Posts Tagged seniors
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.
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!