Reverse Mortgage Information Center

What if you want to do a loan on your home, but you know the home needs repairs to qualify?

Fixing the deficiencies on your property is normally required on traditional loans. Reverse mortgages are unique in the way they allow you to do the loan first and then use that money for the repairs. So you can cash in some equity on your home to do the repairs.

Let’s look at some very common scenarios: 1. You have a deck that has had indoor outdoor carpet on it (you know, the green carpet that looks like grass), and the boards under it have dry rot. 2. Or maybe the southern exposed side of the home has very little, if any paint on it. 3. Sometimes, a tub or toilet area has a squishy floor indicating dry rot.

The required repairs for these problems can be completed after the loan is closed. In fact, any repairs that do not involve safety or health concerns can be done after you loan closes. Your property not having adequate water is an example of a repair that can’t wait, but roofing and dry rot repairs are common and should not be a problem.

How does the lender handle these repairs to make sure they get done? I am glad you asked. You will have to get a contractor’s bid for the repairs and then add 50% to that bid. The extra 50% is to cover any miscalculations to make sure that there is enough money to cover the costs and that you don’t run short. That amount of money is held in escrow, commonly called an “escrow hold back”. Once the repairs are completed, the lender will pay the contractor and refund the remaining money to you.

What if you want to do the repairs yourself? You can. You will still need to have the contractor bids though, and the escrow hold back is still required. The lender is looking for a professional estimate of what the repairs will cost.

Let’s summarize what you just learned: The proceeds of your loan can be used to do the repairs, making a reverse mortgage a unique loan. The escrow holdback will be required even if you choose to do the repairs yourself.

One of the first steps in knowing what you can do, is knowing how much you qualify for. Use our free reverse mortgage calculator to quickly estimate how much money is available to you. There is also plenty of reverse mortgage information that is helpful in becoming, educated before you make your decision.

How much a reverse mortgage costs is one of the top arguments against doing one. Often, I hear: “they are too expensive”. My reply would be: “compared to what”?

Let’s look at what some alternatives are: You could move, but what would be the cost of moving? While you probably could get a quote for moving your household, what price can you put on the emotional cost? When you have lived on your home for several years, if not decades, you have everything where you want it. You know where it is and the memories run deeply. So is it worth moving, and turning your entire life upside down? If you do move, there are more things to consider.

Do you want to have a rental? If you move out of your home, are you going to rent it out? If so, there will be a time investment to manage the property. You will probably have repairs that need to be done and the hassle of screening tenants and hoping to get a good one.

You might be saying that you would sell your home and renting it out doesn’t make sense. If you actually looked up what it costs to move, the next step will be a little easier. You just take the cost of moving, and then add the real estate commissions to that. Real estate sales commissions run 5%-6% of the sales price, and you will probably pay some or all of the closing costs for the buyer. Just to be clear, there are times when selling is the best option for all parties. I am just pointing out that there are expenses in doing so.

So what are the fees associated with a reverse mortgage? Depending on your loan officer, the cost of a reverse mortgage is somewhere between 2% and 5% of the appraised value. You can see that it is actually cheaper to do a reverse mortgage than it is to sell. It is easier than moving, and you get a place to live for the rest of your life. To top it all off, the fees have been drastically reduced, and the interest rates are at an all time low.

Of Course, there are always exceptions. If you are moving in a few years, it likely won’t make sense to do a reverse mortgage. I am not speaking of thinking someday you may move. I am talking about you having a plan to move in three years to a warmer, dryer city and knowing you are going to do it. In other words, have a definite plan.

Looking for more information on reverse mortgages? Getting educated on the reverse mortgage programs available may go a long way towards helping you make your decision. If you would like You can see what you qualify for using our FREE reverse mortgage calculator.

Redwood Financial Services wants to make sure you have all the facts, so you can make an informed and educated decision. The five most common questions are listed below so you can start understanding the reverse mortgage loan.

1. Can I do a reverse mortgage if I owe nothing on my home? This may sound obvious, but absolutely. This allows for more available cash to take care of any non mortgage obligations you may have.

In the event your home is not paid off, you still could qualify for a reverse mortgage. Your mortgage will have to be paid off first (with the reverse mortgage) then any remaining proceeds can be taken as a line of credit, monthly income, or a lump sum.

2. Can I do a reverse loan if I am behind on my taxes? This is a great reason to use a reverse mortgage. It will allow you to get caught up on any past due bills and get those creditors off your back. You could consider deferring your property taxes if you live in Oregon, after the loan closes.

3. Do I have to give up the title to my home? You will use your home as collateral for the new loan. You do not give up your home. You retain all the rights to refinance or sell, and the remaining equity is always yours or your heirs’.

4. Do reverse mortgages allow me to purchase a home? In January of 2009, there was a program introduced to allow a purchase of a home with a reverse mortgage.

5. What if I use up all my equity? When considering property appreciation and the low rates of a reverse mortgage, it takes quite a while to “use up” your equity. On an average it will take 20-30 years to go through it. In the event you actually use up all the equity in your home, you will never be forced to move. You’re protected with a place to live for the rest of your life.

Stop by our website if you would like to see more frequently asked questions and answers about reverse mortgages. You will find a large amount of educational information for free. Get informed before you make your decision.

1. You don’t get to write-off your mortgage interest:

a. Remember the 1099 form you get that shows how much interest you paid? You won’t be getting that after you complete a reverse mortgage. Since you have accrued interest and not paid interest, there is nothing to write off. Once you pay the interest, you will get the write off, but normally that occurs when the home is paid off.

b. Is the interest write off more important than not having house payments? Would you prefer to have the write off or no payments?

2. Accruing interest or your balance growing:

a. Interest accruing on your loan without making payments means the amount you owe on your loan will increase over the life of your loan. The interest that is charged monthly is added to your balance, making it get bigger each month.

b. No payments today in trade for a bigger payoff tomorrow. Most reverse mortgages are paid off when the borrower passes away, so they have permanently deferred the monthly payments.

3. Reverse mortgage fees are expensive:

a. Reverse mortgage fees are expensive when compared to a regular home loan. since there are no monthly payments on a reverse mortgage, but you do have payments on a normal loan, maybe “they” think there is some justification for higher fees.

b. New programs have recently been released that have cut the cost of a reverse mortgage in half from what they used to be. If you didn’t do a reverse mortgage before because of the cost, check again. You will be surprised on how much the fees have been reduced.

4.You leave less money to your kids:

a. It will reduce the amount you leave as an inheritance, if you spend your equity. This could be really important to those who want to leave a sum of money to their heirs, but there are alternatives to how you leave the “money”.

b. Are you really depriving anyone by spending your equity? If you have a mortgage, and you remove the monthly expense, this will leave you more cash to save or spend to maintain your independence. Your heirs may not have to chip in to help you survive. That alone saves them money and enhances their future retirement. If you have no mortgage, getting monthly income or a lump sum of money will help take care of your home and medical expenses.

You will see there are two sides to these so called “reverse mortgage disadvantages”. Just weigh the objection against the need to see if the loan makes sense to you.If you would like to bounce some ideas off of someone, email me or give me a call. You can get my contact information online at www.redwoodreversemortgage.com. You will also find a lot more information on reverse mortgages there.

Have you heard other reverse mortgage disadvantages? Follow the links if you are looking for more reverse mortgage information. You can get a free education with no obligation. You can even use our reverse mortgage calculator for free.

If you’re a Florida retiree and you’re having trouble making ends meet you may want to look into taking out a reverse mortgage. The equity that you have built up in your home over the years may be your answer to a more comfortable retirement. These flexible home equity loans allow you to choose how you want the funds distributed and don’t require repayment for as long as you continue to use your home as your primary residence. The advantages of these loans can make your retirement years much more enjoyable than you’ve ever imagined.

How Reverse Mortgages Work

The amount you can borrow with a reverse mortgage is based upon three factors: your age, current interest rates and the appraised value of your home. You can choose to receive your reverse mortgage funds in a lump sum, monthly payments or you can open a line of credit to draw upon at your choosing. When you apply for a reverse mortgage, your lender will take an appraisal of your home and the amount you can borrow will be determined based upon this valuation. There is very little out of pocket expenses with reverse mortgages as you can finance most of the closing costs into the loan. The loan will not come due and no repayment will be required as long as you continue to reside in the home as your primary residence.

Control Your Retirement Budget More Carefully

As a senior, you know that it can be difficult to create a steady budget during retirement. Using the built in home equity from the house that you already own can allow you to create a budget that provides you with the comfort that you need. Once you have taken out a reverse mortgage, you are not required to withdraw any of those funds at any specific time. You can choose to use the funds as a sort of savings account to use in emergencies, or you can choose to pull all of the money out at once and pay off outstanding debt. The money is yours to do with as you see fit.

Increase your Monthly Income

Many seniors enjoy the flexibility and convenience of receiving their loan funds in monthly installments. Reverse mortgages can supplement your retirement plans, pensions and social security payments. Your reverse mortgage broker can explain all of these options to you and show you which plan is best to meet your retirement needs. The extra income a reverse mortgage can provide can mean the difference between struggling financially and enjoying your retirement years in Florida.

Live out Your Years in Florida Comfortably

Reverse mortgages truly reward those who have been thrifty in their early years and paid down their mortgages. During your retirement years, your home can truly pay you back in every sense of the word. Since reverse mortgages do not require repayment as long as you continue to live in your home, they allow you to truly enjoy your home without worrying about your monthly mortgage payments . Your home equity pays for itself in many ways. So, to truly enjoy your retirement years, make sure you find out how much a reverse mortgage can benefit you.

If you’re thinking of financing your home with a reverse mortage, check out Reverse123’s site on Reverse Mortgage Information and Florida Reverse Mortgage Lender

Reverse mortgages allow you to access your home equity four different ways. We will examine those ways so you know how to access your reverse mortgage equity.

1. Lump Sum – You have the option of taking all the funds available to you at one time. You can use the money for anything you want, but the most common use is paying off the existing mortgage (if you have one) on your home.

2. Monthly Annuity – Not a true annuity, but a monthly amount of money that is guaranteed to continue as long as you or your spouse lives in the home. Wouldn’t retirement be more comfortable if you had a little more money each month? There is also a tenure option that gives you a larger payment for a specified period of time. More common though, is the lifetime payment.

3. Credit Line – If you don’t need the money today, and you want to have a reserve account for emergency, this is probably the option for you. There is no interest being accumulated unless you use the money. It will only be charged if you actually borrow it.

4. A Combination of the Above – You can customize your loan to combine any of the above options. If you need a small lump sum, a monthly boost to your income, and you want the rest to be in a line of credit, mixing and matching is the way to go. Additionally you can alter your plan anytime you want to get more monthly or get an additional lump sum for a small fee.

If you choose anything other than a lump sum, know that you will have to take the adjustable rate mortgage (ARM). There is only one option if you choose the fixed rate. It is a lump sum. You will have to draw it all when your loan closes.

Prior to committing to any reverse mortgage programs, make sure you have all the facts. Visit our website for more reverse mortgage information. There is also a free reverse mortgage calculator to see how much money is available to you.

Let’s face it, there is good and bad in everything that we do. The real question is; does the good outweigh the bad? We are going to take a look at what the real story is. Are reverse mortgages good or bad? We will start with the “bad” points.

Reverse Mortgage Cons:

1. Mortgage Insurance – All FHA loans have mortgage insurance, regardless of how much equity you have available. In the case of a reverse mortgage, it is for the possibility the balance of your loan may exceed the amount your home is worth. This only applies when it is time to sell your home and is usually in the event that property values decline. Remember, even if you use up all your equity, you will never be kicked out of your home. Because of the Mortgage Insurance, you and your heirs will never owe more than your home is worth. That is what you are paying for.

2. Compound Interest – Everyone likes to earn it, no one likes to pay it. Simply defined, it is interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. If you’ve ever had a savings account or investment that you rolled the earnings back into, you have likely earned it. Since you are not making payments on your loan, compound interest will add up.

3. Spending Your Kids’ Inheritance – I have heard some say that it is wrong to spend the children’s inheritance. But, I have to ask, “Whose money is it”? In my opinion, if you need the money, use it. You can leave what is left over, and that should be enough. You shouldn’t blow the money, but use enough to make life comfortable.

The Pros of a Reverse Mortgage:

1. Maintain Your Independence – What could be more embarrassing than asking your kids for financial help to cover monthly expenses? Would you like to need to move in with your kids? You can use your home’s equity to make ends meet and keep your dignity.

2. The Ability to Keep Your Home – Not having to move potentially decades of collected items and memories might be the best reason to do a reverse mortgage. Just the thought of moving makes most people cringe. By taking advantage of a reverse mortgage, you can afford to keep the home you love while affording the retirement you deserve.

3. Making Life Affordable – So many impoverished seniors have become so accustomed to being broke that they don’t even know that they are. Reverse mortgages allow you to access your equity and use it as a lifetime income stream. You might feel like you’ve won the lottery if you were able to get a few hundred dollars more every month.

4. No Mortgage Payments – There are no monthly payments, and you don’t have to pay back the loan as long as you maintain the home as your primary residence. This can really be helpful when times are tough.

Did you notice that the fees weren’t mentioned in the “cons” section? That is because fees are no longer a reason to not do a loan. There are new programs available that cut the fees of a reverse mortgage 50% or more. Usually the origination fee can be totally waived and you could get a large credit towards your mortgage insurance.

Before we summarize, let me admit something. Yes, I am a reverse mortgage loan officer, but I truly believe reverse mortgages are a great tool that can help a lot of people. I am not saying they are for everyone, but when I see anyone saying they are bad, I just cringe. Tools aren’t bad. It’s how you use them. If the equity in your home is the only money you have, what is wrong with using it to make life livable?

Now it is up to you to decide. Is this a tool that can help you or someone you know? Will your life be enhanced with a reverse mortgage? If you are still unsure and want more information, read more of our articles on our website.

David Prulhiere is the owner of Redwood Financial Services and he specializes in reverse mortgages. If you would like to read more about reverse mortgage pros and cons? You can also see other articles and blogs with additional reverse mortgage information.

I’m a reverse mortgage professional who closed a for an non ordinary family. Their home was paid off completely. The property was worth well over the Maximum Claim Amount. The husband was still working as a consultant and brought in enough for living expenses and property taxes. With both husband and wife receiving Social Security it seemed that pulling money out of their home was an unnecessary move.

While asking more questions,, I found out that their son had recently completed Veterinary School and was about to begin his own practice. The parents decided to help their son in starting his new business.

This was an intelligent to proceed this way for several reasons:

Tax-free funds

2 – The Funds from the Reverse Mortgage came in a Line of Credit. The funds were doled out in identifiable increments for the purpose of the business only. Many seniors that are in the process of creating a Trust are asked themselves, “What is going to happen if our Son/Daughter gets all of their inheritance in one lump sum?” In too many cases that money gets spent frivolously by a generation that is not used to having large sums at their disposal.

Trying to refinance their home, would have lead for it to be denied. The lending institution usually looks at your situation much differently when your income drops due to reaching a particular age. Regardless of whether social security and equity is present. Applying many times at multiple banks will more than likely be a waste of time.

4. The loan process for this type of mortgage is quick with no aggravation. I came to their home and discussed the product in detail. One required step is going to a session of HUD Counseling. The great thing is the family already attended a session. All I needed to obtain was a few signatures on a couple of documents. For their situation, there was no payoff schedule so the loan closed in under 30 days.

If you would like to learn more or you’re just curious to see if a Reverse Mortgage is a viable product for you, I welcome you to join me for lunch. My name is Addison Jaggers. I host a weekly Lunch & Learn in Santa Ana at Polly’s Bakery Caf(c) and Benji’s New York Deli. Call me for times @ (949) 981-2905 and/or RSVP by email addison.jaggers@wellsfargo.com Follow me on Meetup for updated events.

To get educated and to see if you qualify for a reverse mortgage

Seniors around the nation have new financing options for purchasing a home. By using a reverse mortgage to purchase a home, older borrowers can use existing cash savings or the money from the sale of their home to purchase a new home in Florida and around the country. The remaining purchase price of the home can be borrowed by taking out a reverse mortgage. This incredible loan eliminates future monthly mortgage payments.

The Florida HECM for Purchase makes it easy for borrowers to purchase a home with a reverse mortgage. Borrowers can use the proceeds to move to a new location or to downsize their primary residence to meet their retirement needs. Seniors could also conceivably sell their existing home and use the proceeds to buy a larger home financed with the reverse mortgage. The amazingly flexible product makes almost anything possible.

Purchasing a new home with a reverse mortgage is very similar to purchasing a new home using conventional financing. However, the loan process tends to be shorter and more simplified. Generally the amount of money a borrower is eligible to take out is based upon the home’s value, the age of the youngest borrower and the current interest rates. When determining the home’s value, the bank will generally use the lower of the appraised value, the FHA limits or the purchase price. The amount of money the borrower would need to provide at closing is the difference between the loan’s value and the amount of money the borrower is eligible to borrow, minus any closing costs. The appraisal, inspection and closing processes are almost exactly the same as in conventional financing.

The purchased property only needs to meet standard FHA requirements to be eligible for a reverse mortgage. Certain condominiums and multi-family dwellings are generally eligible. Single family homes are almost always eligible. Newly constructed properties are also eligible, however the building must have receive a certificate of occupancy by closing. In any event, the borrowers must be ready to move into the home within two months of closing.

Reverse mortgages are no more difficult to obtain than regular mortgages. In fact, in many ways they are much simpler. Borrowers do not need to meet any particular credit or income eligibility since there is no obligation to repay the loan as long as the borrowers continue to live in the home. They must continue to keep their taxes and homeowners insurance up to date, however. Another great benefit of the reverse mortgage is the non-recourse nature of the loan. This aspect of the loan means that a person can never owe more than their home is worth even if the home drops in value drastically.

Reverse mortgages will definitely grow in number over the coming decades. As more seniors reach retirement age and look to move into their retirement homes, expect to see more and more homes purchased with these loans. Financing a new home with a reverse mortgage and eliminating all monthly mortgage payments is certainly an attractive alternative for many on a limited income.

Before you purchase your new retirement home, make sure you check out Reverse123, information on Florida Reverse Mortgage and Senior Financing

Have you ever considered the question how are mortgage rates determined? The following paragraphs summarize the work of mortgage rates experts who are completely familiar with all the aspects of how to compare fixed mortgage rates. Heed their advice to avoid any surprises.

Reverse mortgages are a great way to get a loan using your primary asset. As in all cases of financial lending, the flexibility comes at a price. Reverse mortgages are available for nearly all property types with the exception of co-ops, though co-op owners in some metropolitan areas, specifically New York, should have local options. If you are in retirement, or nearing retirement, and think this may be the product for you, I will go into more detail about exactly how a reverse mortgage works. Reverse mortgage provides the elderly with ways to sell property UK but continue living in their homes, and rent-free. The domicile custodian with reverse mortgage involves joint keepers.

Currently there is about a 2% spread between the lowest variable rates and the five-year fixed. That’s always been a good indicator to consider the variable. Currently, the 30-Year Fixed sits at 4.500% (4.679% APR) and the 15-Year Fixed is at 4.250% (4.557% APR). Current mortgage rates are lower this week over last. Conventional mortgage rates and jumbo mortgage rates are both lower.

It seems like new information is discovered about something every day. And the topic of mortgage rates is no exception. Keep reading to get more fresh news about mortgage rates.

Fixed mortgages are found world wide and are offered by almost all of the lenders but the terminologies may vary in the different states. Fixed mortgage rates have stayed relatively stable over the past few years, so there aren’t many higher-rate mortgages left to refinance. Also, the downturn in housing prices has hampered the ability of homeowners to get cash back from refinancing.

Lenders favour these mortgage types over interest only loans because the principle balance of the mortgage is getting paid down. The 40 year fixed mortgage is a good option for those that do not plan to move out or refinance their property. Lenders who win the bid value their potential customer more and are more often willing to offer a much better product with greater incentives and lower rates. You have more options in choosing the loan that’s best for you.

Borrowers must live at the residence being refinanced and have no other real estate ownership in any other properties; like 2nd homes and rental property. Having been or being in bankruptcy does not preclude a borrower from participating in the FHA program. Borrowers with poor credit tend to default applications. For this reason, many lenders are reluctant to work with the poor borrowers.

Now you can understand why there’s a growing interest in mortgage rates. When people start looking for more information about how to compare fixed mortgage rates, you’ll be in a position to meet their needs. You should now be capable of answering the question how are mortgage rates determined?

Matthew Hendon is the author of this article. MortgageSet.com asks how are mortgage rates determined and offers free resources to help you compare fixed mortgage rates. You may reprint this article provided this paragraph and links are kept.