Counseling: A Very Important Step in the Reverse Mortgage Process

February 21, 2011 By DanFullmer Leave a Comment

Taking out a reverse mortgage is a major decision, since you are putting the equity of your primary residence at stake. One of the most important things you need to do is to attend a reverse mortgage counseling seminar. This seminar is organized to enlighten the prospective borrower’s understanding about reverse mortgages. Similar to most financial transactions, a reverse mortgage is hounded by myths and uneducated opinion that affect its popularity. Technically, the seminar should discuss all the options available to you, however, if you are bent on seeking reverse mortgage assistance, they can provide complete information.

The seminar is facilitated by knowledgeable industry experts from an independent third party who can help prospective borrowers make the decision. It can take place over the phone or as a one-on-one discussion.  Aside from the usual inquiries regarding application requirements and financial rates, these experts will also provide explanation regarding the implications and nature of reverse mortgages. These include explanation as to why it does not affect government assistance such as social security and Medicare. Tax consequences will also be thoroughly explained and its impact on the borrower’s eligibility. They will also be able to explain the effects of an existing loan to a reverse mortgage.

The facilitator can also explain to you the procedure of the mortgage contract dissolution. They also have considerable information about the transfer of mortgage from the deceased borrower to the heirs or estates and the participation of the borrower’s spouses. They can also further discuss the nature of a non-recourse loan and its effect on your finances and properties. These things, albeit seldom asked, do play an important role in making the decision that is why the counselor has to volunteer this information. Some people regret their financial decisions only when they discover that some provisions in the contract are not in line with their ideals. At some point, they only realize the essence of a mortgage seminar only when they are faced with situations that seem complicated to assess.

The seminar is held not to singly encourage you to take out a reverse mortgage but to bring forth to you the arrangement’s pros and cons and present you with other options. Their aim is to educate you in managing your finances in order for you not make emotional decisions that you may later regret. They can be straightforward and advise you if a reverse mortgage would suit your needs depending on your current financial status.

The independent third party organizations who handle personal finance seminars can be searched in the roster of Home Equity Conversion Mortgage Housing counselors or from the counseling network. The agencies permitted by the US Department of Housing and Urban Development to provide face to face and over the phone counseling are National Foundation for Credit Counseling, Money Management International, Consumer Credit Counseling Service, and National Council on Aging.

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To Reverse or Not!

December 21, 2010 By DanFullmer Leave a Comment

Have you been working hard all of your life and now think you deserve some of the rewards? If you have paid money into your property, specifically paying your home loan down or off; because of that hard work you can use it now to your advantage by making it pay you back.   How, you might ask, through a reverse mortgage.

What are reverse mortgages anyway?

Reverse mortgages are a financial tool that senior homeowners, specifically 62 years old and up, can use to access and convert some portion of their home equity into a retirement income absolutely tax-free.

This tool is federally insured so it does not only provide supplemental retirement income flow while simply staying at home and living independently, but also the financial security.  All the while making no mortgage payments per month, not having to give up title or sell your home.

How can you use this tool differences to your advantage?  Unlike forward mortgages, in which you are making payments, in reverse mortgage you are the one who is being paid.  For so long as you live in your property, you don’t make any mortgage payments.

How reverse mortgages are federally safeguarded?

The government has set up some ways to protect the interest of the senior citizens and shield them from any lending predators. Included is the policy mandating that there must be third-party counseling sessions before any processing of the application occurs. It is also a protection policy that mandates any application must not be processed unless it is taken personally by the senior citizen.  Meaning a individual that has power of attorney cannot sign the application for another individual in order to take out a reverse mortgage.  The objective is to protect them from any scams of any kind.

What are the benefits?

With reverse mortgages, you are set to take advantage of financial security; so you stay in your home and feel more positive than ever about your future now that you are retired. You also have no limitations when it comes to your expenditures and that is the benefit of receiving supplemental cash flow to your retirement income.  Or for others it is to pay off the mortgage that is draining month payments from you month after month.

Additionally, you have peace of mind because you are protected and don’t have to worry that the reverse mortgage loan you have will be require you to pay more than your home’s total appraised value.
The money received from reverse mortgage is not taken as income; therefore, it is also under tax-free financial benefits. For you to qualify, you don’t have to have income.

And what are the other benefits?

Of course, with the extra cash you get from reverse mortgages, you can spend however you like, such as making home improvements or repairs, paying for the college education of your grandchildren, traveling for your own enjoyment or visiting relatives and friends or simply vacationing, making unexpected large expenses. Or simply, living a lifestyle more comfortably than what you prepared for.

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Reverse Mortgages Are There Any Dangers?

November 8, 2010 By DanFullmer Leave a Comment

You may have been considering it for a long time now but are afraid because someone has told about the dangers of reverse mortgages. Do these dangers have basis? Or are they simply dangers that you should not mind because the benefits are just too good to ignore?

First, let’s point out these benefits:

You get to own your home or estate for so long as you are living in it, maintaining it, and paying the insurance and property taxes. You also get to enjoy the income from the loan without taxes and spend it without restrictions.  You get the option to use it on the education of your grandchildren or on other large expenses. You are protected by the federal government because of certain strict regulations and safeguards placed on this financial mortgage program.

There are many other benefits that one can receive from taking out a reverse mortgage.  Just like any other financial loans, whether taxable or not, there are also cons or dangers which one should know before deciding to enter in to it, so to avoid regretting it in the end.

Now for the cons:

Some say that reverse mortgages come with high-front end costs that is why there are many lenders offering them. Too often, these costs are not realized at the early stage of your application because just like in other financial loans, most lenders avoid disclosing this issue. So, before you sign anything, it is always a good idea to discuss the possible high charges to avoid the big burdens in the end.  The cost has recently been reduced significantly as more reverse mortgage options have become available.

What are these high-front end costs? They could include interests, origination fees, usually mortgage insurance, appraisal fees, as well as the title and closing fees for your area.

Reverse mortgages can really look appealing to senior citizens of 62 years old and above, due mostly on the fact that they give some sort of financial leveling up for a more comfortable retirement life. On other hand, reading those dangers just mentioned above can discourage many individuals.

Do not be discouraged this product like all products is nothing more than a tool, if you use a shovel to hammer in a nail… it might work, but you will struggle to get the nail in.  Likewise a reverse mortgage is not for everyone.  Used properly as part of a retirement plan, will benefit you.  You must plan, study and know when to implement it as part your retirement plan.

I suggest asking others about reverse mortgages, just be careful you are asking someone who knows something about them.  You would not ask an accountant about plumbing, nor a baker about horse racing.  Get with an expert on financial matters.

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Myths and Facts About Reverse Mortgages

October 20, 2010 By DanFullmer Leave a Comment

Reverse Mortgage Facts and MythsDetermining the truth about reverse mortgages is not easy. You need to be educated on the program so that you can make the best decision for your personal situation. Basically, if you get a reverse mortgage you will be getting a loan that will allow you to have a monthly income coming in, or a large lump sum at once, or a credit line. You can get any combination of these things as well. If you have an existing loan, it will be paid off. So you will not have a house payment. The monthly income you receive from the reverse mortgage is guaranteed and you will receive it as long as you remain living in the home. Regardless of the length of your life, your debt can never be more than the worth of your home.

I have presented the 5 most commonly repeated facts and myths below to help you further understand the benefits and ease reverse mortgages will bring.

MYTH 1: The reverse mortgage lender owns your home.

FACT: In fact, you will continue to be the home’s owner and to hold its deed. There aren’t any penalties when selling, paying off, or refinancing your home.

Reverse Mortgage QualificationMYTH 2: Qualification is difficult.

FACT: You only need to be 62 years of age an own your own home. You don’t need a lot of credit or a qualifying income for this.

MYTH 3: The fees associated with closing are much higher than they are for other loans.

FACT: Actually, the closing costs are very much the same as any other home loan and you will be aware of the fees prior to closing when you receive a Good-Faith Estimate. You can also choose to finance the costs with your reverse mortgage loan. The only other cost involved may be for an appraisal in advance of closing. Often, this is the only fee you will have to pay before closing.

Reverse Mortgage Tax BenefitsMYTH 4: This will affect your taxes and social security in a negative way.

FACT: The earnings you obtain from your reverse mortgage will not become an issue with Social Security benefits or income tax.

MYTH 5: There can be problems with the payment.

FACT: You will ONLY be required to pay the loan if you decide to leave the house or if it is sold. If your spouse dies then you will still be able to remain living in the house and vice versa and also the living spouse will continue to receive the exact payment amount each month. If you have any heirs, they will be presented with the opportunity to pay off the loan with any other assets or they can opt to refinance so that all the remaining equity will become theirs.

Gather all of the specs, when investigating a reverse mortgage loan. Keep in mind that there are other types of mortgage loan solutions and the right choice only depends on your own unique situation.

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