Posts Tagged equity
Reverse Mortgages For Seniors Offer Financial Independence
Posted by Victoria Belle-Miller in Finances on 03/13/2010
As the cost of living rises in 2010, a larger number of older homeowners are looking for a financial solution that allows them to remain in their home and still have available money at their disposal. Often, an older homeowner’s basic living expenses will exceed the income he or she receives after retirement, such as social security benefits. The cost of healthcare, often a necessity for older Americans, is also rising and is not always completely covered by health insurance or government aid. A reverse mortgage could be the answer to this financial quandary.
Reverse Mortgages for Seniors: Basic Information
This type of financing is specifically designed for older homeowners who are financing a residential property. This loan is unique, compared to other conventional home loans, because it does not require the homeowner to make any monthly mortgage payments. As long as the homeowner pays property taxes, stays current on homeowner’s insurance and maintains any necessary home repairs or maintenance, he or she will not have to make any payments on the loan for as long as he or she remains living in the home.
If a homeowner has sufficient equity in his or her home, that equity can be converted into cash with this type of loan. The money received from the loan is tax-free and can be used any way the homeowner sees fit. The money can be used to pay off other existing debt, healthcare costs or to simply improve one’s current lifestyle. The amount of money a homeowner can receive depends on his or her age, the value of the home, and current interest rates. Homeowners can choose from several disbursement options, including a lump sum, a line of credit, monthly payments or a customized option that is designed to meet their financial needs.
Requirements of this Loan
There are certain requirements a homeowner must meet to fulfill the terms of the loan. All homeowners listed on the title of the home must be at least 62 years old. The home being financed must also be the homeowner’s primary residence, which means he or she resides there at least six months out of the year. Due to the absence of monthly payments, there are no income or credit requirements for this type of loan, so in many cases, it is quite easy to qualify for this type of financing.
An appraisal will need to be done on the home to ascertain the home’s value. This will tell the homeowner how much equity is in his or her home so that the lender can determine how much money he or she can receive from the loan. The homeowner must also attend reverse mortgage counseling before he or she can take out a reverse mortgage. This counseling covers the loan and all of its requirements so that homeowners are better prepared before deciding on this type of financing. In many cases, free counseling is available to borrowers.
Benefits of this Type of Financing
This type of loan is insured by the Federal Housing Administration, which in turn guarantees that older homeowners who take out these loans and stay current on taxes, insurance and repairs will never owe more than the value of their homes once their loans are due to be repaid. This type of financing allows a homeowner to stay in his or her home without worrying about paying monthly mortgage payments. This will leave him or her with more money for other expenses and will help them maintain or improve their standard of living.
Senior homeowners have many expenses they are responsible for and the income they receive after retirement may just not be enough. A reverse mortgage could be the solution to their financial needs.
Victoria Belle-Miller is the newest member of the Senior Reverse Mortgage writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the team and a valuable source of sound mortgage advice.
How Could an FHA Reverse Mortgage Affect Retirement?
Posted by Anne Johnson in Finances on 03/03/2010
A FHA reverse mortgages are available to homeowners who are at least 62 years of age and who own the home in which they live. This financial product can help seniors who do not have sufficient income to meet their monthly needs, but do have equity in their home. The FHA reverse mortgage works by liquidating that equity in order to eliminate monthly mortgage payments, disburse payments to the homeowner, or both. Provided that the homeowners remain current on their obligations, the homeowner is not required to repay any of the loan balance until they no longer occupy the home.
An FHA Reverse Mortgage Can Make Retirement Comfortable
A common misconception about the FHA reverse mortgage is that homeowners must own their homes free and clear in order to utilize this product. The truth is, one of the main uses of this financial product is to eliminate monthly mortgage payments. Without the burden of monthly mortgage payments, homeowners have extra cash available to help maintain or improve their standard of living. While there are no monthly mortgage payments required, as long as at least one homeowner remains using the home as their primary residence, homeowner’s insurance, real estate taxes, and home repairs continue to be the responsibility of the homeowner.
How Can the Funds from an FHA Reverse Mortgage Be Used?
If the homeowner has enough equity, he or she can not only eliminate monthly mortgage payments, but receive additional funds from the FHA reverse mortgage. The amount of the additional funds will vary based upon the home’s value, homeowners’ ages, and how much equity is available.
The funds can be disbursed in many different ways and tailored to the needs of the borrowers. The different disbursement options include a lump sum, a line of credit, monthly advance, or a combination of these options. The funds received from an FHA reverse mortgage can be used however the homeowners wish. Common uses for the money are to supplement monthly incomes, to finance healthcare, and to eliminate other monthly expenses, but there are absolutely no restrictions on the use of these funds.
Could the FHA Reverse Mortgage Affect my Government Benefits?
Depending on the type of assistance a homeowner receives, an FHA reverse mortgage could affect their eligibility to continue receiving it. Though the existence of the FHA reverse mortgage itself does not affect any eligibility requirements, the funds a homeowner receives from this product could.
If a homeowner receives an entitlement-based benefit, this financial product will not affect their eligibility. Federal entitlement programs in the United States include Social Security and Medicare. These programs are both based upon factors such as the recipient’s age and job history and, therefore, will never be affected by an FHA reverse mortgage.
Programs such as Medicaid and Supplemental Security Income are considered need based and could be affected by the proceeds from this financial product. In order to be certain that this product will not affect any federal or state benefits, home owners should speak with their caseworkers about the potential implication of receiving money from an FHA reverse mortgage.
An FHA reverse mortgage can help senior homeowners live more comfortably during their retirement. This product can eliminate monthly mortgage payments, as well as provide additional funds to help supplement a fixed income. While this product is certainly not for everyone, seniors who feel they may benefit from this type of loans should speak with a reputable reverse mortgage specialist about their options.
As a former psychology major, finding solutions to resolve people’s problems has always been a subject of interest to me. I hope that my writing will give people the confidence to make decisions about reverse mortgages. In addition to writing, I love to read, knit, spend time with friends and family, and watch the Missouri Tigers and Green Bay Packers!
A HUD Reverse Mortgage Can Be Beneficial
Posted by Victoria Belle-Miller in Finances on 02/26/2010
With the prevalence of negative press about the so-called disadvantages of HUD reverse mortgages, as well as the news about senior homeowners being scammed by deceptive lenders, many homeowners may have been dissuaded from even researching this type of financing. But, most lenders are not trying to trick their customers. For situations in which a HUD reverse mortgage is the right fit for a homeowner, there are many great benefits offered by this type of financing. The FHA insures most of these loans and it is continually making improvements to the consumer safeguards associated with them.
Benefits of this Type of Financing
If a homeowner determines that this type of loan is the right type of financing for his or her needs, there are multiple benefits they can receive from the loan. The homeowner will not have to make monthly mortgage payments on the loan as long as he or she remains the owner of the home and meets the requirements of the loan. These requirements include staying current on homeowner’s insurance, property taxes, and home maintenance or repairs. Once the loan is due to be repaid, the FHA guarantees that the homeowner will never owe more than the value of his or her home as long as they met the aforementioned requirements.
If a homeowner has enough equity in his or her home, the equity can be turned into cash. There are different disbursement options to choose from, including a lump sum, a line of credit, monthly payments, or a customized combination plan. There are no regulations on how homeowners spend the cash they receive. Some homeowners use the cash for medical bills, repayment of other debt, or for personal expenses.
How to Qualify for this Loan
To be eligible for this loan, the borrower must be a homeowner and be at least 62 years old. The home being financed must be a residential property and be the homeowner’s primary residence. There are no income or credit score requirements for this loan, so it is easy to qualify compared with other home loans. All potential borrowers are required to participate in HUD reverse mortgage counseling so that they are informed about the requirements of the loan and are certain that that type of financing is the best option for them.
The Future of HUD Reverse Mortgages
In 2010, the FHA expects to insure about $30 billion in HUD reverse mortgages. Because of this, the current administration has requested a $250 million credit subsidy for the reverse mortgage program and an increase to the current mortgage insurance premium from 0.5% to 1.25%. They also want to reduce the principal loan limit for the loans. These changes could affect the cost of the loan, so now is a good time to look into this type of financing.
Current Rates Are Low
Right now is a great time to consider this type of financing while rates are low and before the required mortgage insurance premium increases. This type of financing allows a homeowner to live in his or her home without worrying about making monthly mortgage payments and, if there is sufficient equity, to receive additional funds.
The amount of money a homeowner can receive depends on his or her age, home value and current interest rates. This type of financing can be a great option for senior homeowners who need to finance their homes and still have accessible money each month. Homeowners who feel this is the right type of financing for them can contact a reputable source for more information.
Victoria Belle-Miller is the newest member of the Senior Reverse Mortgage writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the team and a valuable source of sound mortgage advice.
Equity Release
Posted by Edward Simpson in Finances on 02/24/2010
Interest rates and equity release
The debate over interest rates usually focuses on homebuyers taking out a mortgage, but interest rates have an important influence on those looking at the possibility of equity release due to the influence they have of property prices and scheme affordability. The two main ways to release equity are through a lifetime mortgage, or the home reversion plan, which means selling part of your house outright and of course giving up any future growth on that percentage. The choice of which is best, depends on your circumstances.
The mechanics of equity release.
Understanding how equity release works is a vitally important step in the process. Advice can be sought from equity release advisers, the internet or from trusted personal sources. Often the equity is being released to benefit children within the family. In these circumstances it is important that everybody is involved in the process, including the information gathering phase. By collecting all of the information and talking to an equity release adviser, you can be sure that you will have a clear understanding of what you wish to achieve and if equity release is the right choice for you and your family.
Equity release and the effect on benefits
One of the questions that is often asked is ‘Will my benefits be affected if I release equity?’. In the last year, Government benefit agencies have relaxed the rules with regards to benefits and what clients may utilise the funds for. If done correctly, equity release should only release the amount of equity that you require. There is no need for spare cash to be sitting in a bank account. As a result, there should be no funds available that would negatively affect your benefit position. An equity release adviser will undertake a full benefits assessment to advise you on this very point.
The competitiveness of the UK equity release market
Recently a number of providers have withdrawn from the equity release market. However, leading sources agree that there is still plenty of competition between providers to ensure an excellent deal for those looking to benefit from equity release products.
Equity release forecasts 2010
Recent positive forecasts from ERSA predict further growth in the equity release market in 2010, which will be helped by the strengthening of the property market. Results recently released prove that there is a great deal of appetite for equity release products and the benefits that can be received. Claire Barker, Chairman of ESRA commented:
“The rise in home reversion plans is particularly encouraging and demonstrates increased adviser awareness for these products. This rise could perhaps also suggests that homeowners are becoming less emotionally attached to the concept of full ownership of their property and are seeing the benefits of home reversions in a market of lower property values. These products are good alternatives to Lifetime mortgages for some clients and, with a SHIP plan, homeowners are guaranteed rent-free tenure for life.”
This was further backed by Edward Simpson of equity release specialists Ashall Glover Financial Services who commented, “We have seen a strong start to 2010 in relation to equity release enquiries which we believe has been supported by the steady improvement in confidence in the UK housing market.”
AG Equity Release are independent financial advisers specialising in Equity Release Products, Equity Release Advice and Equity Release Schemes. Please visit http://www.agequityrelease.com/ for more information.
Valuable Reverse Mortgage Information
Posted by Victoria Belle-Miller in Finances on 02/20/2010
A reverse mortgage is not just another typical home loan. It offers several benefits that other mortgages usually do not and most are insured by the Federal Housing Administration. This type of financing is for senior homeowners who may need financial assistance and have sufficient equity in their homes that can be turned into cash. This loan will allow them to stay in their home without making monthly payments and they may even be eligible to receive additional cash back.
How the Loan Works
If a homeowner qualifies for a reverse mortgage, he or she will not be required to make any monthly mortgage payments. The loan does not need to be repaid at all until the homeowner no longer occupies the home and it is sold. He or she will be able to stay in the home without worrying about the possibility of foreclosure due to missing mortgage payments. Also, if there is enough equity in the home, it can be turned into additional cash. The amount of money a homeowner can receive depends upon the homeowner’s age, the value of his or her home, and current interest rates.
Homeowners can choose how the money they receive is to be disbursed so that the amount and schedule fits their lifestyles and personal needs. The disbursement options include a lump sum, line of credit, monthly payments or a personalized combination. There are absolutely no restrictions on how homeowners can spend they money they receive from their loans. Seniors can use the money they receive for medical bills, home maintenance or other expenses.
Loan Eligibility & Requirements
In order to qualify for this loan, applicants must own their home and be at least 62 years old. The home must be the applicant’s primary residence in order to qualify, which means he or she resides in the home at least six months out of the year. Because there are no monthly payments with this loan, there are no income or credit score requirements. Therefore, homeowners can still be eligible for this type of financing even if they have limited incomes or less-than-perfect credit histories.
Borrowers are not required to pay back their loans until they no longer own or occupy their home. The only instance in which a homeowner would be required to repay the entire loan amount is if he or she did not keep the homeowner’s insurance, property taxes, or home repairs up to date.
Before a homeowner can take out a reverse mortgage, he or she will be required to participate in loan counseling, which will explore all of their financing options. This loan may not be the right option for everyone, so counseling will let homeowners know if this type of financing is the best option for their financial needs.
Don’t Buy into the Hype
Many people attempt to discourage reverse mortgages by spreading misleading information about them. While this type of loan may not be the right option for every homeowner, it is by no means a bad option for senior homeowners who need to supplement their incomes or reduce their monthly expenses.
This type of financing is a great option for homeowners who plan on staying in their homes for many years and do not need to preserve their equity for any reason.
Victoria Belle-Miller is the newest member of the Senior Reverse Mortgage writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the team and a valuable source of sound mortgage advice.
In a Journalistic World Full of Opinions on Reverse Mortgages, Where is the Truth?
Posted by Anne Johnson in Finances on 02/08/2010
One month into the year 2010, many people have heard at least something-good or bad- about reverse mortgages. This product has become extremely popular in the last couple years and its popularity continues to rise. However, with popularity also comes criticism. Every article that is published seems to be a minimal amount of information clouded by a storm of opinions.
Although this product is different from any currently on the market, reverse mortgages are a still lien on a person’s home, just like traditional mortgages. Unlike traditional mortgages, a reverse mortgage does not require a person make monthly mortgage payments for as long as they live in the home.
Reverse mortgages are used so homeowners over the age of 62 can pay off their existing mortgage and obtain access to additional funds. Once a homeowner has taken out a reverse mortgage, they will never have to make a monthly mortgage payment again. This federally insured product does require that the homeowner remain current on real estate taxes, homeowner’s insurance, and home repairs. Provided that the homeowner maintains his obligations, the reverse mortgage will not become due until the homeowner moves away or otherwise vacates the home. If the homeowner fails to meet these obligations, the reverse mortgage could become due and payable before the homeowner leaves the home.
The federally insured reverse mortgage does have costs associated with it, just as all financial products do. Most of the up front costs associated with the product go directly to the government so that the reverse mortgage remains a non-recourse product. It is considered non-recourse because, assuming the homeowner continues to respect his contractual obligations, he will never owe more than the fair market sale value of the home.
Reverse mortgage benefits can help people who cannot comfortably afford their mortgage payments, health care, and daily expenses. Important to note is that this product is something which should be discussed with the homeowner’s heirs. In order for the home to remain in the family after the homeowner has passed away, the estate will be responsible for paying off or refinancing the reverse mortgage. This loan should not be considered if a homeowner wishes to leave a mortgage-free home to their heirs because it is a loan and does need to be repaid.
It seems that some critics are unclear on many important facts about this loan. The fees can be a little higher than traditional mortgages, but the interest is not. Also, the largest fees go directly to the government for insuring the reverse mortgage, not to the banker to make a quick buck. For homeowners who could use this product, the benefits strongly outweigh the costs.
There is a lot of misinformation surrounding reverse mortgages. This product is not right for everyone, but also should not just be used in the case of last resort. It can greatly help senior homeowners enjoy their retirement and the protections surrounding the mortgage continue to improve. Hopefully, the product will be around for many years to help seniors without enabling anyone to take advantage of them.
As a former psychology major, finding solutions to resolve people’s problems has always been a subject of interest to me. I hope that my writing will give people the knowledge and confidence to make important decisions about reverse mortgages. In addition to writing, I love to read, knit, spend time with friends and family, and watch the Missouri Tigers and Green Bay Packers!
Reverse Mortgages: How They Work
Posted by Anne Johnson in Finances on 01/30/2010
Reverse mortgages are a unique product that has been available in various forms and with various features for over two decades, though it was not until recently that these loans gained the widespread attention of retired homeowners, news media, federal regulators, and the mortgage industry, in general. This new-found attention has been accompanied by a great deal of misinformation, misunderstanding and, probably as a direct result, heavy criticism of the product.
The bottom line with any legitimate financial product is that it is only as beneficial as it is appropriate. In other words, if the product is right for your situation, it is the right choice; if the product is not right for your situation, it is the wrong choice. Legitimate financial products are amoral – they cannot be inherently good or bad. It is how the consumer chooses to utilize these types of products that determines whether they are “good” or “bad” for them.
That being said, the next concern is how a consumer is to go about determining whether a particular financial product is right for them. The only way for a consumer to make an appropriate choice is to be well-informed about the decision he or she is making. This is especially true in when it comes to reverse mortgages because they are so different from traditional financing.
So what is a reverse mortgage? The aptly named reverse mortgage is so-called because, rather than borrowers incrementally reducing their loan balance by making monthly payments to the lender, they receive monthly payments from the lender that incrementally increase their balance. There are other options for how the borrowers can receive their funds, but the monthly payment option best illustrates how these loans compare with traditional home loans.
When an applicant chooses to purse a reverse mortgage, there are several factors that determine how much money they can receive. The options available to the homeowner are to receive monthly installments or a lump sum, access their funds as needed through a line of credit, or a combination of these options. The lender will use several factors, including the disbursement option that is chosen, to estimate how much can be disbursed to the borrower. The goal when making this determination is to ensure that, when the loan becomes due to be repaid, the amount owed to the lender will not be more than the value of the home.
A reverse mortgage must be repaid in full when the borrower(s) no longer occupies the home. At this time, either the borrower or borrower’s estate will sell the home and use the net proceeds of the sale to repay the lender. The balance will consist of the total of all disbursements made to the homeowner or on the homeowner’s behalf, as well as the interest and service fees that accrued while the loan was outstanding.
Most of the reverse mortgages issues today are Home Equity Conversion Mortgages (HECMs), which are insured by the Federal Housing Administration. This means that the homeowner will not be required to repay any balance that exceeds the market value of the home at the time that the loan becomes due. So, if home values decline or if the balance ends up being higher than initially anticipated, the homeowner is not left ‘holding the bag.’
The only exception to the protection that is offered by a HECM is if the homeowner fails to abide by certain terms of the mortgage contract. Fortunately, these mandates consist of staying current on the real estate taxes and homeowner’s insurance and keeping the property in good repair. These are responsibilities that exist with or without a reverse mortgage, but failing to meet these obligations with a reverse mortgage can result in the homeowner owing the full balance of the loan, regardless of the home’s value.
Any homeowners who are interested in considering a reverse mortgage for themselves should speak with a knowledgeable home loan specialists who can describe all aspects of this type of loan, as well as other types of mortgages, before making a decision about their home financing.
As a former psychology major, finding solutions to resolve people’s problems has always been a subject of interest to me. I hope that my writing will give people the knowledge and confidence to make important decisions about reverse mortgages. In addition to writing, I love to read, knit, spend time with friends and family, and watch the Missouri Tigers and Green Bay Packers!
Mortgage Fraud In The U. S.
Mortgage fraud is an ever increasing problem. You will always have honest people trying to make a good living in real estate. But you will also have those who are trying to cheat their way to a good property deal. You want to be aware of the scams people try to get by with. You may even need a criminal attorney (Fort Lauderdale). When you are aware of the traps and the tricks you are better prepared to protect your interest. Here are some to look out for.
Property flipping is a legal practice until wrong doers try to take advantage of the system. One way they do this is to get appraisers, who they will give a kick back to, to wrongly appraise the land to be purchased. The person who is making the illegal deal will get employees from title companies involved, loan brokers, and property investors to go with him on the illegal deal. He will give them all kick backs when the deal is finalized and he has made a big profit.
For example a property could be correctly valued at $20,000 but the appraiser submits a value of $90,000. Then there is the silent second. This is where the buyer borrows the down payment amount from the seller by issuing a second mortgage but does not disclose this. The primary lender thinks the buyer is investing his own money for the down payment.
However the truth is that the funds are borrowed. The second is not recorded thus the primary lender of funds is unaware of it. Then there is the nominee loans, straw buyer. This happens when the identity of the borrower of funds is kept hidden and a nominee allows the borrower of funds to use his name and credit report for the loan application.
Also you have the stolen identity issues which can be used on the application. The one applying for the loan is probably in on an identity theft crime where the real person is not aware that his identity has been stolen and is being used for a loan application.
And there is the inflated appraisal where the one doing the appraisal colludes with the funds borrower and submits an appraisal to mislead the lender. The false appraisal reports an inflated value. With the foreclosure scam the schemer looks for home owners who are in danger of defaulting on their home loan or for those in the foreclosure process already.
The schemer tricks the home owner by convincing him that he he can save their home if the property owner transfers the deed and that he pays the up front costs. The schemer makes his profit by remortgaging the land and taking the money the owner paid.
A straw buyer is used in equity skimming. The scam involves using false income verification reports and misleading credit reports to get a loan for the property. The name of the straw man is used. Before the close of escrow the buyer turns over the land to the perpetrator with a quit claim deed and turns all land rights over and provides no title guaranty. No payments are made on the loan and the investor waits for it to go into foreclosure after renting the land out for the months it takes for the land to be foreclosed.
Are you a victim of mortgage fraud? If you need to hire a criminal attorney (Fort Lauderdale) or criminal lawyer (Fort Lauderdale), look no further! We make it our mission to make a difference in protecting your rights.
Veterans and the Rising Cost of Living
Posted by Anne Johnson in Finances on 01/20/2010
Usually, one can count on the cost of living rising each year. Unfortunately, VA benefits do not always increase along with the cost of living. Disability benefits for veterans do rise each year, but is it enough to cover the cost of living? This is the predicament in which hundreds of thousands of veterans find themselves every year.
From 2007 to 2008, VA disability payments rose by approximately five percent. This is less than the rate of inflation estimated in this time. People find different ways to deal with this shortage in income, including restructuring their finances using VA loan.
There are a couple of different refinancing options that can help people save money each month. Currently, the VA offers a rate/term refinance, a cash-out refinance, and an Interest Rate Reduction Refinance Loan (IRRRL).
A rate/term refinance be used to refinance an existing mortgage or consolidate mortgages without receiving any additional cash back in order to obtain a lower interest rate and/or lower monthly payments.
A cash-out refinance can be used to turn equity into cash that can be used to consolidate other debts or cover expenses. This is an effective way to reduce monthly costs.
An IRRRL can be used by those who already have a VA loan to make changes such has interest rate or length of term in order to achieve a lower monthly payment.
A VA home loan has many benefits that other loans do not. Regardless of how much is borrowed, the VA does not require any mortgage insurance, which can save the homeowner hundreds of dollars each month.
Also, the VA allows applicants to finance more of their home’s value than other types of home loans. So, if the home’s value has depreciated since the original mortgage and is preventing the homeowner from obtaining new financing, a VA loan may be used to refinance the home at a lower interest rate.
For those wishing to receive cash back through a mortgage refinance, the VA recently began allowing applicants to cash out up to 100% of their home’s value. Though most lenders still only allow up to 90%, this is still higher than any other legitimate type of mortgage available in today’s market.
A debt consolidation refinance can help people who have a lot of high interest revolving debt because it lowers monthly costs and also makes the interest tax deductible since the debt is now part of the mortgage.
The Interest Rate Reduction Refinance Loan is a benefit available to those who currently have a VA home loan. This program is used to take advantages of changes in the market without any additional cash back to the homeowner. This program can be used to obtain a lower interest rate, change the term of a loan, or to switch from an ARM to a fixed rate mortgage. Sometimes referred to as a streamline option, this option does not require an appraisal, income, or asset verification.
A VA loan refinance could help many veterans lower their expenses in order to live more comfortably despite the rising cost of living. To obtain more information about these loan programs, contact a reputable VA loan specialist today.
As a former psychology major, finding solutions to resolve people’s problems has always been a subject of interest to me. I hope that my writing will give people the knowledge and confidence to make important decisions about VA loans. In addition to writing, I love to read, knit, spend time with friends and family, and watch the Missouri Tigers and Green Bay Packers play football!