Your Questions About Reverse Mortgage Lenders

Robert asks…

IndyMac owns Financial Freedom. Is it still safe to get a reverse mortgage with Financial Freedom?

We are in the process of signing papers with Financial Freedom but I worry about them since the government seized their parent company IndyMac Bank. They say they can still make loans, but I worry if they will be able to continue the monthly payments. If I went with them, could I transfer to another lender at a later time?

admin answers:

As long as you are going with the HECM product you have nothing to worry about. The beauty of the HECM reverse mortgage is that it is government insured. This means that if something were to ever happen to Financial Freedom the government transfers the loan and not only guarantees your payments but they also guarantee that you will get them on time. The government did a good job covering all possibilities with this one

Carol asks…

can my step father put me on the reverse mortgage even tho im not his blood son?

Im told he had to add my step sister, but this just doesnt seem right. Apparently the lender required him to add her and not me because I am just his step son.

admin answers:

I don’t understand this question at all, you should ask it on a subject about mortgages or banks.

Paul asks…

Reverse mortgage HELP PLEASE?

Hey everyone i have a question about reverse mortgage. I will be turning 62 In march and i have been looking into refinancing into a reverse mortgage.. but as many houses out here in California my house has lost value and I Do not have any equity… Can i qualify for one? and does anyone know of a Reliable FHA-approved lenders In So-Cal?

admin answers:

Good day,

I am Richard a private loan lender, i give certified loans to serious minded individuals and company at an interest rate of 5% with total loan repayment allowed weekly monthly or yearly depending on how you can make repayments if interested email me at rj.microfinance@mail.mn .We only offer out in: Dollars,Pounds,Euro and Naira only.Apply with the following details:Name,Address,Cell number,Occupation,Monthly income,Loan amount needed&Duration.

Email: rj.microfinance@mail.mn

Richard asks…

Reverse mortgage, Are rates and fees pretty standard, or should I really shop around?

Im 64 and my mortgage is paid off. I read from one lender that fees could run between $5,000 to $8,000. Is this a competive market or is this what I should expect?
Also, my wife ( co-owner ) is only 60 years old…. What problems will I have with eligibility? Should I just scrap this idea and is there another way to get my equity from my house. I am on social security retirement..with no other income and my wife is unable to work.

admin answers:

Hello –

This is a great question.

Until recently, seniors 62 years of age and older have not had the best choices when it came to getting cash from their homes. Traditional home loans only offered the option of either selling one’s house or borrowing against its equity.

With reverse mortgages coming on the scene, seniors now have some additional cash-flow alternatives. This type of loan allows mature borrowers to convert their home equity into tax-free income without leaving their current home or making mortgage payments – and they do not need an existing income to qualify.

How a Reverse Mortgage Works
Reverse mortgages are probably best understood when
compared side-by-side with traditional home mortgages, otherwise known as “forward” mortgages. The following table shows the differences between the two:

FORWARD MORTGAGE REVERSE MORTGAGE

Uses income to pay debt Uses home equity to get cash or credit

Monthly mortgage payments No payments

Falling debt, rising equity Rising debt, falling equity

Both loans incur debt against your home, and both affect equity, but they do so in different ways. Traditional home mortgages require making monthly payments to a lender. With a Reverse Mortgage, payments are made to you.

What a Reverse Mortgage Involves

Here are some important points to know when considering a reverse mortgage:

Eligibility: To qualify for a reverse mortgage, you must be at least 62 years of age. All owners who are on the title deed must meet this age requirement. You must also have paid off all, or most, of your home mortgage. Lastly, the home you reside in must remain your principal place of residence.

Mandatory Counsel: In order to ensure that homeowners are fully aware of the financial ramifications of obtaining a reverse mortgage, you must undergo counseling with an unbiased third party before completing a loan. HUD and AARP oversee a network of counselors who can provide this service, and it should be offered for either a nominal fee or at no charge.

Tax-Free Income: One of the advantages of a reverse mortgage is that the money you receive will not be taxed. The amount you’ll obtain depends on several factors including the plan you select, the type of cash advances you choose, your age, and the value of your home. Typically, the older you are the larger the loan, as you will have more equity in the house.

Cost: The cost of a reverse mortgage varies considerably from one type to the next. However, you can typically use the money you receive to offset the loan fees. The costs will be added to the loan balance and must be repaid with interest once the loan terminates.

Repayment: Reverse mortgages do not require any payment as long as the borrower(s) remain in the home. Should the borrower(s) pass away, sell the home, or permanently relocate, then the loan would be due in full, along with interest and additional costs. If two borrowers are on the loan and one dies, the loan would not be due since one of them still occupies the home.

Home Equity Conversion Mortgage – The Federally Insured Loan

The most common type of reverse mortgage is the Home Equity Conversion Mortgage, otherwise known as a HECM mortgage. This is the only reverse mortgage program that’s federally insured and backed by the U. S. Department of Housing and Urban Development (HUD). This type of reverse mortgage is popular for a few reasons:

Ability to choose your own interest rate.
You can select one that changes annually or one that changes every month.

You have several payment options.
You may receive monthly loan advances for a fixed term or for as long as you live in the home. You may also choose to receive a line of credit or combine monthly loan advances with a line of credit.
The loan can be used for any purpose.
With a HECM, you don’t have to designate the loan to a specific use; you can apply the funds to anything you choose.

Protection.
This is one of the most attractive features of a HECM. This plan protects you by guaranteeing continued loan advances even if your lender defaults.

Sell or Stay?

The main reason people choose a reverse mortgage is to gain financial independence and maintain an adequate standard of living without leaving their current home. The best way to decide if a reverse mortgage is right for you is to compare it to the other option of selling your house. To do this, ask yourself these three questions:

How much cash can I get by selling my home?

How much will it cost to buy or rent a new place?

Is it worth my moving now, or do I prefer to do something else with the money?

Perhaps you’ll confirm what you knew all along, where you now live is the best place to be.

Darren Meade is affiliated with Victory Lenders, a Christian based company. If you would like to receive a FREE CD containing an interview with Sarah Lyons and John Lucas, the co-authors of Reverse Mortgages for Dummies, please contact Darren at 866-676-4325.

Susan asks…

2 wrong reverse mortgage appraisals: borrower manipulated?

My mom had 2 appraisals while she had her Rev Mort. One completely omitted an entire room, and one listed her flooring as vinyl/carpet instead of wood/tile. Why did the lender loan her money when the appraisals were so wrong? Why elderly mom probably didn’t even look at the small print in them.

How could the lender not know about the missing room? That’s information that anyone can get. Sounds like the lender was being manipulative, Agree?

admin answers:

I can’t help but ask, why were there two appraisals done? Did the first appraisal come in so high that the lender questioned it and required another one? Or did you complain about the low value and fought for a higher amount? It’s not typical.

The other person who answered may be right that the appraiser was lazy; it wouldn’t be the first time; but i prefer to give the benefit of the doubt. It could be that the extra room was built without a permit, and so it could not be officially counted. You didn’t say what kind of a room. As the other person said, a bedroom or bathroom would definitely affect the value; but if it was a small nook, he may have been too lazy to figure it into his drawing, or too in a hurry to go to his next appointment. Unfortunately, some folks try to accept all the jobs they can and then are not able to do them well; vinyl vs wood may or may not have made a difference; i’ve seen appraisers whiz through in 15 minutes and take photos hoping the photos will remind them later of what was in the house when they make their report – and then forget a room or other details.

If you used a broker, or the bank officer had taken the time to go to your mother’s home, they should have had it corrected before it was turned in to underwriting. They are as much at fault. But if she dealt with someone online, out-of-state, or the local bank that doesn’t do house calls, then she may have gotten what she paid for. Customer service is very important in reverse mortgages.

The lenders are many times out of state, and would not have necessarily known the details of your home; that is precisely why they must go by the appraisal, wherein a licensed professional physically looks at the home, and not by county records, which are often times wrong. They would not have known the appraisal was wrong unless someone questioned it, either based on the photos, or by the loan officer.

Reverse mortgages are very conservative, and lenders will usually not give more than around 70% of the loan value, so the lender has a lot of room for error. Not sure why you would call it manipulative. If anything, the lender gave your mother less money than she could have received, because they based it on a smaller and dated home. But as the other person said, even with vinyl and carpet, it is still a good investment. What is more important to the lender is that it is well maintained.

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