective products. Count advisers will initially have access to ABN AMRO, Bluestone Equity Release and Macquarie Mortgages products. All of whom hold SEQUAL membership", she said.

For more information about Count visit their website at http://www.count.com.au/

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Using Real Estate to Pay for Retirement

2006-05-17T03:56:00.000-07:00

Have you wondered how you are going to pay for your retirment? Well a new book "Retire on the House" by Gillete Edmunds and Jim Keene may open your eyes to new possibilities. If your like most homeowners, you only think of your home as a place to live and not as a powerful financial tool.

In the book the authors discuss almost every possible way to turn your home into a an income stream without selling it. The suggestions provided will give retirees who own their home many different ideas to suppliment their retirement income.

Some of the suggestions include converting your home into a boarding or rental house, refinancing your home, downsizing, moving to senior community and investing sell proceeds, or taking out a reverse mortgage.

The book does an excellent job of explaining the pros and cons of each alternative, especially its discussion on the complex subject of reverse mortgages. The authors present an easy to understand overview of the pros and cons of using a reverse mortgage.

Although this book tackles some complicated topics like reverse mortgages and can get a little heavy, the information provide is absolutely invaluable. Any Senior that owns their own homes should pick up a copy and study it, if only just to open their eyes to the possibities.

Information brought to you by the Reverse Mortgage Guide and the Reverse Annuity Mortgage Blog.

Widow Reeling from Reverse Mortgage Equity Grab

2006-05-14T18:01:00.000-07:00

The following story shows exactly why you need to understand all terms of a mortgage contract before you sign.

Katherine Stephens and her husband signed up in 1988 for what they thought was a great concept for seniors: a reverse mortgage that would pay them $312 a month virtually in perpetuity -- until they died or moved out of their house.

At the time, Katherine was 76 and Harold was 78. Harold later died, leaving Katherine alone in the house. The $312 checks came in like clockwork every month, until early this year when she moved to the nursing home.

The loan contained an "additional interest provision" which gives the lender the right to 100% of all gains in the market value of the property from the date of settlement to the date of final payoff. At the time of the loan settlement in 1988, the appraised value of the Stephenses' house was $83,500 and is now worth appraised at roughly $500,000.

The current lender Wilmington Savings Fund Society (WSFS) is now damanding that Stephens pay:

$67,586 for the monthly payouts

$158,218.19 in compounded interest at 11 1/2%

100% of the house appreciation since 1988 that is entitled as "additional interest" under the contract

The total owed would be $642,000 but the contract puts the cap on the payouts to the lender at 100% of the current appraised value of the house, $500,000, less selling expenses.

Bottom line: WSFS wants nearly half a million dollars in compensation for total loan advances of $67,586, dribbled out at $312 a month over 18 years.

This information brought to you by the Reverse Mortgage Guide and Reverse Annuity Mortgage Blog.

Home Equity May Save Baby Boomers Retirement

2006-05-11T10:45:00.000-07:00

Baby Boomers have not been diligent in saving enough money to fund their retirements. But with the soaring real-estate prices many of their homes have appreciate in value giving them a large asset base.

Many of these baby boomers will have to look to their home equity to help fund their retirements.

Keene, a regional manager in private client services for San Francisco-based Wells Fargo & Co., added that baby boomers will have a number of options to "monetize" their homes, from buying a less-expensive house or condominium for cash and investing the proceeds, to reverse mortgage loans or interfamily deals.

But seniors that haven't saved money for retirement had better be cautious:

To be sure, there are mortgage experts who are skeptical of putting too much faith in tapping home equity to fund retirement.

"If somebody has no savings, the chances are they don't own a million dollar house free and clear either," said Michael Moskowitz, the president of the New York mortgage company Equity Now. "I think it's a bit of wishful thinking."

He added: "Without retirement planning, without a 401(k) or IRA savings account, people aren't going to be able to enjoy the same standard of living they had before retirement."

Plus baby boomers can't expect the same appreciation as in the last decade:

Chicaferro also cautioned that baby boomers shouldn't count on their homes appreciating as fast in the future as they have in the past decade.

"There's no guarantee that equity in the home is going to double or triple in value, so it's not a prudent thing to sit there and think it will happen," he said.

The key is to start saving for retirement and not rely on the equity in your home. If it is there, then it can add to your retirement lifestyle, but don't expect it to completely support your retirement.

Information brought to you by the Reverse Mortgage Guide and the Reverse Annuity Mortgage Blog.

IPO Possible for IndyMacs Reverse Mortgage Unit

2006-05-07T15:59:00.000-07:00

IndyMac Bancorp Inc. is considering an initial public offering for its Financial Freedom Senior Funding Corp. as net income at the reverse mortgage unit doubled in the first quarter. The IPO would help attract and retain talent, raise cash and enhance shareholder value for Financial Freedom.

The Financial Freedom unit nearly doubled its net income from $4.2 million to $8 million in the first quarter of 2006. It funding $1.1 billion in reverse mortgages, compared to $507 million in the year-ago period.

Wachovia analyst Jim Shanahan assigned an estimated a value of $250 million to $400 million for Freedom Financial, based on a price-to-earnings multiple of 8-12, he said in a note to clients.

IndyMac paid about $80 million for a 94% stake in the firm back in 2004, Shanahan said.

Source: http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BCFAD7068-6F93-4D50-B3F5-DA967D6BE278%7D

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Reverse Mortgage Ebook Available

2006-05-04T09:06:00.000-07:00

www.reverse-mortgage-information.org has just release a free 16-page e-book titled “Is a Reverse Mortgage Right for Me” has been released.

This book was published to provide specific guidance to anyone considering a reverse mortgage. It will help them assess whether this type of loan is a good fit for their individual needs.

The ebook lays out seven specific questions that should be answered by anyone considering a reverse mortgage:

1. Am I the right age for a reverse mortgage?
2. How long do I expect to stay in my home?
3. How long do I expect to live?
4. How much additional income do I need?
5. How much equity do I have and how much can I borrow?
6. Have I considered other options?7
7. How important is it to me to leave an estate?

The book provides specific tips, resources, worksheets and other guidance for reaching answers to each question.

The free e-book, Is a Reverse Mortgage Right for Me? can be downloaded at http://www.reverse-mortgage-information.org/is-a-reverse-mortgage-right-for-me/

Shanghai to Promote Reverse Mortgage for Seniors

2006-04-24T08:32:00.000-07:00

China is now starting to jump on the reverse mortgage bandwagon. The shanghai government is now going to actually promote reverse mortgages.

The Shanghai municipal government has just announced that it will promote reverse mortgages this year, after years of controversy on the topic.

Du Peng, deputy director of the Population and Development Studies with Beijing's Renmin University of China, welcomes the move. But he says the wide promotion will take time and considerable effort.

The population of china is aging as in other parts of the world and they are looking for ways to support this aging population. In Shanghai for instance, 20% of the population is over the age of 60 years old. Even with promotion, it will take 10 years for it to become widely accepted.

"It provides another choice for seniors to support themselves. But it will take over ten years for it to become popular, because the oldest groups of people who now own apartments are mostly the middle aged. Reverse mortgage will only be more applicable when these people retire."

Reverse Mortgages Need Closer Look

2006-04-17T08:17:00.000-07:00

This article from 'The AGE' in australia discusses the need to be cautious when borrowing a reverse mortgage. One problem is that people don't actually read the full mortgage contracts.

LET'S be honest. Most people, when borrowing money to buy their home, don't bother to read the full mortgage contract. They check the essential terms like the amount being borrowed and the interest rate and sign on the dotted line.

One of the things that the Australian Consumers Association is concerned about the traps that are hidden in reverse mortgage documentation.

But the Australian Consumers Association is concerned that the same may not be true for the fast-growing number of reverse mortgages. The ACA recently reviewed 19 reverse mortgages and found a number of traps in the documents. It found many contracts were confusing and hard to interpret and contained wide-ranging default clauses that could result in higher interest rates being charged, a borrower's rights under the contract being limited, or even the enforced sale of the house.

They stress the need to take a close look at any documentation before signing for a reverse mortgage.