Juhani Tontti asked:




Most home types are accepted. The qualification terms are flexible, because the target of the U.S.Government was to offer this chance to as many seniors as possible. If a senior is at least 62 years old, owns a home, where he has equity left, he will qualify. That is the core, how reverse mortgages work.

1. How Does A Lender Pay You?

This is an important question, when you think how reverse mortgages work. The idea is to help you with your financial needs and that means that you will decide, how the lender pays you. It may sound funny, but you will not pay anything back month after month, but only when the loan will be closed.

Depending on your needs, the lender will pay you as a lump sum, as monthly installments, as a credit line or as a combination of some or all of these. You can also decide, how many months you will take the money or how big lump sum you need and to stop there.

2. How Much Can You Get?

I cannot give you an exact figure, because the sum depends on your age, on the appraised value of your home and on the interest rates. But we can say, that the older you are, the more expensive is your home and the lower is the interest rate, the more you can get. There is a loan ceiling of $ 625.000.

3. Does The Terms Change Over Time?

These are the items, which are included into the senior reverse mortgage: compulsory mortgage insurance, origination fee, title insurance, the title, county recording and attorney fees, the real estate appraisal, the survey and the monthly service fee.

According to my knowledge at least the interest rate will fluctuate, if you have chosen a loan with a variable interest rate, but if you will choose a fixed rate loan, then the whole package will remain as such.

4. How Many Borrowers Are Accepted?

This is an important question especially for couples. Also in this respect a senior reverse mortgage is flexible, because it accepts altogether three owners and borrowers. And it is important to note, that these senior must not be relatives, but all must fulfil the qualification, i.e. to be at least 62 and to be owners of the home.

5. When Will You Pay Back?

The reverse loan differs from the usual loan in that respect, that nothing will be paid back on the monthly basis, because the idea is to arrange more disposable money to seniors. So all expenses plus the loan capital will be paid back, when the loan will be closed. This happens, when the last owner dies or moves permanently away.

Rafael

Juhani Tontti asked:




For a senior it is important to understand the key features of the reverse mortgage loans, before he goes on, because some lenders have done false offers trying to utilize the seniors, who do not have a full understanding about the reverse mortgage loans.

If you think the differences between the usual mortgages and the reverse mortgage loans, they are many. With the usual mortgage, the borrower has to have enough monthly income compared the loan sum and he has to pay back every month. With the reverse home mortgage loans the lenders pay to borrowers and all the costs, interests and the capital will be paid back at the closing of the loans.

1. How Much Will I Get?

Actually the reverse mortgage loans amounts depend on the interest rate, the appraised value of your home and on your age. So you will get more the older you are, the lower is the interest rate and the more valuable is your home.

2. What Happens, If I Cannot Pay?

There is one good thing. All of these loans include obligatory mortgage insurances. The idea of these insurances is to guarantee two things. First, that if the selling price of your home do not cover the whole sum of costs, the insurance will pay the difference.

This means that you will never owe more than the value of your home. Second, the lender gets his money for sure. The mortgage insurance is very important, if you think a risk that you could otherwise loose your home. This special insurance guarantees, that it will never happen.

3. What Types Of Loans There Are?

These loans are divided into three groups. In the first group there are the so called single purpose loans, which only some states, governments and non profit organizations will grant. These loans are the cheapest ones. They are used for some specific purposes only, like for home improvements.

The second class is the federally insured loans, HECMs, which are backed by the HUD. These are slightly more expensive ones, but have no income or medical limitations. Owing to higher upfront costs, these loans are recommended for a longer term use. The federal counselor meeting is compulsory. The proprietary reverse mortgage loans are backed by the private companies.

4. What Are The Costs?

Usually the reverse mortgage loans offer tax free income and they have no influence on the Medicare or social security. HECM allows the borrower to live in the nursing home for 12 months before the loan must be repaid.

Normally the lenders charge the origination fees, mortgage insurance premiums and servicing fees. All these fees will be paid when the loan will be closed and the home is sold. A borrower can select either the fixed or the variable interest rate. But remember, that you as the home owner must pay taxes, insurance, utilities, fuel, maintenance and other expenses. If you do not pay taxes or insurances and do not keep the home in good condition, your reverse loan can be due and payable. When the loan is paid, you can deduct the interests in the taxation.

Carlos

Juhani Tontti asked:




This article can handle only some of the many questions and I strongly recommend, that before you will sign anything, you go and meet the federal reverse mortgage counselor, who can tell, what is the best solution for your special needs and whether the reverse mortgage loans in general are the solutions for you.

1. I Own A Home But Have Modest Monthly Income.

Do not worry! The reverse mortgage loans have been developed to help American seniors age 62 and over with their financial problems. The basic thing, how these loans work is, that a senior can get cash against the value of his home. The key requirement is, that the home has equity left against which the senior can borrow. If he has an old mortgage, it must be paid away with the new reverse mortgage loan.

This all means, that the amount of your other assets nor your monthly income has no meaning in this case. The source of the cash is the home equity, which you have already paid and want to use now, when your situation has been changed.

2. If I Do Not Pay, Can The Lender Get My Home?

The reverse mortgage loans work in the way, that you will not loose your home. When you take the reverse loan, you have to take a mortgage insurance. That is a compulsory insurance, which covers the expenses in that case, that your home value, the selling price, is smaller than the sum of all reverse loan expenses.

However, when you as a borrower will remain the owner of the home, you must take care of all the normal expenses, like taxes, insurances, utilities, fuel plus other expenses and to keep the property in a good shape. If you do not take care about the taxes or insurances and do not keep the home in good condition, your reverse loan can be due and payable.

3. Can I Refinance The Reverse Mortgage Loan?

To refinance the reverse loan is wise, if the home value has increased, the interest rates have dropped or the maximum limit, which you can borrow, increases. However, check the costs of the refinancing. As a rule we can say, that the benefits, savings, must be twice as much as the costs of the refinancing.

4. How Should I Use The Money?

These loans are planned to be flexible. The guarantee is always the equity of the home. Actually you can decide how you take the money, as a lump sum, as monthly payments as a credit line or as a combination of all these. And, this is important, you decide, how you will spend the money. You do not have to report that to anybody.

5. When Do I Have To Pay All The Costs?

With the usual mortgage, you have to pay back every month. With these loans everything will be paid back at the closing of the loan. So if you have usual mortgage left you will pay that away with the reverse mortgage loan and in this way your monthly disposable cash increases!

Miguel

Juhani Tontti asked:




The target group of the senior reverse mortgage are seniors, who are cash poor but equity rich. They have paid the most part of their mortgages during many years but then for some reason, their financial situation have changed and they feel that the monthly cash does not cover all the expenses.

1. You Have The Right To Use The Equity.

There is one bad attitude, which resists some seniors to take this loan and that is that they feel that they cannot use the equity, which they have finally been able to pay away. But think about it. It is your money and now, when your home is perhaps too big for you and you really need more disposable money, it is clear that you can use the equity. It will go to a real, burning need.

2. What Kind Of Homes Are Accepted?

The requirement is that all properties must meet the FHA standards and flood qualifications. The accepted home types are single family homes, the HUD approved condominiums, the homes, which include from one to four units, when at least one unit is reserved to the borrower and the single family homes.

3. How Does A Loan Sum Fluctuate?

The reverse loan is quite similar with the usual mortgage loan. In this respect there are two loan alternatives, the loan with a variable interest rate and the loan with the fixed interest rate. If the decision is the variable loan type, then the interest rate will influence on the final payment especially when we think about the compound effect.

4. How Much You Can Borrow?

The maximum amount, which the law allows is $ 625.000. However, the sum depends on your age, the appraised value of the home and on the interest rates. We can say, that the older you are, the more expensive is your home and the lower the interest rate, the more you can get.

5. When Do You Pay All Back?

This is the sweet spot of this product. A senior has not pay back anything on a monthly basis, he can even pay away the traditional mortgage with the reverse loan and in this way to release more money for the daily use. The loan capital and all the expenses will be paid back, when the loan will be closed.

That happens, when the last owner or borrower, will move permanently away or die. Then the home will be sold and the selling price will cover all the costs. If this does not happen, then the mortgage insurance will pay the difference. This insurance is compulsory.

Gregory

laurie m asked:


house worth $560,000 (value)
mortgage loan balance $347,000.00/home equity balance 46,000 the line was 131,000 and we’ve spent 86,000 on home repairs. We have 20,000.00 in credit card debt from an adoption. We make too much to get a credit on any of it. would it make sense to use $20,000.00 of the 45,000.00 left on the equity line to pay off the credit cards???thanks!

ISIDRO

OP-lo asked:


I currently have a stash of cash in a money market earning 3.61% APY. I also have a home improvement project set to start later this month. I have enough cash to cover about 40% of the project. I also have a line of credit locked to prime, currently 5.25%. Should I take some of the cash to max out my Roth IRA and thus borrow that much more against the house assuming investments will earn 8% over time - or - should I minimize my home equity debt in the short term. My job situation is good but not great. I am also putting away 5% of my paycheck monthly into a Roth 401K. I have also considered the fact that I could refinance the equity loan into a new 30 yr mortgage after the project. The downside there is that I am currently at 5.25% 5 years in to a 30 yr mortgage. Thanks for your input.
FYI - even if I used 100% of my equity line, I would still have over 100K in equity on my home. I live just west of Chicago. Our housing market here has slowed but notthing like the devaluations of Florida or the west coast.

JARVIS

Guinness asked:


I am told it will reduce the life of my mortgage loan by 7 years, and will add to my home equity significantly within 10 years. Is anyone out there actually doing this and have you seen positive results?

COLBY

lee b asked:


I own a house free and clear, FMV about 58000.00, its a rental, score is 600. Can I get a loan? I have about 6K in 401K. All my money is in the rental house.
Any suggestion of who I can go to. I am willing to use house as collateral

JACQUES

badgirl asked:


BadGirl has an idea. What if I dump all of my student loans into a refinance and/or home equity (on property I own, but need to unload), and then I decide to bail on that property. It will take me a good 20 years to pay off my large student loan, but how long will it take to recoup my credit rating if I do this? BadGirl thinks it will take longer to pay off the student loan, than rebuild a bad credit rating (and get rid of the student loan debt for good).
Comments/suggestions?
BadGirl was not considering a bankruptcy, just giving the property back to the lender and dealing with the rest. You are right about the fact that I should be smarter, but I actually make about $40K less than I did before I became a teacher, and have more college debt because of it. I was thinking about refinancing with the same shitty company that talked me into the interest only rate to begin with-I thought maybe I could give them some of their “interest” back.

ZACHERY

LifeSaver asked:


I tried to re-finance my 1st and 2nd mortgage with these two banks and was not successful due to owing more on my mortgages than my house is worth (& high credit card debt of about $25K). My spouse and I have student loans to pay for ($60K) and it is very depressing for us. What can we do to fix this financial and emotional problem. More details..we make over $200K per year but the bills and unexpected situations keep coming up. It is now affecting our marriage and we may be separating because of this financial tornado. we have two kids and a dog to care for also. It is tough but right now we are just maintaining to pay bills from pay check to pay check. How do we attack these issues without killing one another and becoming angry about it when we bring up the subject? Are there any highly seasoned real estate agents or financial gurus (anyone w.knowledge) to help us? Any internet or 800#’s? We need help REALLY bad!!

KERMIT