Reverse Mortgage Loans IIII

Easy mortgage contributing to artificial demand
Pub Date: Tue, 24 Jun 2008 10:00:00 EST
It is well known that the terrible status of the mortgage market today can be mostly blamed on lenders practically giving away loans to ineligible borrowers. During the housing boom, a first time buyer could easily buy a home with no money down. Then the credit crunch worsened and loans defaulted and the number of foreclosures skyrocketed because borrowers could no longer pay for their mortgage, and now these loans are almost impossible to come by. Private subprime lenders realize the risk they took and immorally allowed the borrowers to take by giving them a loan they couldn’t afford, and therefore have strayed away from handing these loans out, even to someone with excellent credit. However, the Federal Housing Administration has picked up where private lenders have left off: they offer a government-backed program that allows buyers to get into homes with little or no money down. If the private lenders were unsuccessful, how is the government planning to work this out? We all know two wrongs don’t make a right, and we should learn from others’ mistakes, why then is the government treading through muddy water? Critics say this program will burden the FHA and taxpayers with bad loans. The borrowers hold the same risk they did with the private lenders: they are still getting into homes they probably can’t afford, that they can walk away from without much risk, and the new buyers in the market will contribute to the housing market by creating artificial demand. This potential risk sounds too great, why can’t someone in Washington think of a plan that will help the housing market without burdening taxpayers?

FBI taking control over mortgage fraud offenders
Pub Date: Mon, 23 Jun 2008 10:00:00 EST
The FBI has been investigating mortgage fraud cases for a while now. Recently, 144 mortgage fraud cases have resulted in 406 defendants being charged. According to the FBI, about "$1 billion in losses were inflicted by the mortgage fraud schemes employed in these cases." Many dishonest and greedy people took advantage of the public at large and many citizens are going through a lot of pain and suffering now because of them. Several arrests have been made, including two senior executives from Bear Sterns who were charged with securities fraud, wire fraud, and insider trading for marketing two hedge funds as low risk. As a result of their actions, the collapse of the funds in 2007 ended up in about $1.4 billion in losses to investors.

Interest rates on the rise
Pub Date: Mon, 23 Jun 2008 10:00:00 EST
If the housing market is still full of excess inventory and the number of foreclosures is still rising, then why are the mortgage interest rates rising too? How are buyers supposed to relieve the surplus of homes when the interest rates are so discouraging? For a while, interest rates were going down but recently it ahs been rising. Last week, the interest rates for 30-year fixed rate mortgages averaged more than 6.4%, rising from 6.3% the previous week, and an average of 5.8% during the first quarter. Fueled by the threat of inflation, many economists say mortgage rates are likely to continue rising. To the average working person, an increase of half a percentage point in the interest rates translates to more than $100 to a median-priced monthly mortgage payment. This is very discouraging to buyers who are already stretching their budgets to buy a home.

Leave something extra for your heirs with a reverse mortgage
Pub Date: Thu, 19 Jun 2008 10:00:00 EST
One reason why some seniors choose not to take out a reverse mortgage is because they want to leave their home for their heirs. With a reverse mortgage, the house is sold by the bank once the last remaining borrower dies and any equity left in the home is given to the heirs. Other seniors who want to leave something more for their heirs are using part of the proceeds of the reverse mortgage to set up college trusts for their grandchildren. With the rest of the money, they are using it to enjoy life and pay off existing debt. It sounds like a win-win situation: the seniors use the proceeds of a reverse mortgage to enjoy live in ways they probably couldn’t before and they are still able to leave something for their heirs. In addition to the college trusts, their heirs can still receive any remaining equity in the home once the borrowers have passed.

Mortgage crisis affecting children
Pub Date: Fri, 20 Jun 2008 10:00:00 EST
The sub-prime mortgage crisis is making things hard for many families. Not only are families losing their homes, but children are also being affected in many ways. When the family loses their home, or get evicted from their rental property children must often change schools, sometimes more than once. The amount of stress on their parents combined with economic uncertainty can make children more vulnerable to depression and their expectations can become lower. Sadly, the situation has become so dire that many American households with children are skipping meals, or cutting back on portions to make their food last all week. In addition, they are choosing junk food and other low quality food to fill them up because it is cheaper. As for young adults with plans to go to college, the debt crisis has led lenders to deny student loans based on the school the student chooses attend. 

What are our countrys top officials doing to help the mortgage crisis
Pub Date: Thu, 19 Jun 2008 10:00:00 EST
Well, Connecticut Senator Christopher Dodd’s plan allows mortgage lenders to dump up to $300 billion of their worst loans on to taxpayers. This would be done via a new Federal Housing Administration refinancing program, provided the lenders are willing to accept 87% of the current market value. Some believe he is only doing this to bailout Countrywide, who considered Dodd a special customer. So special in fact, that they reduced his mortgage payments by $75,000. But his plan would benefit all the lenders, not just Countrywide. At the end of the day though, is this fair? Why should taxpayers do anything to help a company that did so much to foment the mortgage mess?

Reverse Mortgage worth the fees
Pub Date: Wed, 18 Jun 2008 10:00:00 EST
Some seniors are wary about reverse mortgages because of their high fees. It’s true, the fees that come with a reverse mortgage are pretty high, around 6%, but it just might be worth it depending on the senior’s situation. Look at it this way, if you are going to sell your home and downsize to a smaller home in an effort to save money, chances are you might use a Realtor for the transaction. On the sale of properties, Realtors generally make between 4%-6% all by themselves and you will still have to pay for the other closing fees. The 6% involved with a reverse mortgage covers all the lender/broker fees, title work, taxes and recording fees, HUD Mortgage Insurance, and more. More importantly, you won’t ever have to make a monthly mortgage payment! When comparing regular mortgages to reverse mortgages, the closing costs are 4% to 4.3% respectively. The reverse mortgage has another 2% added on top of the 4.3% because of the HUD Mortgage Insurance. This is especially important because it protects not only the borrower/s, but also their heirs from ever having to pay back a loan that exceeds the value of their home. In addition, the borrower/s will never have to leave their home (as long as property taxes and homeowners insurance are up to date) even if their home has depreciated. You don’t get that kind of protection from a regular mortgage. 

Is 2008 the year of cleanup
Pub Date: Wed, 18 Jun 2008 10:00:00 EST
The chief economist for the National Association of Realtors said that by 2013, home prices in South Florida could be 20% to 30% higher. He called Florida’s property market turmoil a ‘short-term slump’ due in part from a short term over supply and from gamblers speculation on real estate. He is counting on foreign investors and Baby Boomers to boost home sales during the second half of 2008. But some believe he is being overly optimistic, after all he works for the national Realtor’s group, who is supposed to promote home sales. Also, Baby Boomers may not choose Florida; after all, it’s not as cheap as it used to be. In Miami, thousands of condo units are due to come to the market in the next year, as a result of overbuilding during the housing boom. This will just add to the surplus of properties for sale. Is 2008 really the “year of cleanup” as he says? 

Mortgage brokers vs mortgage bankers
Pub Date: Thu, 12 Jun 2008 10:00:00 EST
How are mortgage brokers different from mortgage bankers? For one, mortgage bankers have direct access to their company’s funds. For example, a mortgage banker could be one that represents Goldman Sachs and can strike a deal with the borrower but only with funds from his or her lender. Mortgage brokers on the other hand, are independent agents who deal with various wholesale lenders. A good example is an independent agent who can make a deal happen by knowing which program would work for which borrower and which lender could close the fastest. In 2007, Florida had 86,000 licensed mortgage brokers, but today it has gone down by 36%. The number is probably even lower, as many keep their licenses but don’t count on brokering for their livelihood. Although 150 subprime lenders went out of business between 2006 and 2007, the lenders that are still in business no longer have their wholesaling division, which in essence, cuts the brokers out of the loop. It is sad to see another field of the mortgage industry dying out, but is it the end for mortgage brokers?

Are better times closer than we think
Pub Date: Thu, 12 Jun 2008 10:00:00 EST
Could it be true that the worst of the mortgage credit crisis is over? There is so much speculation supporting that good times are ahead, yet even more say that it won’t get better until the next year or two. The Wall Street Journal reports that the bottom was reached in April, and coincidentally, the housing market is in its third year, which in the past has been the bottom of a bad housing market. Some say that California and Florida will continue to lag behind the nation because of the astounding inventory (1/3 of all foreclosures in the country), but eventually, they will catch up. As for the rest of the country, they can expect to see an upturn in the real estate market by 2009, as the majority of the nation is experiencing steady and increasing home values. It seems that we are nearing an end to the recession and entering into a period of inflation. Interest rates are no longer going down and they don’t look like they will lower any more. Is right now really the perfect time to buy and the last chance to take advantage of low interest rates?" 

Despite interest rates mortgage applications rose last week
Pub Date: Wed, 11 Jun 2008 10:00:00 EST
Last Thursday, I wrote a blog titled "Interest rates soar while mortgage applications drop.” It was exactly about that, the fact that mortgage rates rose, but there were less mortgage applications, probably because of the high interest rates. That week, the MBA reported that the application index fell to 502.3 during the week of May 30. But the MBA reported that in the June 6 week, the seasonally adjusted mortgage application index rose 10.9% to 557.1. It seems that despite the high interest rates, deep discounts are starting to entice buyers. These numbers don’t mean that the housing slump is close to an end. As a matter of fact, most analysts agree that the surplus of homes for sale and mouting foreclosures impede chances of a meaningful recovery this year.

Selling a home while saving and getting maximum exposure
Pub Date: Wed, 11 Jun 2008 10:00:00 EST
When it comes to selling real estate we now have many different ways of doing it. You can choose the traditional way where you hire an agent and at the time of sale they collect a 6% commission or a model where you can save thousands in commissions. There are many real estate companies that can do everything a traditional agent can, but instead of collecting a large commission they collect a flat fee. You could also just pay a broker a flat fee to list your property on the MLS. In this case you would do some of the work but the savings are huge. Another very common option in today’s market is the For sale By Owner way of selling. With this option, you would list your property on a FSBO website and as an optional tool you could also list on the local MLS. This option offers the most amount of exposure as well as the most potential for savings.

Is a jumbo reverse mortgage right for you
Pub Date: Tue, 10 Jun 2008 10:00:00 EST
At least 90% of reverse mortgages are the Federal Housing Administration’s government insured Home Equity Conversion Mortgage (HECM). The other 10% are jumbo or proprietary reverse mortgages, which are not backed by the FHA. Seniors with a high value property might opt for a jumbo or proprietary reverse mortgage because they can borrow a higher amount that with the HECM, where there is a limit. A reverse mortgage is a useful tool even for seniors who aren’t struggling as much as others. It’s very common for seniors with high value properties to want to secure a permanent way to retire existing debt, assist them with much higher taxes and property insurance. They may even use the equity for investment strategies or to pay off their grandchild’s college expenses. The possibilities are endless.

Florida leads the nation in fradulent mortgage activity
Pub Date: Tue, 10 Jun 2008 10:00:00 EST
In the Mortgage Asset Research Institute’s annual report on fraudulent mortgage activity, Florida led the nation in 2006 and 2007. Nevada came in second, up from No. 6 a year earlier. Michigan, California, Utah and Georgia followed closely in the Top 10. Common kinds of mortgage fraud include misrepresentations of income, employment history, and falsified financial documents. But the mortgage industry doesn’t blame borrowers alone for committing fraud. Real estate agents, mortgage brokers, and lenders are all responsible for a climate of lax standards during the housing boom that allowed this information to go unverified. The Mortgage Bankers Association cites FBI statistics which shows 46,700 mortgage fraud reports in 2007, which is an over 30% increase from 2006 and twice as many than in 2000. 

Get professional advice before signing any papers
Pub Date: Mon, 09 Jun 2008 10:00:00 EST
If you are seriously thinking about a reverse mortgage, it is important to talk to family, friends, and a financial advisor about it. If you are married, it may be a good idea to make sure that both you and your spouse are listed on the deed. That way, if one spouse passes away, the other can still continue receiving funds from the reverse mortgage. You should feel very comfortable with your lender and he or she should be able to answer all your questions. If your lender suggests you use the proceeds of the reverse mortgage to purchase an annuity, you should try to find another lender. If that is not possible, just don’t buy into what they suggest because an annuity’s value will never catch up to the balance of a reverse mortgage.

 
How is the current housing slump affecting reverse mortgages
Pub Date: Mon, 09 Jun 2008 10:00:00 EST
The current housing situation is not affecting those who have already taken out a reverse mortgage in a different way than those with a regular mortgage. One of the problems with the housing slump is that property values are dropping in many real estate markets, especially in the hardest hit a reas like Florida, Nevada, and California. As a result, homeowners actually owe more than their home’s value. This is one reason why many homeowners walk away from their mortgage because even if they tried to sell the home, they wouldn’t be able to receive enough to cover what they owe the lender. With a reverse mortgage, lenders can’t rescind the mortgage even if the home’s value drops. As a matter of fact, even if the seniors pulled out more than the current value of the home, the lender can still look only to the value of the home for repayment. In this sense, the lenders are taking a risk by providing a reverse mortgage. But then again, there might not be a very high chance of that happening because lenders never let you take your entire equity to be used for a reverse mortgage. The bad news is that if your home’s value continues to depreciate, there might not be any equity after the loan is paid to be distributed to heirs.

Unemployment rate not a good sign for economy
Pub Date: Fri, 06 Jun 2008 10:00:00 EST
It is unsettling to hear that in May alone, nervous employers cut 49,000 jobs. The unemployment rate soared from 5% in April to 5.5% in May, which is the biggest one month jump in the rate since February 1986. The number of unemployed people grew by 861,000 in May, rising to a total of 8.5 million, which is the highest since October 2004. Compare those numbers to last year, when the number of unemployed stood at 6.9 million and the jobless rate was 4.5%. Employers and consumers alike continue to tighten their belts due to many crises – namely housing, credit, and financial, and also the spiraling energy costs. The unemployment rate is expected to climb to 6% or higher early next year, as employers won’t want to ramp up hiring until they feel more secure about the economy.

Why are some homeowners able to fix their loans and others are not
Pub Date: Thu, 05 Jun 2008 10:00:00 EST
Everyday struggling homeowners call the foreclosure Help Hotline for advice on how to save their homes and avoid foreclosure. The next step is called the foreclosure prevention process, a complicated and time-consuming effort involving the mortgage servicers and the borrowers, with foreclosure prevention counselors in between. If the lender will approve a loan workout depends on various factors, especially the cost. For example, if keeping an at-risk borrower in their home will cost the lender more than a foreclosure will, then that homeowner is usually out of luck. But foreclosures are expensive; at least $50,000 according to the Center for Responsible Lending and the common objective is to fix the loan. Another big factor that will determine whether someone gets a workout is the location of the home. For example, if the home is in an area where the housing markets hit terribly, like Florida or Las Vegas, lenders will try harder to keep borrowers in their home, since it would be very difficult to sell the property. On the other hand, however, if the house is in better markets and the house will sell fairly quickly at a good price, then the lender might favor foreclosure instead.

Interest rates soar while mortgage apllications drop
Pub Date: Thu, 05 Jun 2008 10:00:00 EST
Another sign that the mortgage industry has a long way to go before it gets back on its feet is the fact that mortgage application volume fell 15.3% during the week ended May 30. The trade group Mortgage Bankers Association’s weekly application survey also reported that the application index fell to 502.3 during that week, from 593.3 the previous week. Compare that to the index during the week ended May 30, 2003 at the height of the housing boom, which was 1,856.7. Instead of interest rates lowering to appeal to buyers, the rates rose while application volume declined. The interest rate for a 30-year fixed-rate mortgage increased to 6.17% from 5.96% a week earlier. What do all these numbers mean? My opinion says that it sums up the fact that the mortgage industry is still in recession and the interest rates are not helping get people financing in order to solve the housing situation.

Is reverse mortgage permanent
Pub Date: Wed, 04 Jun 2008 10:00:00 EST
It’s a hard decision to commit to a reverse mortgage because after you sign the papers, there really is no going back. It is possible to refinance a reverse mortgage loan, but once you borrow against the equity in your home, the only way for your house to earn more equity is by appreciation, which is not a factor in anyone’s control. Once you do decide that a reverse mortgage may be a possible option for your situation, rest assured that there are different payment options that will suit your needs. You can receive the money as a lump sum, through monthly payments, a credit line, or a combination of the three. The line of credit might be the best deal because you’re only borrowing what you need, when you need it. The funds that stay in the line of credit don’t rack up interest expense and don’t add to the loan balance. As everyone’s situation is different, it is important to consult a financial professional before committing to a financial decision.

Home Values affecting reverse mortgages
Pub Date: Wed, 04 Jun 2008 10:00:00 EST
For seniors seeking reverse mortgages, the qualification is pretty simple: you must be 62 years or older, own your home and live there. You must also have a certain amount of equity in your property, though it’s ok if you still make monthly mortgage payments because you can use the proceeds from a reverse mortgage loan to pay it off. Pressured by a faltering economy, and burdened by loans taken out during the housing boom, seniors need money more than ever. But many of them are not qualifying because of the falling property values, which are slowly eating away their equity. National statistics show that for the past 18 years, the number of homeowners taking out reverse mortgages has been rising. But in areas where property values have been falling, like California, the number has actually been dropping. Experts blame falling home values, which means homeowner have less equity against which to borrow. Click here to view a graph that shows the decline in California reverse mortgages and the increase in reverse mortgages all over the country. 

Renters are victims of foreclosure too
Pub Date: Tue, 03 Jun 2008 10:00:00 EST
As we already know, this housing slump is affecting everyone in different ways. Whether it is a homeowner going into foreclosure, mortgage brokers out of work, or home values dropping drastically, everyone is sharing the pain. Unfortunately, even renters, who obviously don’t own a home and who pay their landlord on time, are the most recent victims. There have been many situations recently that involve renters being kicked out of the home or condo they are renting because the property is going into foreclosure. Many times tenants don’t even know the property they are renting is in foreclosure until someone hands them a notice of foreclosure or they find out from someone other than the landlord. It is an unfair situation, as there is very little protection for tenants. They end up losing their deposit and have to find a new place in an undisclosed amount of time. Even if the tenants decide they want to buy the property being foreclosed, the banks tell them to make a bid after they have moved out. Some states in the Northeast have begun introducing legislation to protect renters from being evicted, but what are the hardest-hit areas like California, Arizona, Nevada, and Florida doing about it? If you are looking for a place to rent, visit http://www.homekeysrentals.net/, where you can search through thousands of rental listings in Florida for free. 

Mortgage fraud possibly helped inflate prices during housing boom
Pub Date: Tue, 03 Jun 2008 10:00:00 EST

As one of the hardest hit areas of the housing and mortgage slump, Las Vegas is the region’s “mortgage fraud ground zero,” according to Scott Hunter, the FBI’s special agent in Nevada. Most of the empty houses in Las Vegas are a result of mortgage fraud. A married couple is being charged with bank fraud, alleging two banks to make more than $107 million in dubious loans and netted a profit of at least $15 million involving 277 properties. But mortgage fraud does not only exist in Nevada, on a national level, the FBI currently has 1,380 active investigations into mortgage fraud, compared with 818 in 2006. Mortgage fraud may have helped raise the prices during the housing boom and made others believe that properties were very high in value, but they probably overpaid $200,000 to $400,000.

Use reverse mortgage to pay off debt
Pub Date: Mon, 02 Jun 2008 10:00:00 EST
In March, the Federal Reserve reported that consumers had a record $957 billion of credit-card and other types of revolving debt outstanding, which is up about 8% from a year earlier. One would wonder, if people owe so much money, why would they give into a reverse mortgage and owe even more money? One reason may be because you can use the proceeds of a reverse mortgage for virtually anything, and many seniors who owe money use the cash to pay off their debt. This is a great way to live comfortably, and you might not ever have to pay for a reverse mortgage for as long as you live (assuming you remain in the same house). But then again, unexpected life circumstances may occur and you might have to live in a nursing facility. That situation would make the reverse mortgage due, and is one of the risks of a reverse mortgage.

Consumer resistance to blame for slow growth with reverse mortgage
Pub Date: Mon, 02 Jun 2008 10:00:00 EST
Throughout the next few years, the reverse mortgage market is expected to grow tremendously. So far the growth has been slower than expected because of a lack of originators and consumer resistance. Federal regulations originally restricted the number of lenders authorized to make reverse mortgages, but now there seems to be several companies offering them. Consumer resistance occurs for a variety of reasons, one being a desire to pass the home’s equity on to heirs, or even just to avoid debt altogether. But an AARP survey shows that the primary reason cited by people who completed the mandatory counseling but decided not to close the loan was the high origination fees which can top 10% of the home’s value.

Credit score doesnt matter when qualifying for a reverse mortgage
Pub Date: Thu, 29 May 2008 10:00:00 EST
People all over the country have been using their credit cards to pay off their mortgage and other expenses. Even seniors are being hit hard with the high interest rate of credit cards, and having to pay it off on a fixed income. They may have even missed a few payments and their credit score may be less than favorable. Things may get so bad for some seniors that they look for ways to make additional income, and many times the only asset they have is their home. A reverse mortgage lets them tap into their home equity and provides them with the extra income they need to pay off their debt, or do as they please. To qualify, seniors must be 62 years or older, and own their own home, but lenders don’t look at income or credit score, so even if their credit needs fixing, they can still qualify for a reverse mortgage.

Will Bush veto the Foreclosure Prevention Act
Pub Date: Thu, 29 May 2008 10:00:00 EST
The House recently approved the American Housing Rescue and Foreclosure Prevention Act. The bill fell short of the margin needed (the vote was 266-154) to override President Bush’s threat to veto the bill. The Bush Administration opposes the bill because they see it as a “bailout” of lenders and speculators. But the bill would help as many as 2 million troubled borrowers refinance into more affordable loans, it would mostly be financed by insurance premiums borrowers pay to the FHA, and only owner-occupied homes would be eligible for government-backed refinance loans. The bill isn’t designed to bailout lenders because they would have to accept a maximum 85% of a property’s current appraised value as payment on an existing loan, and borrowers would have to pay an exit fee to prevent them from receiving profit from the sale of the home if prices rebound.

Does reverse mortgage give too much freedom
Pub Date: Wed, 28 May 2008 10:00:00 EST
For many seniors, a reverse mortgage can be a great financial vehicle to carry them through their golden years in relative financial security. One of the perks is that they can spend their home’s equity on just about anything. There are no limits or pre-determined ways to spend the money received. This blessing can also be a curse however, because it could case problems if the funds are needed for an emergency down the road. It is important to plan for the future, and in that planning, to take into consideration how the proceeds from the reverse mortgage loan can help secure it. There is nothing wrong with living it up in one’s golden years, but the temptation to splurge might be too great for some. In that case, maybe monthly payments would be a better idea than a lump sum, because it will provide a steady and reliable income month after month.

Housing prices still declining
Pub Date: Wed, 28 May 2008 10:00:00 EST
According to Standard & Poor, a quarterly index that covers all nine US Census divisions, prices nationwide are at levels not seen since the third quarter of 2004, but it is still up 60 percent versus 2000. Some people believe that home prices before the housing boom are correct because the boom greatly inflated them, and that now prices are beginning to neutralize to pre-inflated prices, which is what they should have been all along. Of the 20 metro areas, nineteen of them reported annual declines, with 15 of them posting record lows. Las Vegas had the worst quarterly performance, falling 25.9%, followed by Miami and Phoenix. The only area that managed to stay above water was Charlotte, NC, which gained less than 1 percent over the previous year. 

Treat reverse mortgage as final option
Pub Date: Tue, 27 May 2008 10:00:00 EST
For seniors who have not prepared for their retirement as well as they had hoped, there is always a reverse mortgage. But a reverse mortgage loan shouldn’t be looked at as a backup; instead it should be seen as an option when all others are gone. A house is sometimes the only investment a senior has, and should be taken very seriously if taking a loan against the value of the house. A reverse mortgage is well suited for many seniors who have no other choice and need to liquefy their assets. Whether for an additional insurance plan, or for taking a vacation, extra income is always good. The best part is that seniors retain the title and home ownership, they don’t have to pay any taxes on the cash from the reverse mortgage, and they can use it however they please.

Hispanics jobless rate hit hard with housing bust
Pub Date: Tue, 27 May 2008 10:00:00 EST
For Hispanics in the US, the housing bust is really hitting hard. They were among the primary beneficiaries of the expansion in recent years. The housing boom generated millions of new jobs in industries that required physically demanding jobs from factory work to carpeting and upholstery, to landscaping, roofing, janitorial services, and so many more. They also filled a large number of relatively high-paying construction jobs. But in areas like Florida, California, Georgia and Nevada, where growth was very fast, significant portions of this work are disappearing. According to the Labor Department, the unemployment rate among Hispanics spiked 1.4 percentage points, to 6.9%, while the overall jobless rate rose half a percentage point, to 5%. 

Is reverse mortgage due if you move to a nursing home
Pub Date: Fri, 23 May 2008 10:00:00 EST
Reverse mortgages have several benefits, especially since the money you receive from it isn’t counted as additional income, and therefore is tax free. If, after a few years you have to leave your home for an assisted living facility or a nursing home for a matter of months, you can still claim your home as your residence for property tax purposes. But, if you had taken out a reverse mortgage, moving to a nursing home would make the loan due. That being said, the lender would proceed to sell the home and if the home sells for more than what is owed, you or your heirs keep the money left over, and if the home sells for less than what is owed, the lender takes the fall.

Home values in some areas are appreciating
Pub Date: Fri, 23 May 2008 10:00:00 EST
An interesting pattern is beginning to show throughout the national real estate market. Those regions which didn’t surge during the boom years are where economies are staying strong and house prices are actually appreciating. Places like Texas, upstate New York, some Rocky Mountain States, and the Carolinas are faring far better than the five states in a housing recession: California, Florida, Nevada, and Michigan. However, regardless where you live, the whole nation is feeling the pinch of stricter lending standards and a slowing economy. The volume of sales is down, as requirements of larger down payments and higher credit scores are keeping even first-time buyers from buying homes. It’s good to hear that the whole country isn’t suffering from a housing recession, but for the states which are, something needs to be done.

Reverse mortgage great for seniors who own house
Pub Date: Thu, 22 May 2008 10:00:00 EST
Seniors who are cash-strapped are looking for options to help their financial situation. Reverse mortgages are a great option, but are usually better suited for those whose homes are either paid off or have a low mortgage balance, and who want to live in the residence for the rest of their lives. Seniors share common concerns about property valuation, maintenance and repossession. If their home has a high value, they might think of selling the home for a higher return, or if their home is undervalued, they might fear they will owe more than the home’s value. Nevertheless, the FHA ensures that they will never owe more than the home is worth, and they will take the fall for something that is obviously not in the borrower’s control. They also want to know how much maintenance they have to keep up with and what the conditions are. As for repossession, seniors can rest assured that the banks will never take their home away, as long as they still live in the home and keep up with the maintenance, property taxes, and insurance. 

Three steps towards a smarter financial decision
Pub Date: Wed, 21 May 2008 10:00:00 EST
So you’ve already heard about reverse mortgage loans and how you can access your hard earned equity. You are also aware of predatory lenders and that you should carefully consider all available options and speak to family and friends before making a financial decision. If you are ready to take out a reverse mortgage loan, then by considering three steps, you can avoid making a misstep. First, make sure you really need it. If you are planning to borrow only a small amount or plan to move out in a few years, you might pay far less by taking out a home-equity line of credit. Also, carefully consider your situation and find out if you can generate more income by selling and moving to a less expensive place. Second, be aware of the product pitch. According to a 2006 AARP survey, one in 10 reverse mortgage borrowers had been pitched a financial product along with their loan. Most of the products pitched were deferred annuities or long-term care policies. It is crucial that you don’t buy into a deferred annuity, as you are unlikely to earn more with an annuity than you are being charged in interest and fees on the reverse mortgage. A long-term care policy might be appropriate for your situation, but you should first consult with a financial planner, which brings me to the next step. Step Three is getting help from a financial planner. You are required to meet with a counselor before taking out a reverse mortgage, but the quality of the counseling is inconsistent. If you want, you can also consult a fee-only financial planner to ensure you are making a good decision that will enrich your retirement. 

Housing situation driving people to sleep in cars
Pub Date: Wed, 21 May 2008 10:00:00 EST
The housing situation continues to get worse and there seems to be no end in sight. I read a truly heartbreaking story today about middle-class senior citizens and families in California who were laid off in the past few months and have resorted to sleeping in their cars. Everyone’s situation is a little different, but they all share one thing in common: they are homeless. Some of them are homeless because too much of their income went to pay off their mortgage or rent and by being laid off they couldn’t afford it, or they entered into foreclosure because the payments became too high. Some of the people are senior citizens, and this is one example where a reverse mortgage loan wouldn’t be possible, because they don’t own their own home. Fortunately, New Beginnings Counseling Center, a homeless outreach organization worked with the city of Santa Barbara to allow certain parking lots as a safe place “for the homeless to sleep in their vehicles without being harassed by people on the streets or ticketed by police.” It is hard to believe that the economy has reached this new low. It is undeniable that it is affecting everyone, and it has definitely hit the middle class. Read the rest of the story by clicking here.

Useful info about reverse mortgages
Pub Date: Tue, 20 May 2008 10:00:00 EST
There are many tips and tools for retirement from many specialists across the world. There are also many different opinions and conditions about reverse mortgages. Here are a few bits of information that I found useful and worth reading about reverse mortgage loans.

You won’t be able to borrow the full value of your home, even if it is completely paid off.

Closing costs are about twice as much as you’d pay on a typical mortgage. For a loan of $125,000, fees and closing costs would total over $16,500.

In general, the older you are and the more your home is worth translates to more access to your equity. In other words, if you wait until you really need a reverse mortgage, you’ll often get better payouts.

On the same note, don’t take out more money than you need. Choosing a way to receive the money that you would draw from gradually will cost a lot less in interest than a lump sum.

A reverse mortgage might be a useful part of your financial plan for your retirement years, and it has benefited many who needed acces to their equity. Keep these thoughts in mind, butmake sure you talk to friends and family about a reverse mortgage before making any financial decisions.

Behavioral changes in consumer spending habits
Pub Date: Tue, 20 May 2008 10:00:00 EST
There have been many behavioral changes in consumers since we entered this credit crunch. A survey of Wal-Mart buyers by Reuters found a significant increase in store traffic from the end of the month to the first of the month. It showed that shoppers were stretched on their budgets as a result of high gas and food prices and had to wait until their monthly checks came to go to the store for food. Also, Wal-Mart is getting good business because many consumers changed their usual buying habits and are now shopping at lower-cost stores like Wal-Mart. The cycle of shoppers running out of money in between paychecks and then flocking to the stores on payday is more pronounced and obvious. This economic recession is so bad that according to the National Small Business Association, in the first quarter of 2008 13,155 businesses filed for bankruptcy, an increase of nearly 45% from the 9,103 business bankruptcy filings during the same period in 2007. I can only imagine what’s in store for the rest of the year, but I really hope this housing market will turn itself around.

Expect more foreclosures to come
Pub Date: Mon, 19 May 2008 10:00:00 EST
Last month alone, there were 243,353 foreclosure filings. According to RealtyTrac, this number is nearly three times the total in the same month just two years ago. The trend is unmistakable, and it is easy to assume that without the government stepping in, that many more American families will be losing their homes. The House approved legislation on May 9, aimed at helping some of the people facing foreclosure, but President Bush has already said he would veto it. The proposed legislation sponsored by the House of Representative Christopher J. Dodd (Democrat of Connecticut), would guarantee up to $300 billion in mortgages of troubled owner-occupants. It is the only substantial proposed fix for the foreclosure mess that has any legs.

Seniors pressured into buying unnecessary financial products
Pub Date: Mon, 19 May 2008 10:00:00 EST
When seniors are approached by someone trying to sell them a reverse mortgage, they should pay specific attention to the fine print and if the person is trying to add on other financial products. Seniors are becoming targets of aggressive marketers who are selling reverse mortgages to borrowers, even when it might not be necessary for their situation. Many marketers are accused of persuading seniors to use loan proceeds to buy annuities and other high-commission products. The problem with an annuity is that it will never make enough to offset the cost of a reverse mortgage loan. For example, if a senior couple takes out a $100,000 reverse mortgage to finance a ten-year deferred annuity, they will probably owe $183,000 on the mortgage in principal and interest by the time they start getting annuity payouts.