1. Why is the loan amount on the deed of trust more than the maximum claim amount for that county? Due to the fact that there is no maturity date on a HECM loan, HUD has designed a calculation by increasing the amount on the deed of trust by 1 and 1/2 times the national…Details
Here is my drain story. I have an older home. The laundry pipes do not support modern water pressure. They are too narrow. The outlet pipe on my clothes washer was constantly getting clogged. I bet I had the plumber out at least once or twice a year. I had him come out to do…Details
Reverse mortgages have become an increasingly important financial tool for people 62 and older who want to remain in their home and fund their retirement. One half of all reverse mortgages were made in just the last couple of years. With over 78 million baby boomers approaching retirement, reverse mortgages are no longer mortgages of…Details
The application process for a reverse mortgage generally takes an average of 90 days from start to finish and has five major steps. However, the longest part of the reverse mortgage process is the decision-making process that leads up to the application. Because reverse mortgages are highly regulated, it is not unusual for lenders to…Details
The Living to 100 Life Expectancy Calculator uses the most current and carefully researched medical and scientific data in order to estimate how old you will live to be. Most people score in their late eighties… how about you? The calculator asks you 40 quick questions related to your health and family history, and takes…Details
The Consumer Financial Protection Bureau (CFPB) is seeking information from consumers about their reverse mortgage experiences. They will use the information that is submitted to determine whether new regulations are needed and to inform their suggestions to Congress. If you have a reverse mortgage or considering a reverse mortgage, tell the CFPB what you think…Details
The two lists ranking the top cities best prepared for the 65-and-over crowd to age well and the best cities for “successful” aging among the 80+ population, compiled in July by nonprofit, nonpartisan think tank Milken Institute. “America is growing older. The implications and costs of this extraordinary demographic shift are now upon us,” says…Details
The National Reverse Mortgage Lenders Association has launched a borrowing with confidence campaign for reverse mortgage borrower. The association created a “Roadmap” for reverse mortgage borrowers and potential borrowers to guide them in the process. This month we will discuss what happens when your loan becomes due.
As a reverse mortgage borrower you are not required to make any monthly payments on your loan. The loan is paid off when you or your surviving spouse no longer resides in their house as their principle residence.
The reverse mortgage is a non-recourse loan, which means your heirs are not responsible for any remaining loan balance if the balance exceeds the value of your home. The mortgage insurance you pay to FHA will pay off the debt for you. Any remaining equity in your home is retained by your estate if they sell the home.
When a person on the reverse mortgage passes, the remaining spouse is responsible for informing the loan servicer. In addition the heirs must notify servicer, with all the borrowers have passed away within 30 days. Servicers do audit deaths of reverse mortgage borrowers. Any payments made to borrowers stop at this time. Interest on the reverse mortgage insurance premiums and homeowners insurance continue to whom tell after the reverse mortgage is settled. The servicer will notify the heirs that the reverse mortgage is now due and payable. The loan can be paid back of other resources or by selling the home. If there is balance from the home sale after the reverse mortgage is paid it belongs to the estate.
If all reverse mortgage borrowers on title sell the property, passed away, or do not maintain the property as their principal residence for a period exceeding 12 months, this is called a maturity event. A maturity event means the loan is due and payable. It is very important that your estate communicate with the servicer to ensure the loan is paid in a timely manner.
The estate will have six months to satisfy the debt. If the debt is not satisfied within six months, they may request to 90 day extensions. Again, it’s very important that your estate communicate with the servicer as to their intentions process of repaying the loan. If the estate is actively working to refinance your property or to sell it, they may be asked to provide documentation of the process.
You may want to print out a copy of this article and put it with your will or living trust. It might also be advisable to discuss it with the person or family member who will be in charge of settling your estate.
If you have any reverse mortgage questions, please call me, Angella 866-949-7030. Is my pleasure to be of service.Details
Your parents have always been thrifty. They helped you through college and were very careful about saving for retirement, but lately you notice that they aren’t going out very often, they are very careful when they shop, they often complain about the high cost of fuel or their utility bills. Your parents are not alone. Even some of the best laid plans can come up short. With medical costs rising in the double digits, exponential rising fuel costs and lower returns on investments, their nest egg might be coming up short.
Our parents have traditionally relied on a three component retirement plan: Social Security, pension and savings. Your parent’s average Social Security check is $1,002. You’ve read it in the news, you’ve seen it on sixty minutes, pension plans are under funded and benefits are being cut. That leaves your parents with their nest egg to retire on. It may be enough now. They are getting by with a few hundred dollars here and there from you and your siblings but what about as they get older? Are they pinching penny’s and still do not have quality of life? Money for travel? Extras? What if they need in home care? A couple of hundred dollars might pay for someone to come in for a three or four days. Then what?
A reverse mortgage may be the answer. If you haven’t heard of them, your parents have. They are being inundated with advertisements in the mail for them every week. These loans are increasing in volume every month. So why doesn’t anyone know about them? They haven’t hit the mainstream yet, but they will. Reverse mortgages are a special type of loan strictly for senior citizens. In the past they have had a bad reputation because in the early years of introduction there were predatory lending practices that occurred and many senior signed over a portion of the equity in their homes, “equity sharing programs”. Well thanks to the federal government reverse mortgages have been cleaned up. They are federally insured and heavily federally regulated. Reverse mortgages have turned into an empowering financial tool for seniors that can make the difference in whether or not a senior has to work part-time at Wal-Mart to make ends meet or live comfortably in their retirement years.
Here’s how they work. To attain a reverse mortgage you must be 62 years old or older. They are very similar to an equity loan except that there are NO PAYMENTS for the life of the loan. The senior qualifies of a percentage of their equity to be turned into cash. The amounts of their proceeds are based upon the senior’s age, the value of their home and their homes location. If there is a first mortgage on the home this must be paid out of the proceeds. Paying off the mortgage in itself is often times a substantial increase of cash flow each month for a senior. Can you imagine if you didn’t ever have to make another house payment?
These loans are exceptionally flexible and safe. Before a senior can even submit a loan application they must attend an independent counseling session paid for by the federal government to insure that they understand the loan completely. This counseling session is independent from the lender and the originator and has no cost to the senior. And did I mention that these loans have NO OUT OF POCKET COSTS and NO PAYMENTS FOR THE LIFE OF THE LOAN! Reverse mortgages also have no credit requirements. The senior can take the proceeds in a number of ways. They can set up a line of credit that they can draw on as needed. The credit line grows at the same rate as the loan if unused and does not count as loan principle until used. They can receive a lump sum of cash up front at closing; they can set up a guaranteed monthly tenure payment for life, or a combination of these.
One of our clients, a very active woman of eighty did part time catering to make ends meet. After she refinanced with a reverse mortgage, she paid off her first mortgage, she set up a credit line of $25,000.00 that she can draw from at anytime; she took $25,000.00 at closing and set up a guaranteed tenure payment of $1000.00 per month for the rest of her life. Formally she worked part time and worried. Presently, she travels, gets massages and has peace of mind.
Reverse mortgages have changed and make financial sense. If your parents need money for quality of life either for things they want or things they need. Reverse mortgages may be the answer. Call me and get the facts about how a reverse mortgage can help the senior in your life.Details