Factors To Consider Before Applying For A Reverse Mortgage

Reverse mortgage is increasing in popularity for many people especially those who are in desperate need of another source of cash to supplement their existing income. There are a lot of success stories about this kind of mortgage, but don’t apply for one just yet.

Although reverse mortgage loans can provide you the cash you need, they are not suitable for everyone and it’s not for all situations. Additionally, the procedures involved when getting this kind of loan could be quite confusing and you could wind up with massive debts instead of financial stability.

So what are the important factors you need to consider before you decide to apply for a reverse mortgage loan? Here are some of the things you need to know.

Reverse Mortgage Loan Requirements

One of the most fundamental things you have to know about this type of loan is that you should be at least 62 years old. You should also reside in the home where your home equity will be put up against. You are also required to pay off any existing mortgage on your home, in case there’s any. The amount that you could get out of a reverse mortgage loan is based on different factors. These include the value of your home, the mortgage limit that’s been set by the government for your location or the lender’s imposed limit, both current and future rates, your age, as well as the fees that are going to be deducted once the loan is released.

The lender would also ask you to stay in your house. If you do so, the lender won’t be able to ask for repayment unless you decide to move out of the house or sell your home.

Therefore a disadvantage to this type of loan is that you can’t just move out whenever you want to and go to different places during your retirement years.

How Can You Get Your Money?

The majority of reverse mortgage institutions will offer you three options on how you can get the proceeds of your loan. You could obtain the cash as a line of credit, a lump sum, or in monthly payments. However, many lenders would let you to combine these three methods of payout.

The Cost of Obtaining A Reverse Mortgage Loan

One of the most crucial things to think about is the cost of getting a reverse mortgage loan. It is because this kind of loan could be extremely expensive. Form insurance premium to origination fees that tend to cost as much as $25,000 or even higher and that is just for a reverse mortgage loan of $250,000. Additionally, you also have to think about the interest rates.

Impact On The Eligibility For Government Assistance

In case you are already enjoying help from the government, you have to first look for more information if getting a reverse mortgage loan could affect this. A few of the government assistance that could be impacted are Supplemental Social Security Income, Medicaid, as well as food stamps.

These are only a few of the most important factors that you have to consider before you apply for a reverse mortgage in Columbia. And when you are only looking to get a loan for your luxuries or any unnecessary investments, you must take this into account several times over. Reverse mortgage loans can be quite expensive to pay off if you only plan to spend them on things that you don’t need.

Call Reverse Mortgage Specialist if you want to know more about reverse mortgage loans. 

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

Reverse Mortgages: Common Myths Debunked

There are a lot of misconceptions about the terms associated with reverse mortgages.

Even with the recommendations provided by the American Association of Retired Persons (AARP), a lot of seniors still worry when it comes to applying for a reverse mortgage loan. Things become worse when their loved ones or friends say that this type of loan is nothing but bad news even though they can’t provide any credible information to back up their claim.

Common Reverse Mortgage Myths

One of the most common misconceptions regarding a reverse mortgage Columbia is that it tends to result into houses being repossessed from the borrowers. This isn’t true. As a matter of fact, the senior borrower would still own the house that’s under the loan program. This ownership is protected by the lien that’s put on the property, just like other types of mortgages. It will guarantee that the lender will be repaid for the owed amount, getting rid of the threat of having the house repossessed.

Because the majority of reverse mortgages are Federal Housing Administration or Home Equity Conversion Mortgages types, the US government provides full protection by using the mandatory 2% insurance fee that can be paid on all of the FHA reverse mortgages.

The other types of reverse mortgage loans are referred to as Proprietary Reverse Mortgage and Federal National Reverse Mortgage Association. Private lenders guarantee them, which makes them safe options.

Another misconception is the idea that a reverse mortgage is costlier than other kinds of mortgages. On the other hand, the closing cost of a reverse mortgage are costlier compared to an FHA mortgage by just 1% when obtained on the exact same property. Traditional mortgages, on the other hand, tend to charge more than 2%.

The interest rates also take on a huge factor in this case. Although traditional mortgages utilize the prime rate as their base, the interest rate of the FHA reverse mortgage loan will depend on the one year the US treasury note. This will show that the interest rate produced through the reverse mortgage is lower than that of a traditional mortgage.

There is also misinformed concept that the house would be handed over to the lender when the borrower passes away or has moved to a different permanent location. This is not true. It follows the exact same procedure as that of a normal mortgage where the home equity will go to the heir of the borrower or the estate.

A reverse mortgage loan needs the estate to pay the lender the home value once the loan’s due comes. The exact same thing applies if the value of the house has decreased or when the borrower reaches extreme old age.

The last misconception about the reverse mortgage loan is that tax will be imposed on it and the borrower’s health insurance and Social Security will be affected. A reverse mortgage loan isn’t an income but a loan. In case you are still in doubt regarding the security that you get through reverse mortgage, you could refer to certain publications from AARP. It is a legitimate body that is involved with reverse mortgages that could give you reliable information.

Call Reverse Mortgage Specialist if you need more information about this type of loan to make sure that it is the right one for you. 

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

A Guide To Reverse Mortgages

People’s priorities change as they age and that is something that happens naturally. In terms of their financial needs, for example, young kids have shallow concerns about money. On the other hand, teenagers, have more needs, but are still manageable. Young professionals tend to have complicated but still, unnecessary financial problems. As called in urban slang, yuppies have a higher likelihood of buying due to their initial excitement of being a real adult.

Meanwhile, middle aged individuals have more complicated and defined financial problems. Those who are nearing their retirement or seniors have a well-defined financial concerns. Because the majority of people who are in their retirement age know what their needs are, they are those who are targeted by financial institutions and banks for loans like a reverse mortgage.

A person who is nearing the retirement age will most likely be more concerned about savings and funds more. This is only natural since retiring from work for good means they will no longer receive a pay check. Some individuals, after checking their savings and bank assets would feel that the money that they have won’t last them throughout their retirement period. That’s exactly whey reverse mortgages become advantageous for this particular demographic.

A type of mortgage that’s designed specifically for those who are already in the retirement age is a reverse mortgage. This type of loan is offered for people who are at least 62 years old. The reverse mortgage is a loan that is placed on the home equity. It’s called reverse since it’s different from a conventional mortgage where the homeowner gets a lump sum and he or she has to repay their debt within a certain period of time.

In a reverse mortgage loan, a lender will release money to the borrower for the life of the mortgage and the loan amount increase is directly related to the released amount.

The contract will expire once the homeowner sells the house, moves out, or dies. When this happens, one can say that the mortgage will also expire once the house has been sold. In case the homeowner decides to move out or sell the house, he or she will no longer receive payments from the lender once they express their intent to sell. But if they don’t have any plans of such then the payment they receive will remain continuous. In case the homeowner dies, the heirs will inherit the home and the reverse mortgage and they decide to settle the debt or continue the allotment, that’s in case they plan to move out.

If the house is sold, a part of the proceeds would be used to repay the home equity mortgage. In case there is an excess, the homeowner could keep it, when the proceeds aren’t enough to settle the loan, the insurance provider of the bank will absorb the reverse mortgage.

Before you take out a reversemortgage loan Columbia, you must do your research thoroughly. You should also weigh its pros and cons. A reverse mortgage will bind your home to the lender and you will have no chance of reclaiming the property because the only factor that would determine the conclusion of the mortgage is selling the house.

Reverse Mortgage Specialist now and find out if a reverse mortgage loan is right for you.

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

What You Need To Know About Non-Recourse Reverse Mortgage

A reverse mortgage loan is a non recourse loan and it is one of the features that many senior home borrowers do not understand. Many people think that this term refers to something bad and tends to bring the feeling of uneasiness to the homeowners at first when it’s being explained. But, a non-recourse loan offer security to the borrower about the collateral.

A reverse mortgage will require the withdrawal of the home equity from the primary home where the senior borrower is living. Because the collateral is placed on the house, it must be the sole source of dissolution and repayment of the mortgage contract.

The reverse mortgage loan will convert into cash a part of the home equity according to its current fair market value. The loan can be released as a lump sum or monthly payments, based on the borrower’s preferences. Even when the loan allotment period has ended already, the borrower has no responsibility to repay the loan and can continue living in the house. But the longer the senior borrower stays in the property, the higher the repayment dues will accrue.

The repayment would start when the senior borrower along with his family makes a decision to leave the house and sell it. If the borrower dies, the heirs will inherit the mortgage contract and they will be given 12 months to live in the property, wherein they can determine if they will still continue with the financial benefits of the loan or sell their home. The proceeds of the sale will be used to settle the full mortgage loan and the remaining amount will go to the primary homeowner or his estate.

When this happens, it will provide security on the part of the borrower that there will be on other property that will be involved when it is time to repay the reverse mortgage loan. There are instances when the borrower has outlived is expected lifespan, especially with the modern medicine these days as well as the physical activities made for seniors.

As that happens, the obligation for the loan will increase dramatically and may even exceed the value of the property. Real estate tend to increase in value. However, there are cases when the value also decreases. This takes place when the house is not well maintained and taxes are not paid regularly. Minor home repairs like repainting and plumbing when not attended to right away can result to bigger issues.

If the loan obligation goes beyond the home equity, the lender can’t force the homeowner to sell his other properties, regardless if it’s tangible or real, to cover the repayment. The lender will assume the loss in the event that the value goes down; on the flip side, the borrower will assume the loss if the property value goes up.

A non-recourse loan will make sure that your reverse mortgage Columbia won’t go beyond the home’s value. Although it may be worth more than the house, but when it comes to repayment, nothing should be used to deal with the obligation or the lender will have no other recourse to get repayment but through the collateral alone.

Call Reverse Morgage Specialist for a comprehensive discussion about reverse mortgages.

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

FHA Reverse Mortgage Limit To Increase In 2020

Just like with forward mortgages, the Federal Housing Administration is set to increase the maximum claim amount for a reverse mortgage in the year, 2020. The FHA said that the HECM limit will be increased this new year from $726,525 in 2019 to $765,600 in 2020. This would mark the fourth consecutive year that the FHA has increased the limit of the HECM. In the past two years, the loan limit was at $675,650. Given that figure, the HECM limit as increased by nearly $100,000 since 2018.

The HECM limit is reliant on the 150% of the conforming limits of the Federal Housing Finance Agency for Fannie Mae and Freddie Mac, which were just recently increased to over $510,000. However, there’s no geographic variation for the loan limit of the HECM unlike the loan limits of Fannie and Freddie as well as the forward mortgage limit of FHA.

The limit of reverse mortgage loans is $765,600 for all the parts of the United States, including the areas that are high cost and the special places of Guam, Hawaii, Alaska, as well as the U.S. Virgin Islands, where forward mortgage limits go beyond the other parts of the country.

General Speaking, reverse mortgage loans is also called Home Equity Conversion Mortgages or HECM. It is a financial product geared towards homeowners who are at least 62 years old that lets borrowers convert a part of the equity of their house into cash without having to pay monthly payments.

Although the loans are created by private mortgage lenders, the federal government insures them, which means the borrowers would never owe more than the actual worth of the house.

And provided that the borrower still lives in the house, he or she could stay in the house provided that they continue to make insurance and property tax payments, make sure that the house is always in good repair, and use it as their main home.

The boost nearly $40,000 over the HECM limit last year means that the borrowers could be able to get more equity from their houses using a reverse mortgage loan in Columbia that is insured by the government.

This also means that more consumers would be able to qualify for the loan.

Since the HECM needs borrowers to pay off their current mortgage before taking out a new loan, some borrowers who have high mortgage balances might not have been able to get enough proceeds for them to qualify. Now, with this higher claim amount, borrowers may have sufficient cash in the HECM loan to finally make it work.

The FHA said that the new HECM limits will take effect for case number that have been assigned on or after Jan. 1 2020 through Dec. 31, 2020.

Call Reverse Mortgage Specialist if you wish to learn more about reverse mortgage loans.

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