HECM Reverse Mortgages - Quick Overview

8/30/2009

posted by N. Sioris

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Although HECM (home equity conversion mortgage) reverse mortgages have been in existence for more than 20 years, the general public still finds them a bit mysterious. They actually are not that difficult to understand, once you start grasping the basic facts about how they actually work. Once you have an understanding of the basics, you will be able to determine whether HECM reverse mortgages are worth considering for your situation.


Facts At a Glance

*You retain title to your home. The bank does NOT own your home and
the bank does not get your home after you pass away. Your home remains part of your overall estate and can be passed to your heirs.

* The are NO monthly mortgage payments required.

* You do not have to repay the loan as long as you live in your home.

* The money you receive from your home is TAX-FREE.

* The money can be used for whatever you like...no restrictions.

* The money you receive does not affect your Social Security or Medicare benefits.

* HECM reverse mortgages are often times used to pay off an existing mortgage balance.

* Reverse mortgage loans can substantially improve the quality of your retirement life.

* You or your estate are never financially responsible if your home is worth less than the balance of your reverse mortgage at the time you permanently leave your home.

* HECM reverse mortgages are considered "non-recourse" loans, meaning that the home stands alone for the debt.

* You can buy a house with a reverse mortgage and never make a monthly mortgage payment on the new house as long as you live there.

* HECM reverse mortgages do not require credit, income, or medical qualifications.

* All owners on the title to the home must be a minimum of 62 years old.

* The home must be your primary residence.

* HECM reverse mortgages require substantial home equity, usually at least 40% or more.


Now that you have glanced over the basic facts, you may wish to find out if you qualify for one of the HECM reverse mortgages that are currently available. Just click the button below for your personalized reverse mortgage quote.

HECM Reverse Mortgage Calculator

8/19/2009

posted by N. Sioris

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A HECM reverse mortgage calculator is needed in order to determine how much money you can borrower against the equity in your home using an FHA insured HECM reverse mortgage.

We often hear the question; "What is the maximum loan-to value for a reverse mortgage?" The problem with that question is that it cannot be answered with a straight forward percentage amount.

A reverse mortgage is a difficult concept to grasp. It's different from a traditional mortgage in so many ways, not the least of which is calculating the maximum loan amount.

A reverse mortgage calculator is programmed with a complicated mathematical algorithm that is constantly changing as market interest rates fluctuate. Additionally, each reverse mortgage loan amount must be custom calculated to fit the age of the specific borrowers. The borrower's ages along with the current interest rates and the market value of the home, must be input into a reverse mortgage calculator before the maximum loan amount can be determined.


Online Reverse Mortgage Calculator - Strictly an Estimate

If you are trying to get a ball-park idea of whether you have enough equity in your home to qualify for a HECM reverse mortgage, you can use this reverse mortgage calculator WITHOUT OBLIGATION! You will not be required to fill out a contact form or provide your contact information before you can use our reverse mortgage calculator.

Many online sources for HECM reverse mortgage loans will not allow you to access their reverse mortgage calculator tool without first registering or filling out a contact form, (which of course means that you will be contacted whether you intended to be or not.)

Our reverse mortgage calculator is updated whenever interest rates change. However, it is important to know that our reverse mortgage calculator results are not a commitment to make a specific loan. It is simply a starting place so that you know generally if you are eligible and approximately how much of a loan you might be able to get.

If you like the numbers that you see after you use our reverse mortgage calculator, your are welcome to request a more comprehensive and personalized HECM reverse mortgage quote and summary. The summary will be customized specifically for you, based upon your home value estimate and your age. It will also provide you with a detailed cost breakdown and an amortization schedule so that you will have a glimpse into the future, if you decide to access your home equity through a HECM reverse mortgage.

Request your personalized HECM reverse mortgage quote here.

HECM Reverse Mortgage Interest Rates

8/18/2009

posted by N. Sioris

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Below are the interest rates for HECM reverse mortgage loans effective August 18, 2009. This week's rates are unchanged from last week. Seniors will receive the same initial loan benefit amount that they would have received last week.

AARP-HUD Approved Reverse Mortgage Counseling

8/13/2009

posted by N. Sioris

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Anyone interested in applying for a HECM (home equity conversion mortgage) reverse mortgage loan must first complete mandatory reverse mortgage counseling and obtain a counseling certificate of completion. The reverse mortgage counseling certificate is valid for 6 months. AARP-HUD approved reverse mortgage counseling is a highly recommended resource for obtaining your required reverse mortgage counseling certificate.

The borrower must provide the reverse mortgage counseling certificate to whatever lender he or she chooses to use to obtain the reverse mortgage loan. The lender is not allowed to begin the application process until the borrower presents them with a reverse mortgage counseling certificate of completion.


Is Reverse Mortgage Counseling Really Necessary?

Reverse mortgage counseling is one of the safeguards that HUD implemented to insure that reverse mortgage borrowers and their families have a full understanding of the pros and cons of a reverse mortgage loan. HUD worked closely with AARP and other groups when designing the criteria for the reverse mortgage counseling sessions as well as the training program for the HUD certified counselors.

Because of AARP's involvement in setting up the criteria mentioned above, it is understandable that some of the best qualified counselors can be contacted directly through AARP Reverse Mortgage Counseling offices. The toll free number for AARP reverse mortgage counseling is - 1-800-209-8085.


You can read more about AARP Reverse Mortgage Counseling here.

HECM Reverse Mortgage Counseling Protocol

8/10/2009

posted by N. Sioris

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The Federal Trade Commission (FTC) is recruiting the assistance of HUD approved HECM Reverse Mortgage Counseling agents to help them in their efforts to detect fraudulent and misleading offers relating to FHA reverse mortgage lenders and loans.

While conducting the required HECM reverse mortgage counseling session, the FTC is asking reverse mortgage counselors to look and listen for false or misleading claims relating to reverse mortgage offers that the borrower may have received. They are asking HUD reverse mortgage counselors to be on the alert for unscrupulous lenders that may try to mislead potential reverse mortgage borrowers about the key features of this type of loan.

When reviewing the paper work provided to the borrower from the reverse mortgage lenders, the counselors are being asked to look closely at the key features of the loan, like the interest rate, fees, loan payments and total reverse mortgage costs. If they see a large discrepancy between the terms being offered and what would typically be offered, the counselors are advised to view this as a sign of possible deception, and request permission from the borrower to report it to the authorities.


Keep an Eye Out For Intentional Misrepresentation

Other areas of concern that the HUD reverse mortgage counseling agents are being asked to be on the alert for are; company names, logos, seals and other representations of the lenders' that may give the impression that the lender or broker are affiliated with a government agency or a government program.

The counselors are being asked to inquire whether the borrower has been pressured in any way to use their reverse mortgage loan money to buy other products or services such as an annuity, long-term care insurance, home improvements, or investments. The FTC's concern is that some reverse mortgage lenders may try to convince senior borrowers to get this type of loan just so that the borrower will have the ability to purchase other products that they are selling in addition to reverse mortgages.


The FTC Business Alert can be read in its' entirety here.

Retirees Unable to Sell Their Homes and Downsize

8/06/2009

posted by N. Sioris

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The worst economic crisis since the Great Depression is taking its' toll everywhere you look these days. One segment of the population - retirees, are finding themselves stuck in their homes. Many, had planned to sell the "large family home" for a substantial profit and downsize to a home or community that would be more suitable for their golden years' lifestyle.

One component of the retiree's previously well thought-out plan, may have been affording to live in an assisted living community or having in-home-care assistance. For many, those things are now simply unaffordable and unobtainable. Home values have declined across the country, and in some areas drastically declined, (i.e. Florida, California, Nevada, Arizona, Michigan, Ohio.)

Seniors are not able to sell their homes for anywhere near the values that their homes were just a year or two ago. Furthermore, if they are willing to list their homes at drastically reduced prices, many are still not selling or even receiving any offers. Consequently, many senior citizens are trapped in their homes. They are not able to access their home equity through a sale, and the sale if it did take place, would yield far less profit to feather their retirement nest egg than they had planned.

One thing that a senior homeowner can do is, get a reverse mortgage. A reverse mortgage home loan allows seniors, 62 years or older to tap into the equity that still remains in their homes, without ever having to make any monthly mortgage payments for as long as they live in the home. The money they get from a reverse mortgage can be used for whatever purpose they choose. So, if in-home-care is a priority, then at least through this financial tool they might be able to afford it.

Find out if you still have enough equity left for a reverse mortgage loan.

Or use our reverse mortgage calculator.

Free Reverse Mortgage Counseling

8/04/2009

posted by N. Sioris

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Two major credit counseling agencies that offer HECM (home equity conversion mortgage) reverse mortgage counseling for senior homeowners considering getting a reverse mortgage loan, have announced that they will offer reverse mortgage counseling for FREE.

The usual fee for reverse mortgage counseling is $125.00 and is normally required to be paid by the reverse mortgage borrower. Lenders are not allowed to pay for reverse mortgage counseling on behalf of the senior borrowers. For some seniors, this is a financial hardship.


The Good News Is

Good news for reverse mortgage borrowers was recently announced by NCOA (National Council on Aging) and MMI (Money Management International.) Both of these organizations are now offering reverse mortgage counseling at no charge to senior homeowners applying for a reverse mortgage loan.

Both of these agencies have counselors that are certified by HUD and AARP to conduct reverse mortgage counseling in order to assist older homeowners in evaluating the pros and cons of getting a reverse mortgage loan.

Reverse mortgage counseling is a mandatory requirement for all FHA/HECM, government insured reverse mortgage loan applicants.

Find out more about AARP HUD Reverse Mortgage Counseling here.

Providing Financial Assistance to Aging Parents

8/03/2009

posted by N. Sioris

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Over the weekend The Wall Street Journal Report with Maria Bartiromo, aired an interview with Andy Cohen, CEO and co-founder of Caring.com. During the interview Mr. Cohen highlighted the challenges that many baby boomers are struggling with while providing care and financial aid to aging parents.

Currently, 45 percent of adult children in the U.S. are providing financial assistance to their aging parents. Mr. Cohen cautions that there are three major mistakes that people routinely make while helping their parents.

1. Not maximizing all the entitlement benefits that their parents are eligible for. Caring.com provides access to a "benefits check-up" which accesses 1600 sites to check for various benefits or entitlements, that your aging parents might be eligible for.

2. Not spending parent's assets before contributing their own, such as using life settlements, a reverse mortgage, or the parent's retirement savings. Cohen says for tax reasons this approach is advised, even though it's a tough conversation to have with aging parents, especially if the parent feels strongly about leaving an inheritance.

3. Not having all the legal documents in place in order to manage aging parents' health directives as well as make financial decisions for parents.

Reverse Mortgage Money Can be Distributed Several Ways

8/03/2009

posted by N. Sioris

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Reverse Mortgage borrowers are offered several choices of how to take the cash distributions from a HECM (Home Equity Conversion Mortgage) reverse mortgage loan. Each borrower is able to make this decision for themselves, unless the entire reverse mortgage home loan amount is required to payoff an existing "forward" mortgage balance on their home.

For this discussion, let's assume that most or all of the reverse mortgage loan proceeds will NOT be needed to payoff a current mortgage debt. In this case, the borrower has five options for how to receive the money from the reverse mortgage home loan.

• Tenure - Equal monthly payments as long as at least one borrower continues to live in the home as a primary residence.
  
• Term - Equal monthly payments for a fixed period of months that the borrower selects.
  
  
• Line of Credit - Unscheduled payments or installments, at times and in amount of the borrowers choosing, until the line of credit is depleted.
  
• Modified Term - Combination of the line of credit option plus monthly payments for a fixed period of months, selected by the borrower.
  
• Modified Tenure - Combination of a line of credit with monthly payments for as long as the borrower remains living in the home.

Understanding these options and then making a selection that will be the right choice, is sometimes confusing and a bit intimidating for some borrowers. However, one of the GREAT things about the government insured reverse mortgage is that at anytime during the course of the loan, a borrower can call the loan servicer and request a change to the way he/she receives the reverse mortgage home loan benefits.

The borrower is not locked in forever. So when "life happens" and circumstances change, this type of loan comes with the flexibility of easily making a change to the way equity is paid out.

Request a complimentary reverse mortgage loan quote today. It will be customized to suit your individual specifications.

A Reverse Mortgage Could Limit Entitlement Benefits

8/02/2009

posted by N. Sioris

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Generally speaking, if you get a reverse mortgage your benefits from Social Security and Medicare are not affected or reduced in any way. In fact, one of the most prominent statements included in educational reverse mortgage guides and promotional ads, routinely say: "Social Security and Medicare benefits are not affected when you get a reverse mortgage on your home."


True - But With Conditions

This is absolutely true as long as you are speaking strictly about regular Social Security retirement income and federally funded Medicare. However, if you are a recipient of any local government or state backed programs, such as Medicaid, food stamps or other need-based assistance programs, you must be very careful when you get a reverse mortgage.

Most of the need-based programs require that your income and or assets remain below a certain level in order for you to continue to be eligible. Most of these programs have a monthly income threshold. If your income exceeds the threshold you will be disqualified from receiving the benefits. If you are considering whether to get a reverse mortgage or not, you will want to make certain before-hand what the income limitations are in order to maintain your current level of benefits.


Plan Ahead - Proceed With Caution

You can then structure your reverse mortgage loan proceeds to be disbursed in monthly increments that will keep you under the threshold for your entitlements. Just be careful, and make sure you do your research FIRST so that you do not find yourself in a perilous financial situation that possibly cannot be undone later.

If you are currently on Medicaid or you are receiving food stamps, you may wish to check with your local Medicaid office here. You can also call Medicare at 1-800-Medicare.

The American Bar Association has also rendered advice on this topic. You may wish to review what they have to say as well.

More People Turn To Reverse Mortgages

8/01/2009

posted by N. Sioris

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With the economy in crisis, more people than ever before are feeling insecure about retirement. Whether you are all ready retired or thinking about retirement, there is a lot of insecurity surrounding this topic. AARP released a report called, "Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older."

As people live longer and fewer corporations offer defined benefit plans it has become more challenging than ever to prepare adequately for retirement. Combining those two realities with the fact that most retirement nest eggs are tied to the stock market, and you have more than enough insecurity to go around. Below is a chart taken from the AARP Retirement report that illustrates how the current economy has affected Americans in or approaching retirement.

"During the past 12 months, workers at least 45 years old report many ways that recent changes in the economy have affected them or their family. As seen in Figure 1, over half (56%) have found it more difficult to pay for such basic items as food, gas, and medicine, while slightly fewer helped a family member pay bills (47%) and found it more difficult to pay for utilities such as heating and cooling, or phone service (45%.)"




Some people are choosing to get a reverse mortgage to help out with shortfalls in the areas mentioned in the AARP survey. Possibly you are someone that might be able to financially benefit if you get a reverse mortgage. Feel free to contact us if you want to find out if this solution could be right for your situation.