Reverse Mortgages Soar Amid Coronavirus Pandemic

Reverse mortgage is getting a second look as a possible alternative source of stability amid the coronavirus crisis, which has caused the 401(k)s to shrink away and the stock market to behave just like an oscilloscope. The growing equity that many seniors have in their property is one of the many reasons behind the reverse mortgage’s new appeal.

The National Reverse Mortgage Lenders Association said that homeowners who are at least 62 years old saw their housing wealth increase by $39 billion starting from the third quarter up to the fourth quarter of the past year, setting a new record of $7.23 at the end of the year.

The volume has increased substantially, at about 67% year over year growth for this specific sector. The customer of reverse mortgage loan is the older homeowner who are in their retirement, which recently got pummelled by around 20% and 30%. Most homeowners think they should be accessing their home equity instead of selling off their position or living off their retirement hoping that in time, it will all come back.

Even though economic crises are not new, the global depth as well as scope of the existing situation is unprecedented and has hit consumers, especially seniors, very hard. This has caused a lot of them to inquire about reverse mortgage loans.

Most of the borrowers of reverse mortgage Columbia are at the center of the crisis. Many of them are concerned about their financial health, stability, and ability to age in place. Many of them are wondering what they can do to hedge their risk during the current movements in the market and most are turning to the security and safety offered by reverse mortgages.

The inquiry levels are at levels that haven’t been seen in three years and can be considered as part of a much wider trend with more people turning to home equity to assist them in achieving a safer and more secure retirement.

One important aspect in driving this brand new consumer interest is working through the confusion by a lot of people about how the product works. Even though reverse mortgages have existed for several years, many consumers remain uncertain about the loan’s design.

There are still many misperceptions regarding reverse mortgage. One of the most common questions is how does it work. Aside from noticing a surge of inquiries from senior homeowners, more financial advisors are also asking questions and wanting to be educated about how reverse mortgage loan works so they could recommend it to their clients as an alternative to selling off their position.

The new push for educating consumers include making clarifications about the servicing difficulties in the conventional mortgage space, which is being buried in waves of forbearances. But many of today’s potential reverse mortgage borrower has already performed some form of homework in advance for any kind of lender conversation.

Call David Stacey, Reverse Mortgage Specialist, if you need to know more about reverse mortgage.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

Reverse Mortgages: The What, The Who And The How

There are different types of home loans on the market. One of which is what we call reverse mortgage. Some people might think that this is similar to a traditional mortgage or home loan. The only similarity is that both are loans against a borrower’s home. To understand this type of loan further, let us first discuss what a reverse mortgage really is.

What is a Reverse Mortgage Loan?

A reverse mortgage borrower does not need to pay back the lending company as long as he/she still lives at the residence used as collateral. The loan amount will be based upon the home’s equity and the age of the borrower. A borrower has the options to receive the funds in different terms – monthly payments, a lump sum, a line of credit, or a combination of these methods. You must take note that in reverse mortgage, you are not required to pay the loan back unless you sell your home, move out or die. One of the many advantages of having this kind of loan is that you can use the loan money without having to move out, rent or repay the loan each month.

Who can Apply?

You or your spouse are at least 62 and are co-owners of the residence.

You must own a home (this home should also be your primary residence).

One of the good things about a reverse mortgage in Columbia is that you don’t need to have an income to qualify (however, you do need to demonstrate that you have the resources to pay the homeowners insurance and real estate taxes). Your home must meet the U.S. Department of Housing and UrbanDevelopment (HUD) standards to qualify. If you own a mobile home or cooperative house, you can’t apply for this kind of loan. Only single-family home, a one-unit to four-unit dwelling, a condominium unit or some other HUD-recognized dwelling unit are the only types of homes accepted.

How to Apply?

Shop and Compare. You can use the internet to look for loan companies and compare their rates and fees. It is always a wise move to shop around so you can weigh your possible options. You can also ask people you know like your family members, friends, relatives and co-workers what they know about this type of loan or read reviews. However, weigh their opinions against what is best for you. There are a lot of misconceptions about reverse mortgages and taking someone’s advice that is hot knowledgeable can hurt you. Choosing a legitimate and reliable lending institution can be a difficult task though, since a lot of scams have evolved in the market. Contact Reverse Mortgage Specialist and schedule a time to get all your questions answered.

After you have chosen a local lending institution, you can now fill out and submit the reverse mortgage application form. Be sure to have the necessary documents such as your credit report, proof of your identity, etc. Requirements may vary depending on your chosen lender.

You might need to present a property appraisal.

Once approved, make sure that you have read and understood everything before finally signing any contract or document.

Meeting with a qualified counselor like David Stacey is your best bet for making sure you are doing what is right for you and your future. Call Reverse Mortgage Specialist today to schedule a convenient time to meet.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

Using Reverse Mortgage To Pay For Long Term Care

When it comes to long term care insurance, seniors have the option to use a reverse mortgage and other options to cover their long-term care expenses. Since long term insurance will ask you to be in excellent health, this isn’t always available to everybody especially for people who are older whose premiums tend to be prohibitive. In case you are at least 62 years old and you own your home, you can obtain a reverse mortgage to cover your care at home costs or your long term care expenses, which insurance policies don’t usually pay for.

A reverse mortgage loan allows you to borrow from the amount that you’ve already paid for your home. You are tapping into cash that’s otherwise made available to you only if you decide to sell your home. The remaining balance of the home equity will be given to your estate.

You can choose to receive monthly payments, as a line of credit, or lump sum. Plus, the proceeds that you receive are tax-free. Although the age of eligibility is 62 years old, it is ideal to wait until you are on your early 70s. If the borrower is much older, he or she will have higher chances of getting a bigger loan.

The federal government has also set some maximum limits regarding the amount of equity that could be borrowed. Generally speaking, just about 50% of the home’s value is made available through reverse mortgage.

You can use the money you get from the reverse mortgage Columbia loan to cover your home health care expenses. Since you should repay the loan once you decide to sell the house, the long term care in another facility cannot be paid for using the reverse equity mortgage unless the property’s co-owner qualifies to continue using the house as his or her primary residence.

Reverse Mortgage and Long Term Care Expenses

A study conducted by The National Council on the Aging (NCOA) revealed that using reverse mortgages to cover long term care expenses at home can help address what continues to be a real problem for most older Americans as well as their families.

The country spent $123 billion in 2000 for the long term care of those who are above 65 years old, with the amount poised to double over the next three decades. Almost half of those costs are covered out of pocket by people and just 3% are paid for the insurance companies while the health programs of the government cover the rest.

The study also showed that out of the 13.2 million reverse mortgage loan candidates, about 5.2 million are either receiving Medicaid or may need Medicaid in case they had to deal with covering the expensive cost of long term care in their homes. This segment of the older population of the country is economically vulnerable may get $309 billion in total from reverse mortgages that could help cover their long term care.

Call Reverse Mortgage Specialists if you want to know if taking out a reverse mortgage is the most suitable option for you.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

Who Will Own Your Home After Getting A Reverse Mortgage?

Many people think that getting a reverse mortgage loan means they are selling their houses to a lender for a lower value and that the lender will stand to benefit once the value of your home increases in the future.

If you get a reverse mortgage, just like when you obtain a traditional loan, the lender will take a security interest in your home’s value for the outstanding balance that you carry out.

With a traditional mortgage, you will own the house even though you owe a big amount of cash at the outset of your loan. You just pay off the amount of the loan over time until you have paid it off completely.

With reverse mortgage loans, you continue to own the house but you will owe a smaller loan amount at the start of the loan and the amount that you owe will grow until your death or once you have decided to move out of the house for good. You build up interest on the reverse mortgage loan so you owe much more than once the time comes that you have to repay the loan, which is usually done by selling the house.

Get The Benefits Of Selling Your Home

There is a misconception that with a reverse mortgage, the bank owns the house. That is not true. Although it may seem like you are selling your home to a lender. But the truth is, you are only selling them a part of your house.

The reverse mortgage will pay off your existing loan. You will have access to the equity of the house now so you could live the way you want, without the responsibility of paying repayments every month.

When you purchase a new house, you usually put down between 5%-20% of the purchase price, so it is like the bank is purchasing most of your house, but letting you live in it while you pay them back what you owe with interest.

This is a lot like reverse mortgage. If you have home equity remaining in your house at the end of the day when your home sells, it will still belong to you as the borrower or to your estates.

You Own The House

You might be thinking that a reverse mortgage Columbia may prevent you from repainting your home, renovating, renting out a room, or having a family member move in.

Once again, that is not true. A regular reverse mortgage will not restrict you from doing any of these things. With a reverse mortgage, you are the legal owner of the house and your name will remain on the title.

There are some restrictions on certain things like renting out the house while you are not living in it. It is because this kind of loan was created to allow retirees to age in place and that is why you should stay in the house and use it as your primary residence.

Call Reverse Mortgage Specialist if you want to know if this type of loan is the best option for you. 

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

Tips To Avoid Running Out Of Reverse Mortgage Proceeds

Although a reverse mortgage is generally advertised as offering a secure income source for the rest of your life and they could, under the ideal conditions, running out of cash sooner than you anticipated is one of the main risks of taking out this kind of loan. A reverse mortgage is a kind of loan wherein homeowners who have significant home equity can use it to apply for a loan.

How To Receive A Reverse Mortgage?

There are six different ways for you to receive your reverse mortgage Columbia proceeds, and the one you select will have a significant effect on how easily and quickly you can use up your ability to borrow against your house.

1.    Lump sum

2.    Line of credit

3.    Tenure reverse mortgage

4.    Modified tenure reverse mortgage

5.    Term reverse mortgage

6.    Modified term reverse mortgage

All six options have different levels of risk to reverse mortgage borrowers.

How To Avoid Outliving Your Reverse Mortgage?

Lump sum

The lump sum is the only reverse mortgage payment plan that has a fixed interest rate. It may be a low risk method to borrow and you may know how much you need to repay but this option has its own set of unique disadvantages.

The common problem with reverse mortgage borrowers is that they don’t plan correctly. They have a tendency to mismanage the proceeds. When they have used up the cash, they don’t have any sources of income to rely on. The lump sum option is also risky for younger borrowers who have longer lifespans and don’t have a different retirement resources.

Line of credit

The possibility of you running out of cash with a line of credit option whether used alone or along with a term or tenure plan will depend on how you could use the payment plan. Just like a regular HELOC or home equity line of credit, a reverse mortgage line of credit payment plan can’t be revoked, which means it cannot be canceled or reduced due to the changes in your home value or finances.

With this plan, you won’t be at risk of losing access, your available line of credit will go down every time you draw upon it, and just pay the interest and mortgage insurance fees on the money that you borrow. Plus, a line of credit will give you access to more funds as time goes buy since the unused amount grows every year whether or not the value of your home increases. The unused part of the payment plan will grow at the same interest rate that you are paying on the money that you have borrowed.

Tenure reverse mortgage

This option has the least risk of running out of proceeds provided that the loan borrower keeps up with the property taxes, homeowner’s insurance, and home repairs. If the borrower fails to do any of these things then the loan will become due and payable. The interest rates are adjustable as long as the borrower will stay in their home as their primary residence.

Modified tenure reverse mortgage

It provides smaller payments per month compared to a straight tenure plan and the line of credit would be a lot smaller compared to a straight line of credit.

Term reverse mortgage

This payment plan will put the borrower at risk of outliving their loan proceeds. With this option, you reach the principal limit of your loan at the end of the term. After that, you will not be able to get more proceeds from your loan. But you’ll get to stay in the house with the caveats included in the lump sum option.

Modified term reverse mortgage

This option provides the borrower with only a monthly payments for a set of time. However, the line of credit will stay available until it is consumed. If the borrower plan how to use the line of credit, then he or she will unlikely run out of money.

One good way to limit your risks of outliving the proceeds is to wait as long as you can to take out this kind of loan. Change your payment plan if you have already taken out this loan and you think that you could be at risks of outliving the reverse mortgage loan. 

Despite of what the ads say, there are several ways for you to outlive your reverse mortgage. Be sure to understand the situations under which this type of loan might not offer financial stability for life. You can use that knowledge to determine if you should take out this loan and which payment option makes the most sense and offers the best security.

Call Reverse Mortgage Specialist for more information about this type of loan.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

How Can Seniors Free Up Cash For Retirement Using Reverse Mortgage?

Do you want to free up as much as $4 million for your retirement fund or perhaps use the money to pay off your mortgage? In case you are a senior who has serious digs in areas like New York City, California, Myrtle Beach, or other markets where several homeowners are cash poor but house rick, you may be able to get such money with just your home. These has brought back jumbo reversemortgages back to life.

Reverse mortgage, wherein retirees get access to their homes equity through mortgages that do not have to be paid provided that they live there, were considered as the last resort. Then, finance professionals started to publish research about several years ago, which shows that the strategic use of the reverse mortgage loan can help retirement portfolios would better survive down markets or perhaps delay the their claim to Social Security benefits.

Reverse mortgages started to be on their way to become a mainstream product after that first wave of research. However, the federal government back in 2017 raised the initial insurance premiums and cut back on the lending limits for reverse mortgages that are federally insured, which shook up the market once more.

Now, lenders have been giving out proprietary jumbo loans that are not under the new federal rules. They have become famous in places where housing values are high and where retirees could be having a mountain of equity but still find themselves short of cash. For the meantime, most jumbo reverse mortgage loans involve lump sums. However, lenders are starting to provide jumbomortgages that have a lump sum or line of credit.

Seniors are using the reverse mortgages to settle conventional mortgages or to get money for their living expenses or long term care. Other seniors, even with the significant increase in premium, must still use federallyinsured reverse mortgage loans with a line of credit so they could stretch out their credit accounts.

How Does Reverse Mortgage Work?

The loans let seniors who are at least 62 years old to borrow against their home equity. The older the applicant is, the more money they are permitted to borrow. After the recent update, reverse mortgages that are federally insured has been capped at $765,600 starting January 1.

The loan is generally repaid when the borrower dies or if the borrower decides to sell the house. Provided that the borrower continues to pay the home insurance and property taxes, they are permitted to stay in their homes for the rest of their lives without having to make any mortgage payments. The loan won’t be recalled by the bank and that is why reverse mortgage loans carry higher fees compared to traditional mortgages.

Generally, seniors waited until they’re running out of cash before getting a loan. However, some researchers say this is not a good way to use them. They believe borrowers must take out reversemortgages Columbia early in their retirement years and use them to provide their retirement portfolio with protection during market downturns.

Call Reverse Mortgage Specialist if you are looking to take out a reverse mortgage loan but want to make sure if this is the best option for you.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/

Tips For Handling Reverse Mortgages After Death

A reverse mortgage lets seniors live in their houses without having to pay mortgage payments and could also offer retirees with their much needed money. But just like all other loans out there, reverse mortgages need to be paid back eventually. Things can be complicated when it is time to pay back the mortgage. This will depend on the amount of equity you’ve got in your home and if you would like the house to remain in your family after you pass away.

Create a Solid Plan On How To Handle A Reverse Mortgage After Your Death

Get A Will

Your pay off plan should include creating a will before you take out a reverse mortgage loan to make sure that all of your assets, including your home, are transferred to the right individual upon your death. If you don’t have a will, your home would undergo a probate process and the state would decide who would inherit your share of your home.

Update Your Records Regularly

Under the tax laws that are set in place these days, reverse mortgage borrowers who purchase or make significant improvements in their homes could be eligible for a home interest tax deduction once the loan has been paid off. However, the only way for you to prove if the interest rate is indeed deductible is to make sure that you keep all your records so that you have the documents to prove how you used the funds from your loan.

Determine The Best Pay Off Option

In most cases, heirs just sell a house after the borrower of the reverse mortgage dies and your will could determine how you would like the remaining proceeds to be utilized once the loan is paid off.

One good way for you to pay off the reverse mortgage loan is to sell your house to your kids while you are still living, and use the sale proceeds to pay off the reverse mortgage loan. There’s also the option that involves renting the home back from your kids while you are alive. In case you decide to do this, you should consult an estate planning attorney or an accountant who can help you manage the sale of your home so you can avoid running into problems with gift tax laws. In case it’s important for your family to keep the house, you should think about paying off the loan while you are alive, probably with assets such as cash value in your life insurance policy or cash from an investment account. 

Reverse mortgages Columbia are types of loans that can be quite complicated. Therefore, borrowers as well as their heirs have to know how to pay back the loan once it comes due. By knowing and understanding the options ahead of time, borrowers of reverse mortgages as well as their loved ones could decide what options are the best for their unique situations.

Call Reverse Mortgage Specialist if you are interested in knowing more about reverse mortgages.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/