Options For Receiving Your Reverse Mortgage Money

5/29/2007

posted by N. Sioris

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Seniors considering Reverse Mortgages, have several options to choose from when deciding how they would like to receive their money. The most popular Reverse Mortgage is the Home Equity Conversion Mortgage, commonly referred to as the HECM. This loan is federally insured by FHA through the department of Housing and Urban Development - HUD.

If your Reverse Mortgage is a HECM, you can receive your Reverse Mortgage Money in the following ways:

TENURE – You receive equal monthly payments for as long as you remain in your home, and as long as the home continues to be your primary residence. If there are two owners on title, then the payments continue until the last borrower leaves the home permanently.

TERM – Equal monthly payments for a fixed number of months selected by the borrower.

LINE OF CREDIT – This is an amount of money that is set aside to be used periodically in whatever amounts and intervals the borrower chooses. It works the same way that a Home Equity Line of Credit does, but without monthly payments required to the lender.

MODIFIED TENURE or MODIFIED TERM – These are a combination of the above options, chosen by the borrower at the time the loan is established.

As Reverse Mortgages continue to become more popular each year, there will be alternative Reverse Mortgage loans that will enter the market place and will offer a variety of other choices for payouts as well as variations on the Reverse Mortgage product itself. Comparisons of these options for your Reverse Mortgage Money are just a click away.

Reverse Mortgages & HUD Counseling

5/16/2007

posted by N. Sioris

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Before senior homeowners are eligible to apply for a Reverse Mortgage, they must first discuss the loan with a counselor employed by a non-profit or public agency approved by the U.S. Department of Housing and Urban Development (HUD). Before an application can be processed the applicant must complete either face-to-face or telephone counseling.

Both HUD and AARP oversee a network of counselors whose job it is to review the Reverse Mortgage process with the borrowers, discuss alternatives, and answer any questions the seniors may have about how the loan works. These counselors are required to use loan analysis and comparison software that meets AARP's model specifications, as outlined by the AARP Foundation's Reverse Mortgage Education Project.

Counseling usually takes at least one hour, but can take longer especially when done by telephone. Counseling is funded by HUD and is free to the senior applicants.

HUD counselors can be located Nationwide by calling toll-free: 866-889-9347

Reverse Mortgage Competition - Good For Consumers

5/15/2007

posted by N. Sioris

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Several National lenders have entered the Reverse Mortgage market recently.

Bank of America, headquartered in Charlotte, NC recently agreed to purchase Reverse Mortgage of America, a division of Seattle Mortgage Co. The acquisition will make Bank of America, the third largest originator of Reverse Mortgages, trailing only Financial Freedom and Wells Fargo.

Countrywide Financial Corp, has also launched it's own proprietary Reverse Mortgage, called "Simple Equity". Countrywide first introduced the Simple Equity Reverse Mortgage in California late in 2006. It has since been rolled out in 46 additional states.

VirtualBank, a division of Lydian Private Bank, and headquartered in Palm Beach, FL has developed three Reverse Mortgage products, collectively referred to as Lifetime Income From Equity ("LIFE").

So as you can see, the race is on. Lenders like these know a trend when they see one, and they are poised to act on the growing demand by aggressively pricing and implementing competitive new products.

This can only be good news for the consumer. If you are considering a reverse mortgage, you will have quite a few choices. And as with most products that have a high demand, the providers will compete for your business with price incentives as well as innovative and high quality products and excellent service.

Stay tuned and watch the Reverse Mortgage market explode, especially since the Baby Boomer generation is on the brink of retiring.

How To Qualify For A Reverse Mortgage

5/13/2007

posted by N. Sioris

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1. All Borrowers On Title Must Be 62 Years or Older

2. There Are No Health Requirements. Your Health Is Not A Factor

3. There Are No Credit or Income Requirements

4. The Home Must Be Your Primary Residence

5. You Must Have Little or No Outstanding Mortgage Balance

6. If You Have a Mortgage, The Reverse Mortgage Funds Must Be Used to Pay Off Any Existing Mortgage and To Make Required Home Repairs, If Needed.

7. You Can Refinance a Reverse Mortgage, To Get More Money, If Your Home Increases Significantly in Value

8. All Borrowers Must Meet With an AARP-HUD Approved Reverse Mortgage Counselor Before They Can Begin The Loan Process.

What Is A Reverse Mortgage?

5/13/2007

posted by N. Sioris

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A Reverse Mortgage is a unique type of home equity loan. You receive cash against the value of your home without selling it. You can choose whether you want to receive a lump-sum payment, a monthly payment, or a line of credit. There are no restrictions on how you use the reverse mortgage funds.

Reverse Mortgages are available to homeowners age 62 and older. Unlike a traditional mortgage, with a reverse mortgage, you won't be required to provide any income or credit history to get the loan, and you do not make any monthly payments. Instead, the amount you owe accumulates over time, based on loan payouts and interest on the loan. You do not have to repay the loan as long as you continue to live in the home. The loan becomes due when you or the last borrower sells the home, passes away, or permanently moves out of the home.

You continue to live in the home and you retain title and ownership of it. The bank does NOT own your home, which is One of The Biggest Myths Circulating About Reverse Mortgages You are still responsible for taxes, hazard insurance, and home repairs. You do not have to repay the loan as long as you continue to live in the home. The loan is repaid when you pass away, sell, or permanently move out of the home. The funds from a reverse mortgage are non-taxable. They do not count toward income or affect Social Security or Medicare benefits. They do not count as income for Medicaid benefits eligibility as long as the reverse mortgage money you receive is spent within the month that you receive it.

AARP Glossary Of Reverse Mortgage Terms

5/07/2007

posted by N. Sioris

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AARP (American Association of Retired Persons) does not endorse any particular Reverse Mortgage lender or product. However, they have been national leaders in educating seniors and their families about reverse mortgages as well as helping legislate changes that have made reverse mortgage loans safer and more useful to senior homeowners. AARP led the effort to develope the Federal insurance program for reverse mortgages. Without this insurance, there would be few reverse mortgage lenders participating in the reverse mortgage market and the loans would not be as safe for homeowners as they are today.

AARP has been the leading provider of consumer information and education on Reverse Mortgages. It has published fact sheets, Free Consumer Guides and videotapes. AARP has also published the following glossary of Reverse Mortgage Terms to help guide consumers through the common terms that might be used while they are applying for a reverse mortgage.

Reverse Mortgage Terms:

203-b Limit - the dollar limit in each county for how much of a home's value can be used to determine the amount of money you can get from a federally insured HECM reverse mortgage; the name comes from Section 203-b of the National Housing Act

AARP Model Specifications - rules recommended by AARP for analyzing and comparing reverse mortgages

Acceleration Clause - the part of a contract that says when a loan may be declared due and payable

Adjustable Rate - an interest rate that changes, based on changes in a published market-rate index

Annuity - a monthly cash payment you get from an insurance company for the rest of your life.

Appraisal - an estimate of much a house would sell for if it were sold; also called its market value

Appreciation - an increase in a home's value

Area Agency on Aging (AAA) - a local or regional nonprofit organization that provides information on services and programs for older adults

Cap - a limit on the amount an adjustable interest rate may go up or down during a specified time period

Closing - a meeting where documents are signed to "close the deal" on a mortgage; the time a mortgage begins

Condemnation - a court action saying a property is unfit for use: also, the government taking private property to use for the public by the right of eminent domain

Creditline - a credit account that lets a borrower decide when to take money out and also how much to take out; also known as a "line-of-credit" or "credit line."

Current Interest Rate - in the HECM program, the interest rate currently being charged on a loan; it equals the one-year rate for U.S. Treasury Securities, plus a margin (see below)

Deferred Payment Loans (DPLs) - reverse mortgages that give you a lump sum of cash to repair or improve a home; usually offered by state or local governments

Depreciation - a decrease in the value of a home

Eminent Domain - the right of a government to take private property for public use; for example, taking private land to build a highway

Expected Interest Rate - in the HECM program, the interest rate used to determine a borrower's loan advance amounts; it equals the 10-year rate for U.S. Treasury Securities, plus a margin (see below)

Fannie Mae - a private company that buys and sells mortgages; a government-sponsored business that is watched over by the federal government

Federal Housing Administration (FHA) - the part of the U. S. Department of Housing and Urban Development (HUD) that insures HECM loans

Federally Insured Reverse Mortgage - a reverse mortgage guaranteed by the federal government so you will always get what the loan promises; also, a Home Equity Conversion Mortgage (HECM)

Fixed Monthly Loan Advances - payments of the same amount that are made to a borrower each month

Home Equity - the value of a home, subtracting any money owed on it

Home Equity Conversion - turning home equity into cash without having to leave your home or make regular loan repayments

Home Equity Conversion Mortgage (HECM) - the only reverse mortgage program insured by the Federal Housing Administration, a federal government agency

Initial Interest Rate - in the HECM program, the interest rate that is first charged on the loan beginning at closing; it equals the one-year rate for U.S. Treasury Securities, plus a margin

Leftover Equity - the sale price of the home minus the total amount owed on it and the cost of selling it; the amount the homeowner or heirs get when the house is sold.

Loan Advances - payments made to a borrower, or to another party on behalf of a borrower

Loan Balance - the amount owed, including principal and interest; capped in a reverse mortgage by the value of the home when the loan is repaid.

Lump Sum - a single loan advance at closing

Margin - in the HECM program, the amount added to the one-year Treasury rate to determine the initial and current interest rates, and to the 10-year Treasury rate to determine the expected interest rate

Maturity - when a loan must be repaid; when it becomes "due and payable"

Mortgage - a legal document making a home available to a lender to repay a debt

Non-Recourse Mortgage - a home loan in which the borrower can never owe more than the home's value at the time the loan is repaid

Origination - the process of setting up a mortgage, including preparing documents

Property Tax Deferral (PTD) - reverse mortgages that pay annual property taxes; usually offered by state or local governments

Proprietary Reverse Mortgage - a reverse mortgage product owned by a private company

Reverse Annuity Mortgage - a reverse mortgage in which a lump sum is used to purchase an annuity that gives the borrower a monthly income for life.

Reverse Mortgage - a home loan that gives cash advances to a homeowner, requires no repayment until a future time, and is capped by the value of the home when the loan is repaid

Right of Recission - a borrower's right to cancel a home loan within three business days of the closing

Servicing - administering a loan after closing, such as maintaining loan records and sending statements

Shared Equity - an itemized loan cost based on a percent of a home's value at loan maturity; for example, a 5% shared equity fee on a home worth $200,000 at maturity would be $10,000

Supplemental Security Income (SSI) - a federal monthly income program for low-income persons who are aged 65+, blind, or disabled

Tenure Advances - fixed monthly loan advances for as long as a borrower lives in a home

Term Advances - fixed monthly loan advances for a specific period of time

Total Annual Loan Cost (TALC) Rate - the projected annual average cost of a reverse mortgage including all itemized costs

T-Rate - the rate for U.S. Treasury Securities; used to determine the initial, expected, and current interest rates for the HECM program

Uninsured Reverse Mortgage - a reverse mortgage that becomes due and payable on a specific date

Source: AARP

AARP Facilitates Reverse Mortgage Counseling

5/04/2007

posted by N. Sioris

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Although AARP (The American Association of Retired Persons) does not endorse any particular Reverse Mortgage lender or product, they have been instrumental in educating seniors about Reverse Mortgages.

The AARP, in conjunction with HUD (Housing and Urban Development), implemented The Reverse Mortgage Education Project. The project administers a national HECM (Home Equity Conversion Mortgage) Counselor exam. The exam is required for counselors who work for HUD-approved HECM housing counseling agencies. Counselors who pass the exam are then eligible to participate in HUD's National HECM Counseling Network. These network counselors are the only HECM counselors approved by HUD to offer HECM counseling by telephone on a nationwide basis. As part of the counseling session, the counselors use loan analysis and loan comparison software that have met AARP's Specifications.

HUD counseling is mandatory for all seniors that are interested in applying for a reverse mortgage. Because not all seniors are capable of driving themselves to a counseling office, the convenience of telephone counseling is a huge advantage for some applicants. The AARP, in it's constant efforts to protect and educate retirees, has had great input and oversight for the training and certification of the HECM Counselors. AARP Network approved counselors can be located by calling 1-800-209-8085.