Reverse Mortgage Loans

What Is A Reverse Mortgage, How Do Reverse Mortgages Work

2012-03-07T23:48:00.001-08:00

What is a reverse mortgage? How can a mortgage be reverse? Is it a loan or what? These are typical questions, which the American seniors do, when they hear about the reverse mortgage for the first time. This article explains the basic features of the reverse mortgage.

An American senior can qualify for the reverse loan if he or she owns a home, where he lives permanently and where he has enough equity. If he has an usual mortgage left, it is not a problem. And he must be at least 62 years old. Thats all. When he wonder how do reverse mortgages work, the answer is, that he or she will take a loan against the equity of his home. The equity will be the only collateral for the loan.

1. To Whom The Reverse Loan Is Targeted?

When the Reagan government decided about the reverse loan it had one target. To offer better life circumstances to the American seniors, who are cash poor but equity rich. That meant seniors, who need more disposable cash. The only source of the money is the homes, which they own.

So they planned a loan, which used the equity of the home, i.e. seniors who wanted to go on living in their old homes could continue that but who had also an opportunity, if they wanted, to eat the equity, which they had saved during many years.

2. The Payments To The Senior Are Tax Free.

This is quite clear, because the loan comes from the equity, which a senior has paid using his salary. And he has paid taxes from his salary already once. However, it is wise to check this issue from the state, where a senior lives, because in some states the lump sums are taxable. The monthly payments, which are used during the same month are usually tax free.

3. A Senior Can Dictate, How The Lender Will Pay To Him.

This is nice. A borrower, i.e. a senior can order a bank, how it will pay to him. The alternatives are the lump sum, the monthly payments, the credit line or the combination of these. Of course the needs of the senior will order the payment way. Usually these loans are used for the serious purposes, like for the increased medical bills, house repair etc., but nobody will ask how the loan will be used.

4. Maximum Three Seniors Can Become The Borrowers.

The couple or maximum three borrowers can become the borrowers, but in this case all must qualify. This means, that they all must live in the home permanently and be the official owners of the property. It is not a must, that they are relatives. The loan terms will be calculated along the age of the youngest borrower.

5. The Loan Will Be Paid Back, When The Last Borrower Will Sell The Home, Move Away Or Pass Away.

As long as even one borrower will live in the home, the running time just goes on. But when the last borrower will die, move away or sells the home, the home will be sold and the selling price will be used to pay away the loan capital, interests and the costs. The obligatory mortgage insurance will cover the costs, which a home selling price cannot do.

The home equity is honestly the only collateral for the home. In no case a borrower has to use his other assets to pay for the reverse loan. Nor has the heirs to pay it. This is why the lender will not ask the income statement or the credit score, when a senior will apply for the reverse loan.

Juhani Tontti, B.Sc., Marketing, Shares Tips About What Is A Reverse Mortgage. The Correct Reverse Mortgage Information Helps Seniors To Make Good Decisions. Visit: Information On Reverse Mortgage

Retire With Reverse Mortgage, Earn Secure And Regular Income

2012-02-09T05:19:00.000-08:00

Have you noticed, that the reverse mortgage is for a senior, who needs a supplemental income and who has the home equity as an only source of money. If you ponder the reverse mortgage as one option, read this article!

First, the reverse mortgage loan is for a senior, who is at least 62 year old, own a home, which is his or her permanent home and where he has equity left. The lender will not ask any income nor credit score, because the loan is always taken against the equity. A senior or heirs will never owe more than the market value of the home.

A borrower can not lose the home, if he pays the taxes, the property insurances and keeps the property in a good shape. If not, the lender has the right to claim, that the property will be sold and the loan capital, the accrued interests and all the costs will be paid back. A borrower has to take a mortgage insurance, which will be used if the home selling price cannot cover all the costs.

You Order, How The Lender Will Pay.

It sounds odd, but the lender honestly will pay to the borrower according to the timetable, which the borrower has ordered. The borrower can pick the monthly payment, lump sum, credit line or the combination of some or all of these. The borrower has no back payments during the loan running time, but the capital, interests and all the costs will be paid back when the running time has been ended and the home sold.

How To Pick The Timing?

This depends on your plan. If you already know, how much you will need per month, or annually, then the plan is made following this need. If you do not know, then you have another alternative. If you want to be ready for an extra medical bills, for example, you can select the credit line and use it when or if needed. Or you can get the needed reverse mortgage information and see whether you will need it in the future.

Reverse Mortgage As A Supplemental Income.

The maximum reverse mortgage loan is $ 625.500 which means it cannot be the one and only source of money to cover your living costs. For most seniors the reverse loan is a supplemental source of money and they use it to cover sudden extra costs, like the home repair or medical bills.

If You Want To Play It Safe, Pick The Fixed Interest Rate.

The borrower will reamain the home ownership, which means that the home value increases benefits him. However he will start to enjoy about this benefit after the running time is ended. The biggest cost item is usually the accrued interest rates. When a senior succeed to agree the fixed rate loan during a recession, when the rates are low, that can honestly save a lot of money and to make the planning safe.

Pick A Reputable And Well Known Lender.

A reverse loan agreement is always a long term commitment, which means that the lender selection is a careful process. It is clear that only the reputable, long term companies can fulfil the requirements. The reverse loans, which are secured by the Federal Government are safe, because the Government will pay to the lnder, if the original lender cannot do that.

Juhani Tontti, B.Sc., Marketing. Have You Noticed, That The Reverse Mortgage Is For Seniors, Who Are Cash Poor And Need A Supplemental Retirement Income To Manage Financially. Visit: Reverse Mortgages

How The New FHA Reverse Mortgage Saves Costs

2012-02-04T22:56:00.000-08:00

Have you heard how the new FHA reverse mortgage loan program gives a senior a possibility to buy a smaller home or home from another location without using all the savings, plus that a senior can save thousands with the process?

The new FHA reverse mortgage program has an ideal timing. Many seniors suffer from the hard recession, dropped share prices and rising living costs, including the medicines. What they need is a source to grow the daily income. For many the home equity is the only source, which FHA has understood.

FHA reverse mortgage was developed after FHA noticed, that many seniors first sold their bigger homes and bought smaller ones. Then they signed the reverse loans against the smaller ones. What happened was, that they paid the closing costs two times.

New HECM Reverse Mortgage For Home Purchase Saves Costs.

New FHA reverse mortgage gives an opportunity to buy a new home with the reverse mortgage without selling the old home. The allowed home types are single family homes, condos or a small multi family residences. Seniors can reveal some of the existing equity into cash.

As long as the property is their primary home, they will enjoy about the monthly payments, which are tax free. Plus they can rent out the old home and to get an extra disposable monthly cash. The lender follows the payment instructions of the borrower. The alternatives are the monthly payments, lump sum, credit line or the combination of these all.

Here Is, How You Can Get The New FHA Reverse Mortgage.

First, you have to be at least 62 years old and own a home, where you live permanently and where you have equity left. Altogether three seniors can become borrowers, but then everybody must fulfil the requirements. A borrower must go through the counselor meeting, where he has a chance to ask advice.

How Much A Senior Can Get With The New FHA Reverse Mortgage?

Usually the loan sum is 35 – 55 % of the home equity. However, it is not wise to take a very small reverse loan, because the costs can take the major part of the equity. The loan sum is not fixed, but depends on the appraised value of the home, on the level of the interest rate and on the age of the borrower, or if they are many, on the age of the youngest borrower. The ceiling is in all cases $ 625.500.

A Senior Can Get Rid Of The Monthly Mortgage Payments.

When a senior wants to buy a smaller home with FHA reverse mortgage and to sell an old home, where he has mortgage left, he will honestly improve his monthly financial situation. First, he will pay away the old mortgage, then he will take a reverse loan against the equity of the new home plus he will get an extra sum of cash money. In the end of the day, he will not pay any monthly mortgage payments.

If The Market Is Soft, A Senior Can Postpone The Sale Of The Present Home. Let us assume, that a senior wants to buy a smaller home with the reverse loan, but does not want to sell the old home, because the market prices are down. So he decides to wait until the prices rebound. What he can do is, that he can rent out the present home and buy a new one with HECM reverse mortgage for home purchase and to wait until the prices recover.

A senior Can Never Owe More, Than The Value Of The Home.

This makes a new FHA reverse mortgage riskless to the borrower and to his heirs. The only collateral, which the loan has is the home equity. The running time will end, when the last borrower will sell the home, move away or pass away. Then the home will be sold and the selling price is used to pay the loan capital, interests and all the costs. If it does not cover the whole sum, the mortgage insurance will pay the rest.

Juhani Tontti, B.Sc., Recommends To Use FHA Reverse Mortgage To Avoid Double Costs. The HECM Reverse Mortgage Is The Only Reverse Loan Secured By The Federal Government. Visit: Reverse Mortgage For Home Purchase

Reverse Mortgage Facts – Information To Know Before Applying

2012-01-12T10:58:00.000-08:00

Have you ever honestly thought, how many facts you have to know about the reverse mortgage loans, before you are ready to apply? Have you realized, that your role is to write your financial needs, but then read expert information and talk to the counselor?

There should not be any reverse mortgage facts, which you would not know after you have done your homework carefully. Why should you? Simply, because that is your role and you will benefit from it. This article tries to arouse some of the biggest questions concerning the reverse mortgage information and tries to draw your interest to the many details this loan type includes.

Dont worry, there is no industry jargon, only practical questions and answers. It is important to offer the information with a street man`s language and to avoid the typical financial jargon. Unfortunately I cannot offer state by state details, because they wary a little bit, but this list gives you a good idea about the reverse mortgage information to ask.

Who Can Even Dream About This Product?

The reverse mortgages are meant for senior Americans, who own their permanent home, where they have enough equity and who are at least 62. So every applicant must be at least 62 and marked as an owner. The maximum amount of borrowers is three.

What About The Income Or Credit Information?

Don`t worry, nobody will ask it, because the reverse loan will always be taken against the equity of your home. This means, that even if you have not so good credit score you will automatically get the reverse loan, if you have these three things in order: you are at least 62, own a home, where you live permanently and where you have enough equity. That`s all!

How Can I Use The Money?

Well, it´s up to you. The money comes from your home equity and is meant to you. This means nobody will ask a report about the usage. You are free to decide it.

How Much Can I Get?

Good, that you asked that! The maximum amount depends on several things: about your age, or about the age of the youngest borrower, the appraised value of the home and about the interest rate level. To put it simply, the older you are, the higher the home value and the lower the interest rate, the more you will get.

But My Financial Future Is Unknown.

This is the situation for most of the seniors. Who can say for sure, what needs he or she will have after five years, for example? In these cases it is wise to use a credit line opportunity or to leave a part of the maximum sum unused.

Do I Have To Pay The Taxes?

In most cases no, because the reverse mortgage payments are not income but the loan payments. And you have already paid the taxes once, when you earned the salary with which you have paid your mortgage. The thumb rule is, that if you will spend the money during the same month as you have received it, it is tax free. The lump sums are different and you better ask advice from the reverse mortgage counselor.

How Can I Find A Reliable Lender?

The best source of information is your friend, who has taken the reverse loan or your bank manager. The reverse loan is a long term commitment, so only the old financial companies with the good reputation can form your short list.

What Loan Types There Are?

The home equity conversion mortgage, or HECM, is the most popular loan with a market share of around 90 %. HECM is the only loan, which is insured by HUD, i.e. the Federal Government. The insurance means that if your lender will become unable to pay to you, the insurance will take care of the missing payments. HUD has two other loan types, HECM for purchase and HECM Saver Reverse Mortgage.

The proprietary reverse mortgages are private loans, which are backed by the companies, which created them. The single purpose reverse mortgages are offered by some states and some local government agencies or nonprofit organizations.

What Is The Best Time To Sign?

Of course your financial needs dictate the timing but if you are not in a hurry, you can save some money. The reverse loans are financial products, so their prices follow the general economical circumstances. This means, that when the economy is flying high, so are the reverse loan prices and vice versa. So you can do the best deal during the recession by shopping around and by selecting a fixed rate loan.

Can I Buy My First Home With This?

Yes you can but then you must have a bigger down payment, because the equity is missing. If you can do this, it is possible.

What Should I Do To Prepare For The Counselor Meeting?

Collect as much questions and information as you can. In the end of the day only you will carry the responsibility. The secret is in the details. You simply have to know the reverse mortgage information well enough. Ask, discuss, read from the Internet, call to your bank manager, contact the senior people`s associations and so forth.

Can The Lender Take My Home?

Never, if you will take care of the property insurances, taxes and to keep the property in a good shape. The heirs or the spouse is never forced to pay for the reverse loan. There are only two money sources, the mortgage insurance and the selling price of the home. That`s it!

Can I Refinance The Loan?

Yes, it is possible. The market can offer better terms than what you have at the moment, but you can also get new costs to pay. It is wise to make the calculations carefully and to show them to the counselor.

What`s The Benefit Of The Counselor Meeting?

First, concerning the HECM loans it is mandatory. This does not make it useless. On the contrary. The counselors are respected senior advisors, who have usually a long experience about the financial issues of the seniors. The reverse mortgage facts, that these people can give to you are extremely valuable. Prepare well for the meeting, it can mean you huge savings!

Is My Medicaid Eligibility In Danger?

No, if you will follow the Congress guidance. They have set the so called penalty rules. If you have assets, you have to move them to another place, so that you are anymore their owner. Congress has established a period of non-eligibility for Medicaid for the seniors, who have these kind of assets and will transfer the money.

These are many more topics are handled in the article collection published at Reverse Mortgage Information page. I recommend the reading warmly!

Juhani Tontti, B.Sc., Marketing, Recommends, That Every Senior Reads The Reverse Mortgage Facts By Reading This Reverse Mortgage Information . Visit: Reverse Mortgages

Now Free HECM Reverse Mortgage Counseling For All Seniors

2011-12-29T04:32:00.000-08:00

Have you known, that a senior customer will never be turned away, if he or she cannot pay the reverse mortgage counseling? HUD, which is a Government agency, has got the rules, that they can charge for the reverse mortgage counseling, but only a fair price. Now there is even better news!

The HECM reverse mortgage counseling rules say, that the agency cannot charge the fee during the counseling session, if the incomes of the applicant is 200 % below the poverty limit. However, in these cases they charge the fee when the loan will be closed. The low income customers must bring the income documents, like the social security payment receipts or other income documents to the reverse mortgage counseling session.

1. Why The Reverse Mortgage Counseling Is Important?

This session is obligatory for all seniors, who will apply for HECM. This tries to guarantee, that the seniors get enough independent information about how to solve the financial future problems. The counselors are experts, who help seniors and they do not try to sell anything.

A senior, who is going to meet the counselor must do the homework. He has to plan, how he will arrange his or her future financial questions. The job of the counselor is to find the answers. The answer can be something else, than to take the reverse loan. But if the solution is the reverse loan, the counselor can advice, which lenders are reliable, what are the costs of the loan and how the loan works.

2. Who Can Qualify?

The qualification has been made easy. The key thing is, that an applicant is 62 year old or older and owns his permanent home, where he has equity left. Almost all home types are accepted, only some motor home types have been left outside. Altogether three seniors can become borrowers, but all must be owners and fulfil the requirements.

3. Kill The Rumours By Meeting An Expert!

When a human nature does not understand something, it starts to create its own truths. This has happened to the reverse loan images. People, and the press, have invented a lot of rumours about the unhappy seniors, who suffer because they have taken the reverse loan. On the top of this there are quite many scam artists, who have sold too big programs to the seniors. To avoid all the difficulties from these things, a senior makes it wise to get the expert guidance from the counselor.

4. Get The Correct Information Already In The Beginning Of The Planning Process.

It is important to make your homework. The Internet includes all the needed information, so just use the search engines. Actually you can get the full information about how the reverse loans work before you will meet the counselor. In the counselor meeting you can get information for your own situation, i.e. which solutions fit to you.

5. The Free Reverse Mortgage Counseling.

HECM reverse mortgage counseling has always been free for seniors with annual incomes less than $ 20.000 or for couples with annual incomes less than $ 30.000. For others the customary fee has been $ 125, which has been included in the loan sum, i.e. collected after the running time has ended.

And then the good news. HECM reverse mortgage counselors will waive the counseling fees from all borrowers to improve the information sharing and to help elder people to keep their homes. They see the free information sharing as one important way to make the program more interesting among the seniors.

The service is offered by NCOA or The National Council on Aging via its Reverse Mortgage Counseling Services Network. If you are interested, they offer a free telephone number to set the date for the meeting, which you can find from the Internet.

Juhani Tontti, B.Sc., Recommends To Utilize This Free Reverse Mortgage Counseling, Which NCOA Offers. An Expert Reverse Mortgage Counselor Can Give The Right Recommendations To You. Visit: Reverse Mortgages

Reverse Mortgages For Seniors, How To Finance The Retirement

2011-12-16T00:00:00.000-08:00

When you have pondered the reverse mortgages for seniors, have you thought how you would finance your retirement? Have you noticed that the reverse mortgage loans release cash for you along the schedule you have decided!

The retirement years are full of surprises. Unfortunately most of them concern the living costs, the income side staying unchanged. Towards this background it is useful to know, that the reverse mortgages for seniors are a possible source of an extra cash.

I think this is the smart thinking. The reverse mortgage loans should be an opportunity, which you can use if needed. The retirement years should be financed with the usual pensions, as most retired do.

1. If You Have Normal Reverse Loan Left.

A borrower can have only one mortgage loan type at a time. This means, that if you have a usual mortgage still left, you will pay it away with the reverse loan. This releases more cash for the monthly usage. And because the reverse loan has no monthly back payments, you will get a double benefit, both tax free.

2. The Peace Of The Mind.

The reverse mortgages for seniors offer a secure source of the money in case a senior will need it. It is like a financial insurance for the future. It is wise to get the facts about the reverse mortgages in a good time in advance and when the sudden need comes, a senior is ready. This is important, because most seniors have a situation, when the incomes do not grow, but they are afraid about the possible living cost increases in the future and how are they able to manage them.

3. You Can Use The Money From The Reverse Mortgages As You Will.

The lender, most often a bank, will follow your instructions when paying to you. There is no credit nor income information needed, because the loan is always taken against the equity of your permanent home. You do not have to report to anybody about the usage of the money.

Many seniors use it as a supplement to the normal pension, to pay the sudden medical bills, to buy a flat to a child, to travel or to pay the home repair, for instance. It is good to remember, that the money comes from the home equity, i.e. it is the money, which a senior has paid once plus the home price increases.

4. The Reverse Loan Payments Are Tax Free.

This is not a crystal clear rule, because some states in US follow the rule, that if the money is used during the same month, then it is tax free. But a senior has to talk with a counselor, if he plans to take a lump sum, it may be taxable money.

5. The Future Is Unknown, Think To Take A Credit Line.

A borrower can select, how he or she wants the lender to pay to him. The alternatives are the monthly payments, the lump sum, a credit line or a combination of all these. If a senior does not know, what are his needs he can always pick a credit line, because that is honestly flexible.

The reverse mortgages for seniors offer benefits, which are taylor made for the senior Americans. The seniors can continue to live in their old homes and to maintain the home ownerships. This is important, because the home price increases add value to the equity.

The reverse mortgages are blamed for their costs, that the upfront costs are quite high. Here I can only say, that it depends on the situation. If the home equity is the only source of the money and if the need of the money is serious, is the cost still reasonable?

Juhani Tontti, B.Sc., Is Focused To Share Information About The Reverse Mortgages For Seniors To Paint Clear Pros And Cons Of The Reverse Mortgages. Visit: Senior Reverse Mortgage

How Reverse Mortgage Counseling Association Helps Seniors

2011-12-12T02:02:00.001-08:00

Have you always hoped, that some reverse mortgage counseling group would help seniors by arranging contacts between the reverse mortgage borrowers? Have you a need to discuss with other reverse mortgage borrowers?

The Reverse Mortgage Counseling Association made this plan to become true in June 2011. This program is called RMCA Senior Membership Program and the target is to share the research data, allow the seniors to use the tools and get the industry feedback. This program is open for new and present borrowers and it encourages members to form a community, which is useful for all members.

1. The Street Level Communication.

Today the seniors can use the reverse mortgage counseling, the official guidance, but this new program deepens that information, because the seniors can get a real life experiences from other members and to make questions to the reverse loan industry.

This program has an ambitious task to collect all the relevant information and the user experiences into one place. The data will be objective and the program works as a bridge builder between the industry and the senior members.

2. What The Members Will Get?

The efficiency of these kind of programs depends partly on their activities. The annual fee is $ 25 and with that the members will get newsletters, aging in place information, United Networks Of America discount card, the usage of the national non-profit referral service and they can use the counseling from other members concerning the tax and insurance issues.

3. The Target Is To Help Seniors To Age At Their Homes.

This is a very nobel target and the seniors require a lot of guidance and information to be able to solve all the obstacles. The program, which the Reverse Mortgage Counseling Association has set helps a lot. It works as a supporting program, which has a big mental influence on the seniors, who have the reverse loan.

The reverse loan lenders have taken the program as a very useful venture and some have even donated an one year membership fee to the borrowers. It is wise, that both the borrowers and the lenders meet in this program, because they actually have mutual benefits.

4. A Survey Will Be Made Twice An Year.

This is useful for all parties, because it is important to research, what is honestly happening in the industry. The survey will monitor, how the senior borrower needs are developing, which again will help also the lenders to adjust the contents of their products.

5. Contacts Between Members With SandBox Senior Service.

This service offers an unofficial channel between the members and allows to make questions from the different reverse mortgage issues. Because the program works like a club, only the members can see the communications.

The target of the Reverse Mortgage Counseling Association to establish this program is to strengthen the industry by building the active contacts between the members. It will also strengthen the community by sharing the correct information and to kill the false rumours.

Juhani Tontti, B.Sc., Marketing, Is Happy That The Reverse Mortgage Counseling Association Started The Senior Membership Program. The Reverse Mortgage Counselors Want Really To Help Seniors. Visit: Reverse Mortgage Information

Can A Senior Lower Reverse Mortgage Cost, Are Better Terms Ahead

2011-12-10T01:55:00.001-08:00

Have you also thought, that some other economic time is better and you could lower the reverse mortgage cost? Have you thought, that the accrued costs, like interest rate, will be decreased in the future?

The basic difficulty is, that the future forecasting is difficult or even impossible. This makes the forecasts concerning the reverse mortgage cost also difficult. However, a senior borrower has to make important choices, before he will sign the reverse loan agreement.

The key thing is to understand, what is the bigger market, which will influence on the terms of the reverse loan. We speak about the financial products, which follow the economic circumstances. To put this simply, the selling prices are bigger, when the economy is running well and another way round.

1. What Are The Drivers In The Reverse Loan Market?

Do the important drivers come from the general market or from the demand of the senior citizens? If we think, the needs of the seniors, they hardly follow the economic circumstances. These people are mostly retired and the need for an extra monthly money is big.

So it seems, that the bigger impact comes from the financial market, i.e. from the competition between the different reverse mortgage lenders. This forces the sales managers to make special offers by reducing the price of a certain reverse mortgage cost element.

2. The Impact Of The Offers.

The basic feature of the reverse loan is, that a senior will not pay back anything during the running time. This means, that all the costs will be added on the top of the previous ones. By utilizing the special offers a senior can lower the closing costs. This requires, that a senior must follow the market offers during a long time, but it is time well spent.

3. The Elements Of The Reverse Mortgage Cost.

The counselor fee is the only out of the pocket fee, others will be included into the debt. So the interest will be calculated for the whole debt capital, which means that it will be the biggest element in the closing cost. The loan shopping is the only way, on the top of some special offers, with which a senior can find the best deal. The Internet is a great tool to handle the process.

4. The Interest Rate Choice.

When the interest rate is the biggest element in the reverse mortgage cost, it is important to think it a little bit more. A borrower must select between two types, the fixed or variable rate loans. The fixed rate will be the same for the whole running time, which makes it risk free and easy to forecast.

If a borrower manages to sign a deal during a recession with an exceptional low fixed rate, that is good. The variable rate follows the market prices and can bring good results, if the present rate level is high and the forecasts are that it will be lower in the future. If the running time is a long one, it is hard to forecast the rate development.

5. What Is Essential?

In the reverse mortgage cost there are bigger and smaller elements. What will determine the closing costs is the development of the whole package. If the fixed interest rate, which a senior could get, is historically on a very low level, it is not realistic to hope to get even a lower one. The need of an extra money dictates the timing and if a senior has shopped around and located the best lender, there it is.

Juhani Tontti, B.Sc., Is An Expert Author, Who Has Followed The Market Including The Reverse Mortgage Cost Discussion, Recommends To Shop Between Different Reverse Mortgage Lenders To Get The Best Deal. Visit: Reverse Mortgage Cost

5 Facts Why Reverse Mortgage Cost Will Always Be Covered

2011-12-10T01:52:00.001-08:00

Have you also heard rumours, that the reverse mortgage cost can grow bigger than the value of your home? And that a senior or his heir must pay a part of the reverse loan from his own wallet? These are myths, so read the facts!

These myths or rumours grow easily, because the reverse mortgage cost stay hidden during the running time and because a senior has not to pay back anything on a monthly basis. One thing may be, that the reverse mortgages are complicated products and some seniors have honestly difficulties to understand all the details, including the list of the reverse mortgage costs.

1. The Basic Target Of The Reverse Mortgage Loan.

When the Reagan administration decided to allow the launch of the reverse loans in America, the target was to help seniors, who are cash poor, but equity rich, i.e. seniors, who had low fixed monthly incomes, but who had a need for an extra income owing to the increased living costs, like the medical bills or home repair.

In a way, the system was similar to the social security, but now the seniors had to pay the bills, the reverse mortgage cost, by themselves. Because these seniors had assets, which were in the equities of their homes, the administration created a system, a loan, which could release this equity and turn it into cash money.

2. The Reverse Home Loan Is Not A Personal Loan.

This is the most important thing, when you think the reverse mortgage cost. The reverse loan is a loan, which is guaranteed by the home equity and the obligatory mortgage insurance. This means, that a senior, you, has no personal risk, when you think about the reverse mortgage cost. Of course you are interested about how much you, or your heirs, will get after the closing costs.

3. The Heirs Are Protected.

A senior borrower can never borrow 100 % of the home equity. How much he or she will get depends on the age of the borrower, the interest rate and the appraised value of the home. The ceiling is always $ 625.500. The home ownership remains at the borrower, which means, that the home price increases benefit the borrower and thus will be added to the home equity.

4. What Happens, If The Home Prices Drop Dramatically?

During this financial crises the home prices have fallen by tens of percentage points, which is very exceptional. However, it happened and many seniors think, how this influenced on the positions of the senior borrowers. Actually the impact is close to zero. The only element in the formula may have been the interest rate in a case, if a senior has chosen a variable rate. Otherwise, what is agreed is agreed.

5. The Summary.

As you can see from this article, it is important to understand the basic system of the reverse mortgage cost. This loan is not a personal loan, which simply means, that no human being will be forced to pay a part of it. That is just impossible. Even in the case, when a borrower has not paid the property insurances and taxes. The home equity and the reverse mortgage insurance are the sources of the money, which will cover the costs.

When you next time hear about the rumours, how a senior had to pay a part of the reverse loan, make your comment immediately and say, that it just cannot be possible, because a reverse loan is not a personal loan.

Juhani Tontti, B.Sc., Is An Expert Author, Who Has Shared Information About The Reverse Mortgage Cost And Teached The Tricks, How To Get The Best Quote From A Reverse Mortgage Lender. Visit: Reverse Mortgage Cost

5 Facts How FHA Reverse Mortgage Is An Option For The Long Term Care

2011-12-08T10:46:00.001-08:00

Have you thought about the alternatives you have in use for the long term care? Have you realized, that the sources are from the insurance, form your own wallet, from the social security or from the FHA reverse mortgage? FHA reverse mortgage, also marketed under HECM reverse mortgage name, is an alternative, which a senior can use to finance a part of the long term care, for instance the wheel chair ramp to his or her home.

1. Who Can Apply For The FHA Reverse Mortgage Program?

Because the FHA reverse mortgage program is one way to finance your senior years, the Federal Government has made the qualification easy. Almost everybody can qualify, if he or she is at least 62 and owns a home, where he lives permanently.

Some mobile homes have difficulties with the qualification. There is no need to present any income nor credit statements, because the loan is always taken against the home equity. If a senior has a usual mortgage left, he must pay it away with the reverse loan. There is no payments during the loan running time, but the borrower must pay the property taxes and insurances. The ownership will stay at the original owner. Totally three owners can be borrowers, but all must fulfil the qualifications.

2. A Senior Can Pay The Long Term Care Insurance With The FHA Reverse Mortgage.

The insurance is a handy way to cover the long term care costs. If a senior has difficulties to pay the insurance, he can think to take the FHA reverse mortgage and to pay the needed insurance with that. A good plan is to pick the monthly payments, which cover the insurance bills. A senior has to remember that if he plans to trust in Medicaid program, the maximum amount of own assets is only $ 2.000, before he can qualify.

3. What If You Do Not Know, How Much Are The Care Costs?

This is a good question. In most cases, how a retired person could forecast, what are his or her long term care costs per year, for instance, and how long he will need the care? This program is very natural. But the FHA reverse mortgage payment alternatives has one option, a credit line, which fits to this need.

4. A Senior Can Include Other Costs Into The Same Package.

The long term care costs cannot be the only cost which a senior will pay with the reverse loan. Actually the lender is not interested about how a senior will use the money. The more important thing is, that a reverse loan program fulfils the financial needs of a senior.

5. A Senior Can Keep The FHA Reverse Mortgage Program As A Reserve Plan For The Future Sudden Needs.

This can be very clever especially, if a senior knows, that he will not have any other source of an extra money. The home equity is usually a good investment and the home prices will increase over a long period of time. This adds equity and makes it possible to tap even more money from the equity for the long term care, for instance.

Juhani Tontti, B.Sc., Marketing, Recommends Seniors To Use FHA Reverse Mortgage Or HECM Reverse Mortgage To Pay For The Long Term Care. Visit: Reverse Mortgage Costs

How Do Reverse Mortgages Work, 5 First Steps For A Senior Newbie

2011-12-06T00:50:00.000-08:00

If you do not have a clear picture about how reverse mortgages work, you better start to study. Does it sound odd, when the lender will pay to the borrower and not vice versa? Get the basic picture about the system.

When you try to understand, how do reverse mortgages work, it is important to understand the basic system. The reverse mortgage is a loan, which will be taken against the equity of the home. This means, that the lender will not check the income nor the credit information. The loan will simply eat a part of the equity step by step.

1. How Much You Can Borrow?

The absolute maximum is $ 625.500, says the law. But a more typical system is to use three elements, which influence on the amount. The age of the youngest borrower, the appraised value of the home and the interest rate. Roughly speaking, the older the borrower, the lower the interest rate and the higher the home value, the more a borrower will get. If there are the maximum a mount of borrowers, three, then the age of the youngest is used.

The borrower will select, how he wants the lender to pay. The alternatives are one lump sum, the monthly payments, a credit line or the combination of all these. Concerning the taxes, it is wise to make sure, that the borrower will not have to pay taxes, especially if he will choose the lump sum alternative.

2. Will You Qualify?

If you are at least 62 and own your home, where you live permanently and where you have equity left you will qualify automatically. Some mobile homes are not accepted. If there are more than one borrower, three is a maximum amount, all must qualify, i.e. to be the owners of the home and live there permanently.

3. When Is The Time To Pay Back?

The target of reverse mortgage is to arrange cash money for the seniors. This means, that a senior has not to pay back anything during the loan running time. When a borrower, or the last borrower, will sell the home, move away or pass away, the home will be sold and the selling price is used to pay away the loan capital, accrued interests and all the costs. The obligatory mortgage insurance guarantees, that the other assets of the borrower, nor the heirs, will never be used to pay the reverse loan.

4. The Secret Is In The Facts You Know.

A senior must research, what are his financial needs and what products there is in the market, which would fit to him. Because he is not usually an expert, his role is to define his needs at the moment and in the future. Because we do not know the future, it is important to keep some reserves for it. After he has the need list, he must use experts, like the bank manager, other seniors, reverse mortgage counselor and to study by himself, how the reverse loan could serve him.

5. Are The Reverse Mortgages More Expensive?

They are, because the upfront fees are quite high. However, it depends on the needs. If the need is urgent and the home equity is the only source of the extra money, is there any other choice? And because the senior will stay as a home owner, the future home price increases will help quite a lot.

Juhani Tontti, B.Sc., Marketing, Helps The Seniors To Get A Picture About How Reverse Mortgages Work. And Do Reverse Mortgages Work Best In His Situation. Visit: How Do Reverse Mortgages Work

5 Effective Tips To Locate The Reverse Mortgage Broker From Your Area

2011-12-06T00:44:00.000-08:00

Did you know, that a reverse mortgage broker has to be licenced to originate reverse loans in a state, where he is located? Did you also know, that all reverse mortgage brokers are members in the National Reverse Mortgage Lenders Association?

The association membership is a sort of a guarantee for the reverse mortgage broker, because then a senior knows to whom to contact, if she or he doubts something. The property location will determine the location of the reverse mortgage broker.

1. Use The List Of The Brokers For The Shopping.

The reverse loan is a long term commitment, which means, that the broker and the lender must be reliable and well-known long term ventures. One sign is the brand image of the company, because only the good ones will reach the good fame. Step one in finding a company is to prepare a list of reverse mortgage brokers. Collect the names of the candidates from the different sources. The bank manager, the press, other seniors, ads and internet.

Step two is to cut the names down to twenty and to send the same quote request to all of them. Before you can do this, you must have collected enough information about your needs and the different financial products and met the counselor.

2. Compare The Quotes.

If you still think, that the reverse mortgage brokers are selling the same products with the same prices, it is a time to change your opinion. The reverse loans are like whatever products, which do not have any fixed selling terms. The economic situation will influence greatly on the prices and the only way to get the best deal is to follow the market long enough, to use special offers and to ask quotes regularly. You have to do your homework.

3. Select The Five Best Quotes.

You must show, that you are serious with your deal. When you get the first quotes from the brokers, pick the best five and ask each of them once again, what is their best offer. You can tell directly, that you have other quotes, which are as good as yours. Will you do it better?

4. Make The Best Two To Compete With Each Other.

Nobody wants to be a loser, especially not the reverse mortgage broker, who has been in contact with you several times and done a lot of work for your offer. When you let him know, that there are two offers, which are equal, I am sure each is willing to talk about the terms. Before you sign the aggreement, make sure that both are respected, reputable and long term operators in the reverse loan industry.

5. Show Your Quotes To The Counselor.

Your initial information, with which you asked the quotes, was partly built as a resulst of the counselor meeting. Maybe you also received recommendations about the brokers. Now you can turn to the counselor and ask, whether these brokers are high classic companies and whether you are safe, if you will make an aggreement with some of them.

As you can find from this article, the process to find a broker is very practical and the key is the fact, that each broker at each time has its own terms. When a borrower follows the market long enough, he will find out the best deal. This is important, because the reverse loan is a long term deal and the accrued costs will be paid away after the running time.

Juhani Tontti, B.Sc., Marketing, Has Recommended This System To Find A Reliable Reverse Mortgage Broker And A Reverse Mortgage Lender To His Readers. Visit: Reverse Mortgages

Apply For Reverse Mortgage, But Do It Correctly

2011-12-05T08:35:00.000-08:00

Did you know, that to apply for reverse mortgage requires, that you have done your own homework plus met the HECM counselor? Have you understood, that the whole process is extremely useful to you?

If your need of the extra cash is urgent and you feel, that you have no time for the details, think once more. Yes, because to apply for reverse mortgage requires some basic knowledge. It can happen, that this financial product does not fulfil your needs or there is another one, which does it better.

The idea of the reverse mortgage is, that a senior 62 or over can tap a part of his or her home equity and use it how he will. The home must be his permanent home and there must be equity in the value. If there is still a usual mortgage, he must pay that away with the reverse loan. Practically all home types will qualify.

1. The Qualification Requirement.

The qualification requirements have been done easy. The key element is the home ownership and the fact that there is equity in the value. But if a senior, or maximum three seniors, own the home, where they live permanently, they will qualify automatically.

If there is more than one borrower, all must fulfil the qualification criteria. The maximum loan amount depends then about the age of the youngest borrower, about the appraised value of the home and about the market interest rate. The older the borrower, the lower the rate and the higher the home value, the more a borrower will get.

2. You Can Fill A Part Of Your Extra Cash With The Reverse Loan.

Typically those, who will take the reverse mortgage have no other source of money and they cannot get a new loan, because their ability to pay the monthly payments has decreased. Still, the idea of the reverse loan is to use the money for the serious purposes, maybe for the longterm ones.

3. How To Prepare To Apply For Reverse Mortgage?

The knowledge is the hard currency in this process. You have to know two things. What is your need and what financial product fits best for this particular need. Because you cannot know the future sudden needs of the extra cash, one solution is to save some equity for the future.

It is important to make question lists and to talk with other seniors to get enough useful tips. The meeting with the counselor is extremely important. But you can also meet your bank manager plus other experts, because they can see the situation independently.

4. There Is No Income Nor Credit Information Check.

The reverse loan is a sure choice, because you will not be forced to use your other assets to pay back the reverse loan. When the running time is over, the home will be sold and the selling price will be used to pay the loan capital, accrued interests and all the costs. If the selling price will not cover the whole amount owed, then the mortgage insurance will cover the missing part. You must take the insurance, when you sign the deal.

5. To Get The Best Reverse Mortgage You Have To Shop.

The reverse loans are the products of the lenders and their terms fluctuate following the market situations. There are special offers and there are lenders, which are in the trouble, because the sales managers do not have enough sales. These elements influence on the terms. This is an important notice, because the running times of the loans are usually long ones.

I recommend, that you really do your homework, meet the experts and talk with other seniors, before you make any decision. The reverse loan can be a solution for you, but there can be other solutions too. Do not be ashamed, but talk openly about your needs.

Juhani Tontti, B.Sc., Marketing, Has Helped Seniors To Apply For Reverse Mortgage And To Get The Needed Information To Get The Best Reverse Mortgage Or Some Other Product. Visit: How Does A Reverse Mortgage Work

HUD Reverse Mortgages, Has The Widow Spouse To Pay The Loan

2011-11-29T23:03:00.000-08:00

Do you belong to the group, who has HUD reverse mortgages, but whos name is not in the title nor who has not signed the agreement? What if your spouse will pass away and you have to pay the whole outstanding balance?

It is generally known, that the HUD reverse mortgages claim in their terms, that the borrower has never to use his or her other assets to pay back the reverse loan. That the home selling price and the reverse mortgage insurance will cover the whole loan amount, always.

However, there are three widows of the borrowers, who were forced to do this. With the heavily decreased home prices this is a tough job. So to prevent the foreclosure these three widows decided to sue HUD, The Department Of Housing And Urban Development. What happened?

These widows claim that HUD changed in 2008 the old rule, which said that the borrower should never pay more than the value of the home and if this does not cover the whole amount, the missing part will be paid from the obligatory mortgage insurance. Sounds clear.

But according to the new HUD practice, they claim that the spouse has to pay the whole outstanding loan balance, if he or she wants to keep the property. This is tough, if the home price is lower than the total amount of the loan capital, accrued interests and all the accrued costs.

1. The Names In The Title And Loan Agreement Matter.

The system is very clear. The borrowers are those seniors, who have signed the agreements of the HUD reverse mortgages. When the last borrower will pass away, will move permanently to another location or will sell the property, the home will be sold and the selling price will be used to pay back all the money, which is owed to the lender. The remaining part belongs to the borrower or to the heirs. If the heirs want to keep the property, they have to pay away the owed amounts to the lender.

2. The Widows Wanted To Keep The Home.

The widows in question wanted to keep the homes, which was impossible because the home prices were decreased below the amount owed and they were unable to get the funding to finance the deals. The American Association Of Retired Persons Foundation claims that the HUD rule change was made in secret and they also said, that the HECM program follows the consumer protection practice, where the term homeowner includes the spouse.

3. If A New Buyer Will Buy The Property, It Will Be Sold At The Market Price.

Think about this. If a widow spouse wants to buy the property, he has to pay all the owed amounts to the lender, which will exceed the home present value. But if the outsider will buy the property when it will be sold, he or she will get it at a lower price. This cannot be fair according to The American Association Of Retired Persons .

4. In July 2011 The Court Made A Decision.

Actually HUD won this case, which is natural, but not so human. However, if we remember the basic reverse mortgage agreement, the decision followed the principles. The problem was, how to keep the old homes with a current market price. The answer is simple. The spouses could have bought the homes, when the lenders were selling them. They could have done this by using the reverse mortgages, because there were a lot of equity left. Maybe The American Association Of Retired Persons just tested the system and tried to change it to become more consumer friendly.

Juhani Tontti, B.Sc., Has Written A Lot About The Features Of The HUD Reverse Mortgages And Other Topics Concerning The Reverse Mortgages To Help Seniors To Get The Full Picture. Visit: Reverse Mortgage

The 3 Rare Features Of The Reverse Mortgages

2011-11-29T07:38:00.001-08:00

Have you ever thought, how simple solutions the reverse mortgages offer? Have you ever doubted, that they may be more complicated products, than what you first thought? Read about the rare features, which the reverse mortgages include.

The reverse mortgages are meant for the American seniors 62 and over, who own their homes, where they live permanently. These people need more disposable money and the home equity is in many cases the only source. They are often called the cash poor but equity rich people.

The reverse mortgages are always taken against the equity of the home and the only obligation, which the borrower or borrowers have is to keep the property in a good shape and to pay the taxes and insurances. There is no back payments during the loan running time. On the contrary the lender will pay to the borrower according to the instructions, he has got.

The loan capital, the accrued interests and all the costs will be unpaid as long as the borrower does not sell the home, move away permanently or pass away. If this happens the property will be sold and the capital, accrued interests and all the costs will be paid using the selling price, or if this does not cover the whole sum, the obligatory mortgage insurance will pay the missing part.

1. Who`s Name Will Be In The Title?

If a couple takes the reverse mortgage it matters, whether they put only one name into the title. If this one, the borrower, will pass away, the property will be sold, which will cut the running time. But if the couple puts both names into the title, the running time will end, when the last one will pass away, for instance.

Actually three seniors can be borrowers, but all must fulfil the qualifications. When the age of the borrower influences on the loan amount, the lender uses the age of the youngest borrower. On the other hand, the older the borrower, the more he or she can get, so the borrowers must think thoroughly, what they want. If the borrowers want to maximize the loan amount, then the oldest one should become the borrower alone, but if they minimize the risk, then the group members can be the borrowers.

2. When The Loan Is Signed, The Borrowers Cannot Change The Names In The Title.

This means, that this topic must be decided before the seniors sign anything. Seniors have to remember, that the consumer protection laws protect only the homeowners and the borrowers. The change of the law is right now pending.

3. Make A List About All The Costs Involved.

The reverse mortgages include several costs. It is a temptation not to calculate these, because the reverse loan seems to be money from the thin air, because there is no back payments during the running time of the loan. For instance the origination fee is 2 % for the first $ 200.000 plus 1 % of the value above 200.000.

The mortgage insurance is mandatory and will cover the part of the costs, which exceeds the home selling price. Note, that the borrower, or the heirs, has never to pay the reverse loan from their other assets. A big choice is to select between the fixed and variable interest rates, because the accrued interests form a big part of the costs.

Juhani Tontti, B.Sc., Is And Expert Author, Who Shares Professional Level Tips About The Reverse Mortgages With The Target To Help The Reverse Mortgage Borrowers To Make Good Decisions. Visit: Reverse Mortgage Loans

5 Facts How The Reverse Mortgage Lending Is Changing

2011-11-22T03:32:00.001-08:00

Have you noticed, that the reverse mortgage lending is changing and the market is waiting how? The Consumer Financial Protection Bureau will follow up the actions from the future study concerning the reverse mortgage lending.

The need for a new office and new rules comes from the fact, that this industry includes a lot of scam artists, which do not follow any good practices. They utilize the fact, that the reverse loans are complicated products and many seniors do not understand, what they sign.

1. What Is The Consumer Financial Protection Bureau?

It is a Federal Agency, which operates under Dodd-Frank and works against the predatory practices and other abuses in the reverse mortgage industry. Earlier these tasks were split between seven different agencies. The main focus is to protect senior people from the predatory practices by the rulemaking and enforcement authority in the banking and security industries, where the senior people have lost their homes.

2. What IsThe Office Of Older Americans?

That will be formed by the end of January 2012. The target is to focus on the financial products and the deceptive practices, which concern the older Americans. The office will develop, implement and evaluate the programs of Consumer Financial Protection Bureau.

3. The Study Will Be Done.

The Office Of Older Americans will conduct a study about the reverse mortgage lending before july 21 2012. The study tries to identify all unfair practices in the origination of the reverse mortgage lending to protect borrower seniors. It also tries to find out, whether the financial product fits to the circumstances of the seniors.

4. The Results Of The Study.

The study may lead to the new legislation and the removal of many unfair practices, which will be found out. It may touch practices, when the reverse mortgage fits to a senior. It may also touch the cases, when the reverse loan funding is used for the investments. Th earliest time, when the new rules will be effective is late 2012, which means, that the lenders have a lot of time for comments and for the change of their practices.

5. This All Will Improve The Image Of The Industry.

The fact is, that the reverse mortgage industry still include scam artists, whos only target is to milk the seniors. The new legislation and the study will improve the marketing circumstances a lot, which will strenghten the brand image of the reverse mortgage industry.

The reverse loans are financial products, which include a lot of alternatives and details, which make the understanding difficult. The new legislation will help seniors, because new things will be conducted by the law. The products become safer. However, it is sure, that the industry will develop new approaches, which again require new legislation.

Juhani Tontti, B.Sc., Marketing. The Office Of The Older Americans Will Follow, How The Reverse Mortgage Lending Will Develop. The Target Is To Protect The Reverse Mortgage Borrowers From The Scam Artists. Visit: Reverse Mortgages