Tag Archives: Myths

Reverse Mortgage Myths Exposed!

Posted on by
Reply

Determining the truth about reverse mortgages can become a head ache, if you don’t have the right information. You need to be educated on the different programs available, so that you can make the best decision for your personal needs. Basically, if you get a reverse mortgage you will be getting a loan that will allow you to have one of the following three options, a monthly income coming in, or a large lump sum at once, or a credit line that can accumulate interest, so yes it grows as well as you only pay interest on the portion that is used instead of paying interest on the full amount of the loan. You can also choose to get a combination of these different options as well.

If you have an existing loan, it will be paid off. So you will not have a house payment, however you will still be responsible for the tax, insurance and the up keep of the property. The monthly income you receive from the reverse mortgage is guaranteed each month 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 value of your home, even in a declining market.

Here are 5 of the most common facts and myths that will help you further understand the benefits that a 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, the title never changes. There aren’t any penalties when selling, paying off, or refinancing your home.

MYTH 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 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.

MYTH 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 desiring 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. I can help you decide which loan is right for you.

Dreaming of your retirement years should not include losing your home. However due to today’s declining stock market, higher medical costs and taxes, many retirees face this very problem. This is why it is necessary that you, as a baby boomer considering retirement within the next 10 years, understand reverse mortgages and what one could do for you. A reverse mortgage could make it possible for you to travel, buy a second home or start a new business.

Why Get A Reverse Mortgage? A reverse mortgage has many benefits. Your financial status holds the answers to many of the benefits available with a reverse mortgage. Advantages include: • Protect the title to your home • No restrictions on how, when or where YOU spend the money • No restrictions on when you sell your home • You do not repay as long as you remain residing at the home • You do not pay taxes on your received cash To simplify it, remember that a reverse mortgage is the opposite, or reverse, of a regular mortgage – the bank pays you to live in your house. The loan has to be repaid when you pass away, or when your home is sold to a new owner. This solution may suit you if you’re retiring in your current home and have equity in that home. Also, another advantage of a reverse mortgage is that you can qualify for a reverse mortgage even if you have no income whatsoever. Why wait? Begin your golden years on the right track!

Marlon Baugh is a Nationally Known Reverse Mortgage Expert, that has been helping home owners in the south florida area for over 5 years now. If you would like to get more insider information about reverse mortgages, please visit my website @ http://www.specializedfinancialsolutions.com/reverse.htm

Debunking The Reverse Mortgage Myths

Posted on by
Reply

A reverse mortgage is a government sponsored product for seniors 62 and over to stay in their homes and improve cash flow. Reverse mortgages have gained significantly in popularity in recent years. While they are becoming more widely accepted, there are still many myths and misunderstandings surrounding reverse mortgages, This article will explore some of those myths.


Myth 1: Reverse mortgages are only for desperate seniors


This first myth might have been true in the old days of reverse mortgages but not today. You can use reverse mortgages for a variety of reasons from estate planning, vacations, paying for college and paying down debt. In most cases obtaining a reverse mortgages can be a very wise decision. You can even use a reverse mortgage to purchase real estate.


Myth 2: The bank takes your house


This is simply on the case. The bank does not take your house in a reverse mortgage. Banks don’t want your house. When you decide to sell your house, you simply pay off the reverse mortgage out of the proceeds of the loan.


Myth 3: Reverse mortgages are predatory


Reverse mortgages are one of the most regulated of all mortgage loans. You are required to obtain counseling before applying for a reverse mortgage and there is a 3 day right to cancel like with a standard refinance.


Myth 4: Reverse mortgages are too expensive


While some financial products like home equity lines of credit do have lower closing costs, reverse mortgages can save you money especially if the alternative is moving. Most of the added costs of reverse mortgages are for the FHA insurance, which protects your home investment. Also, the added benefit of not having to make monthly payments far outweighs the costs.


Myth 5: I can end up owing more than my house is worth.


This is simply not the case. If the property declines in value and the reverse mortgage balance is higher than the property value, FHA insurance will kick in and cover the difference. You are protected, which is very nice in a declining market.


Myth 6: Reverse mortgages cause tax penalties and can influence Social Security benefits


This is another very common misconception. Reverse mortgage proceeds are tax free as they are simply a loan. Because of this, they do not factor in to Social Security benefits.


As you can see, reverse mortgages are a great way for you to keep your house and earn some extra income in your golden years. As with any financial decision, good advice is essential. You should seek competent help for a mortgage broker or lender who specializes in the field of reverse mortgages.

Carlos Scarpero is a Dayton, Ohio based reverse mortgage originator and expert. Learn more about reverse mortgages by visiting www.CarlosScarpero.com

Mortgage Myths: 77 Secrets That Will Save You Thousands on Home Financing

Posted on by
5

Product Description
In Mortgage Myths, Realtor Ralph Roberts and mortgage consultant Chip Cummings take aim at the 77 mortgage myths that prevent so many would-be homeowners and real estate investors from pursuing their dreams of homeownership. You’ll learn the difference between good and bad debt, how to make mortgage approval easier and simpler, and how to use other people’s money to leverage your investments. This is the ultimate guide to getting the great deal you deserve…. More >>

Mortgage Myths: 77 Secrets That Will Save You Thousands on Home Financing

Myths, Pros and Cons of Hecm Reverse Mortgages

Posted on by
Reply

First and foremost; the bank does not, nor do they want to own your home. So why do so many people believe this? Prior to FHA getting involved in 1988, the lenders would take an equity position in their Borrowers homes.  That practice has resulted in unfavorable feelings towards today’s reverse mortgages. The Federal Housing Administration (FHA) has set the new standards and guidelines for HECM reverse mortgage loans and their involvement has produced a safe, well thought out and balanced loan for Seniors. Look below to find some of the pros and cons of reverse mortgages.


The Upsides

There are no monthly payments associated with a reverse mortgage. You will never be required to make a monthly payment while you reside in your home.
You stay on title and any equity remaining in the property is yours. The lender does not take title to your home!
You can never owe more money than your home is worth. HECM reverse mortgages are “nonrecourse” loans. This means that no matter how long you stay in your home, you will never be obligated to the lender to pay them any more than the value of the property, even if the loan exceeds the value.
A reverse mortgage will not effect Social Security or Medicare benefits.
Qualifying is easy. You must be at least 62 years of age and have value in you home. You do not not have to prove income or have good credit. The value of your home and your age determine loan amounts. It’s that simple.
The money you receive from your reverse mortgage is tax free.
The funds you receive can now be designed for your specific needs. Depending on the amount of funds you require, you can create your loan with a fixed or variable rate. You can also design your loan to provide one upfront payment of all cash, you can receive monthly payments or keep all of the funds due you in a line of credit and withdraw the funds as you need them. You can also create a combination of all three methods.
The funds from a reverse mortgage may be used anyway you want. After paying off any existing mortgages, tax liens or heath and/or safety issues regarding your home, you can use the funds for any purpose you desire. Take a vacation, you deserve it. Make repairs or upgrades to your home. Put all the cash on 7 and spin the wheel, the funds are yours.
You built the equity in your home over years of hard work, now you can let this equity work for you. You can feel the self reward and know that you are not necessarily reliant on your children or other family members to help you. There seems to be a since of pride that goes along with method.
FHA insures these loans. Given the state of this economy, you do not want to find out that the bank funding your monthly payments has gone out of business. With FHA insuring your loan proceeds, you can be comfortable knowing that your next payment will be guaranteed by the US government.
NRMLA. Lender/members of the National Reverse Mortgage Lenders Association are an elite group of individuals who are dedicated to helping American Seniors fulfill their retirement dreams. This group is available for you.  

The Downsides 

Lenders generally  charge their origination fees, FHA upfront mortgage insurance (MIP) and other closing costs that add up in a hurry. The flip-side to this, however, is that if you really need the funds from the equity in your home you could borrow the funds traditionally as long as you can afford the monthly payments or sell the property. If you sell the property, you are left without a home to live in and the 5-6% cost to sell your home is considerably higher than those fees assessed with a reverse mortgage. The longer you live in the property the lower the costs average out.
Most reverse mortgages require utilizing a variable rate. This can be overcome by using a fixed rate. Unfortunately, the fixed rate reverse mortgage requires that you draw all funds available to you and may not be the right loan for all applicants.
Your mortgage debt rises fairly quickly, but, there is no surprise that the loan increases rapidly since you do not make any payments while living in the property. The interest that would be due as in a traditional loan simply adds on and creates a new higher principle value.
Borrowers are of course responsible to keep the property properly maintained and they must stay current with their homeowners insurance and property tax.

 
All in all I believe the upside to reverse loans far outweighs the downsides. Call on a NRMLA member and do your homework. Vist us online: www.mlsreversemortgage.com

Mike Borba (President of MLS Reverse Mortgage) is a broker that has been in the mortgage and real estate field since 1980. Toll Free (888) 888-4834. Visit our website. Read more of our articles online. Reverse Mortgage FAQ’s