posted by N. Sioris
Stumble It!
OK, so this is not David Letterman's Top Ten List, but it is AARP's Top Ten List for why seniors are deciding to get an FHA insured HECM Reverse Mortgage loan.
So, here we go: Top 10 Reasons Seniors Get A Reverse Mortgage
Number 10. Investments, annuities, or long-term care insurance
Number 9. To financially assist family members
Number 8. Keep up with property taxes and insurance
Number 7. Health or disability
Number 6. Pay off non-mortgage debts
Number 5. To pay for unexpected emergencies
Number 4. To help pay for everyday expenses
Number 3. To improve the quality of life
Number 2. For home repairs or improvements
And the Number One Reason Seniors Get A Reverse Mortgage (drum roll please)
Number 1. To Pay Off An Existing Mortgage Balance
Regardless of whether the reason you might be looking into getting a reverse mortgage loan is on this list or not, actually makes no difference. A reverse mortgage loan can be used for any purpose you choose. After all the money you are accessing from your home through this mortgage vehicle is all ready your money. There are no restrictions on how you can use it.
If you would like to see how much money you are eligible to receive, feel free to request your free reverse mortgage loan quote today.
posted by N. Sioris
Stumble It!
The long awaited revisions to the FHA insured HECM reverse mortgage program include the ability for senior borrowers to use a HECM reverse mortgage in order to purchase a home.
Until the passage of the new addendum, the only way to purchase a home and still make use of a reverse mortgage was to complete two separate transactions. First you would have to purchase the new home with either all cash or qualify for a regular purchase money mortgage. After you closed on the purchase of the new home, you would then do a second transaction with a reverse mortgage lender in order to either eliminate the payments and pay off the other brand new mortgage that you just closed on, or to reimburse yourself for the cash that you had to lay out for the purchase.
With the passage of the new revisions, you can now do just one transaction. This not only simplifies and expedites the process, but it saves you from paying double closing costs on two mortgage transactions. The effective target date for purchase money HECM reverse mortgages to be available is January, 2009.
Here Is The Way It Works:
Senior homeowners qualify for a specific amount of money based upon the youngest borrower's age and the appraised value of the to be purchased property or the sale price, whichever is LOWER.
Here is an example of how the math would work for a senior couple that are both 72 years old, based on current interest rates.
Assume that the purchase price and the appraised value for the new home are both $300,000. On a monthly HECM reverse mortgage loan this couple would be eligible for a $186,790.00. Their required contribution to the transaction would be $113,210.00.
For this same example let's assume that this couple is downsizing to a smaller single level home in a retirement community. They have sold their large two-story family home where they raised their kids and lived for the last 25 years. The sale price of the family home was $425,000.00 and they had a mortgage balance of $75,000.00 on that home. After real estate sale costs and paying off the existing mortgage balance they netted $320,250.00. After making the down payment on the new purchase of $113,210.00 this couple pockets $207,040.00 from the sale of their previous home and have ZERO house payment on the new home in the retirement community. They have freed up the accumulated equity in the large family home in a lump sum and moved into a new smaller home, mortgage free. Wow! What a way to enjoy retirement. No house payment and a big chunk of extra cash to boot.
The Eligibility Requirements Are:
- Homeowners must occupy their new home within 60 days of closing the transaction, and the new home must be their primary residence.
- Newly constructed homes must be fully completed and have a final certificate of occupancy from the appropriate local authority.
- Flipping of properties is prohibited. Which means that only current owners of record may sell properties that will be financed using FHA HECM reverse mortgages. Any resale of a property may not occur 90 or fewer days from the last sale.
- The down payment requirement or cash to close must be verified and cannot be borrowed funds. The borrower's funds must be from cash on hand or cash from a sale or liquidation of the borrower's assets. Borrower's may not obtain a bridge loan or "gap" financing to meet the down payment requirements.
- HUD reverse mortgage counseling specific to home purchase reverse mortgages, must be completed prior to an application for loan approval.
- There is no three day right of rescission period for reverse mortgage borrowers for purchase transactions.
Properties that do not qualify for a HECM purchase reverse mortgage loan are:
- New construction residences where a Certificate of Occupancy or its equivalent has not been issued by the appropriate local authority.
- Bed and Breakfast Establishments
- Existing manufactured homes built before June 15,1976 and
- Existing manufactured homes built after June 15,1976 that fail to conform to the Manufactured Home Construction Safety Standards, as evidenced by affixed certification labels and or lack of HUD approved permanent foundation requirements.
If you would like to learn more about the HECM for home purchase, please feel free to call our offices at, 1-888-269-1098 or visit our website to request a personalized summary and quote.
posted by N. Sioris
Stumble It!
Social Security benefits will be increased in January 2009 for 50 million people. The increase will be 5.8 percent and will be the largest increase since 1982 when Social Security benefits increased 7.4 percent. The 2009 increase will be more than double the raise that retirees received in 2008, which was 2.3 percent.
At first blush that sounds exciting, until you realize that what that equates to for the average retiree is a paltry $63.00 per month. Yearly benefit changes are based upon the amount the Consumer Price Index (PCI) increases from July through September from one year to the next. Unfortunately, the problem with using the CPI is that most consumers do not believe that the CPI accurately reflects the prices they are paying for crucial necessities like energy, food or medical care. This disbelief is particularly strong among those living on a fixed income.
Some argue that if the Producer Price Index (PPI) was used for the measurement for Social Security benefits increases, it would be more reflective of the "real world" for retirees. The PPI measures wholesale inflation. (Wholesale inflation tends to lead retail inflation.) The Producer Price Index (PPI) in June of 2008 set a 27 year record with a 9.2 percent increase in inflation over a twelve month period. The last time inflation was this high was the same year that Treasury yields exceeded 15%, and 30 year mortgage rates exceeded 16%.
Retirees Battered on Several Fronts
$63.00 extra per month seems woefully inadequate for millions of retirees that have been battered on several fronts this year. Not only have they seen huge increases in energy and food costs, but many have been assaulted by reeling stock market declines as well as plummeting home values.
The Congressional Budget Office estimated that Americans' retirement plans have lost as much as $2 Trillion over the last 15 months, which represents more than 20 percent of their value, due to the upheaval on Wall Street. Real estate prices have dropped nationally by 20.29 percent. In some of the previously "hot" markets, like California, Nevada, Arizona and Florida the decreases have been even more severe.
More Are Turning To Reverse Mortgages For Help
Retirees worried about their decimated savings and stock market assets are turning in greater numbers to the idea of using a reverse mortgage to stabilize their cash flow and supplement retirement income. Luckily, the greater demand for reverse mortgage loans coincides with new regulations for FHA insured HECM reverse mortgages. The HECM reverse mortgage loan now has a higher National loan limit of $417,000. This is up from the previous loan limits that ranged from $200,160 to a high of $362,790 depending on what county the property was located in. Not only does the single National loan limit simplify the product but it allows approximately 30 percent more seniors to qualify and others to be eligible for even more money than they would have been with the lower loan limits.
If you are one of the many retirees that feel a personal disconnect between what the government says the inflation rate is and what your "real world" experiences are everytime you go to the grocery store, the gas station or pay your utility or medical bills, then don't feel alone. The indexes that have been chosen are by design and unfortunately, will never be reflective of the "real world." Even with the conservative index that the government pegs the increase in benefits to, the system is still on target for insolvency by the end of 2011.
It is essential that we all take charge of our own destiny in retirement. If you thought you planned well and are now realizing that you could be short on money and long on time, you may have to take a look at tapping into home equity even though you thought you would never have to touch it and it would be left in your estate for your heirs.
Home equity does not have to be a sacred cow, never to be tapped into. Most adult children would rather see their parents live comfortably during retirement rather than sacrifice lifestyle in order to leave them a home that they don't want or need.
Ask for a personal reverse mortgage quote today, and find out how much money you are eligible to receive from the equity in your home.
Appraise This