Is Reverse Mortgage Safe?

As you start or approach retirement, many people find that they may need more income. There are many ways to increase your cash inflows like a dividend paying stock or a part time job. But there’s another option that you may want to consider – reverse mortgage. What is a reverse mortgage and is it safe?

Understanding Reverse Mortgage

Getting a reverse mortgage loan is just like selling your house to a lender in return for money. It may be in the form of an income stream, line of credit, or a lump sum. You will be allowed to stay in your house for as long as you can. It is still a loan and you will borrow an amount that is less than the value of your home. The amount that you owe will increase as time passes by as interest rates are applied.

You don’t have to repay the loan until you die, stop living in the house, decide to sell your home, or move to a nursing home. During that time, your house could be sold to cover your debt. Your heirs may keep the house provided that they repay the loan.

What Is So Good About A Reverse Mortgage?

The big plus of a reverse mortgage Columbia is that it can provide you with an income stream that could be very welcome once you retire. With countless Americans underprepared for retirement in terms of their finances, getting a loan could be helpful.

A reverse mortgage tend to be tax free and that is another benefit that borrowers will enjoy. Other retirement funding options require you to downsize and sell your house or even to move to a much less expensive region, reverse mortgages will allow you to stay in your house while you receive regular payments.

Is A Reverse Mortgage Safe?

Reverse mortgage is an effective and safe way to increase your retirement income. But it also has its own set of disadvantages.

You may be sold one with terms that are less ideal by a pushy sales person. Do not fall for their hard sale pitches. In case you are interested in a reverse mortgage, it is better if you get in touch with solid lenders on your own and maybe have an attorney or reverse mortgage specialist to help you out before you sign any contract.

You might not get as much income through a reverse mortgage as you may have expected. The amount of money that you can borrow would depend on certain factors like your life expectancy and that of your spouse, as well as the home value, home equity, and the current interest rates. As time goes by, interest rates will be added to your loan balance and you also have to deal with closing costs, just like other types of loan.

A reverse mortgage loan may not be the financial option that you thought it was since you will still be held accountable for paying off home related expenses like home insurance, property taxes, home maintenance, and home repairs.

Call Reverse Mortgage Specialist if you wish to know if a reverse mortgage is the best option for you.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Can A Reverse Mortgage Lead To Foreclosure?

Many people who are interested in getting a reverse mortgage are wondering if this type of loan could lead to a foreclosure. The answer is yes. But there’s one important thing that you need to know. The circumstances that would cause a reverse mortgage foreclosure are different from the situations leading to a conventional mortgage foreclosure. If homeowners hear about foreclosure, they immediately think about failing to make the needed monthly payment for the mortgage. Well, this doesn’t really apply to a reverse mortgage loan since it does not carry any monthly repayment obligation.

It’s no wonder many people and even the media get a lot of things wrong about reverse mortgage foreclosures. It’s crucial to note remember that a foreclosure could be the resolution of a reverse mortgage loan once the borrower dies. In case the balance that’s due goes beyond the value of the loan, or if the late borrower has no next of kin to take care of the sale, the estate would just let the home go into a foreclosure.

Factors Leading To Reverse Mortgage Foreclosure

Why Foreclosures Happen?

Although reverse mortgages do not need a monthly principal as well as interest mortgage payment during the loan’s duration, there are other obligations that the borrower need to fulfill like maintaining the home and paying all property related costs. Ignoring these costs would lead to loan maturity. If that happens, the loan borrower or the heirs would end up selling the house to pay off the balance on the loan. In case there’s no action to sell the house, the lender would have to foreclose on the house and deal with the sale on their own so that the loan could be repaid.

No Equity Remains At Reverse Mortgage Loan Maturity

The loan balance in some cases goes beyond the reasonable sales price of the house if the loan matures. In this situations, they don’t have any economic incentive to sell of the house on their own. Fortunately, reverse mortgage loans are considered non recourse loans and provide them the chance to just walk away even with a loan deficiency. This should not affect their credit profile. However, the HUD is given the title to the house through foreclosure, allowing them to sell the house and pay off at least a part of the balance of the loan.

A Property Tax Default Happens

Not being able to pay the property taxes will almost always lead to foreclosure. This holds true if the homeowner has a conventional mortgage, reverse mortgage, or not mortgage at all. Unfortunately for the lender, they’re the primary lien-holder on the house and are mandated by federal rules to foreclose on the house for most reverse mortgages loan. In 2015, the HUD created a mandatory financial assessment of each borrower that has significantly decreased the number of property charge defaults.

Always remember that a reverse mortgage Greenville lets the homeowner gets access to funds that would in theory, lower the likelihood that a borrower would default on their payment obligations. However, with the rising financial pressures of going into retirement, people can’t always expect a perfect outcome.

Call Reverse Mortgage Specialist if you want to know more about this loan and if you need professional help in deciding whether this is the best option for your retirement plan.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Reverse Mortgage: What You Need To Know?

Home is the biggest investment for many people. In the United States, the median home price is $272,200, the National Association of Realtors said. In a few hot markets like San Francisco and New York City, the prices of homes are way higher. The problem for many people is getting access to that investment. Selling your home and relocating in a new place is a good solution, but that is a difficult decision for a few people. If you have paid off your mortgage totally or a big part of it, a reverse mortgage could be a good solution. However, you need to fully understand how it works before you make a decision.

Reverse Mortgage: Your Home Is A Piggy Bank

A reverse mortgage loan is a type of loan that is based on the equity or paid up current value of your house. Unlike a traditional mortgage, your lender will pay you monthly, in a lump sum or through a viable line of credit. You will not be required to pay back the loan until you sell your home, you die, or you move out. Your balance will be deducted from the proceeds of the home sale once it comes due and you or your heirs, if you have one, will get any remaining cash.

HECM or home equity conversion mortgage is the most common reverse mortgage, which is insured by the Federal Housing Administration. You might also be able to obtain a reverse mortgage loan through your local or state governments or through private lenders.

The federal insurance will guarantee that when the loan balance goes beyond the sale price of your home, your heirs do not need to pay more than 95% of the appraised value.

Types of Housing

You could obtain an HECM on a single family, two to four unit home where the possible reverse mortgage client owns one unit. Mobile homes or condominiums that have been approved by HUD or Housing and UrbanDevelopment with a permanent foundation that’s manufactured right after June 1976 could be qualified for a reverse mortgage loan.

Eligibility For A Reverse Mortgage Loan

If you wish to qualify for this kind of reverse mortgage Greenville, you need to be at least 62 years old. You have to live in your house as your principal residence. You cannot be delinquent on any federal debut and you should undergo an education session with an HECM counselor that’s been approved by the HUD.

The Fees

Reverse mortgage loans can be expensive. The interest rate is higher than a conventional loan. Lenders will expect for you to continue paying home insurance, property taxes, as well as homeowners association fees, even though some will take a part of the loan proceeds for these expenses. It is also important to continue home maintenance to prevent minor home problems from become serious ones that could reduce the value of your property.

Call Reverse Mortgage Specialist and learn more about reverse mortgage and if it should be part of your retirement plan. 

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Is Reverse Mortgage A Good Solution During A Down Market

An American College of Financial Services professor recommended finding opportunities to use reverse mortgage in a volatile stock market. This type of loan can help preserve a portfolio and offers it a chance to recover.

Take for example a retiree who requires $3,000 per month out of her portfolio to cover one year’s worth of expenses. In case the index fund comes with a value of $250 per share, 144 shares need to be sold to recover the amount or about 180 shares in case the stock market forces the fund to drop by 25%.

Home equity can help create stability during retirement. In February, the stock market experienced its first drop after all the good news. Originators of reverse mortgage loan said a short term correction can’t boost the volumes. However, the extended uncertainty could do just that. Since that time, the market has witnessed wild swings during the  unilateral actions of the president on trade, which could trigger an opening for HECMs to address a need for seniors concerned about the fluctuation in the Dow Jones Industrial Average.

Reverse Mortgage: Changing The Perception

The fees and the costs associated with reverse mortgages are some of the downsides when taking out HECMs. The average origination cost is $27,000, with $18,000 as a general guideline for HECM proceeds worth $100,000.

Generally speaking, the gathering highlighted the ways that the reverse mortgage sector has changed over the years. Home equity is a good way of averting emergencies during retirement. This is commonly neglected by some retirement planners when checking out the general financial health of their clients.

Employers should also let retirees know about reverse mortgages Greenville during their exit interviews. Financial advisors should also pay more attention to housing wealth during retirement.

Call Reverse Mortgage Specialist if you need professional help in planning for your retirement and for more information about reverse mortgages.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Reverse Mortgage After Death Part 2

What happens to the reverse mortgage after the borrower's death? This is one of the most common questions when it comes to this type of loan.

What happens after death?

When the last surviving borrower of the reverse mortgage has passed, the loan balance will become due and payable. A lot of people think that the house will revert back to the bank once the last borrower dies but that is not what happens.

Your heir will have the option to choose if they would like to repay the balance of the loan or keep the house, sell it and keep its equity or just walk away and leave the house to the lender and let them take care of disposing the property.

In case they decide to keep the house, they should repay the loan, which means they need to refinance it with a new loan or use other means they have available.

They could also settle the loan at a lesser amount or about 95 percent of the existing market value. If they would rather sell the property, they have to make sure that they do whatever needs to be done to change the title so they could put the house into the market. If this is the case, it is better if the borrowers talk to an estate attorney first to make sure that they are taking the needed measures for their unique situation.

Will Your Heirs Be Held Responsible For The Balance Of Your Reverse Mortgage?

The heirs who will get the house will have to repay the outstanding balance of the reverse mortgage. They can do this by selling the house within 12 months or by refinancing it into a conventional loan. The heirs can keep the remaining equity in the house.

Is It Possible To Lose Your House With Reverse Mortgages?

You may default on this type of loan if you break at least one of the three rules on loan maturity that were outlined in your agreement. If you want to keep your loan in good standing, you have to pay your homeowner’s insurance and property taxes regularly. Plus, you also need to use the house as your primary residence. If you fail to meet any of these requirements, the lender will have the right, as per the HUD, to call the reverse mortgage due.

Is It Possible To Buy The House Back?

Because the house is already your own then there’s no point to buying it back. You need to understand that reverse mortgage Greenville is just a loan against your home. There’s no prepayment penalty. Plus, you could also repay your loan in any amount you prefer, voluntarily.

Is It Possible To Walk Away From Reverse Mortgages?

In case the balance on your outstanding loan is more than the current value of the property, you could no longer stay in your house. You can walk away or create a deed in lieu of a foreclosure. Reverse mortgage loans are known as non-recourse loans, which means you cannot transfer your debt to your heirs or estate.

Call Reverse Mortgage Specialist if you want to know more about reverse mortgage, the requirements, your obligations, and how to apply.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Reverse Mortgage After Death Part 1

One of the most popular questions when it comes to reverse mortgages is what happens with the loan and the home after the borrower’s death.

Reverse mortgages are meant to be the final loan that senior loan borrowers will make and that is why this question is always on top of the minds of many homeowners as well as their heirs since many of them want to keep the loan and their house for the rest of their lives.

In case they get approved for a reverse mortgage loan, they will be able to live in their houses without having to pay mortgage for life.

The majority of the borrowers know that the eligible principal limit or the benefit amount will depend on the youngest borrower’s age along with the HUD lending limits, home value, as well as the interest rates implemented during that time.

Those who did their research and are aware of this fact are worried about the changes that may happen on their loan once one borrower, whether younger or older, dies first. They’d like to know if the remaining spouse could stay in the house, if there will be any changes to the reverse mortgage loan, and what will be the effect on their heirs.

As a matter of fact, all borrowers who have heirs are almost always worried about what will happen to their mortgage and their homes once they pass away.

You should know that the terms do not change when the loan closes. The original terms remain if one of the loan borrowers has to leave the house or if one dies before the other one, regardless of the age of the borrower who’s remained.

Reverse Mortgage Vs. Traditional Loans

Reverse mortgage, as its name implies, is the reverse of a traditional mortgage. In the latter, the borrower makes monthly payments to the lender until the loan amount plus interest is settled. In a reverse mortgage, the lender pays the borrower the amount of the loan. The loan, interest and other charges accrue and will be due once the last borrower leaves the house permanently.

Although no repayment is due on a reverse mortgage, there’s no prepayment penalty and that means borrowers could opt to make payment in their preferred amount at any time without worrying about the penalty. But the borrower is not required to do such a thing until they permanently move out of the house or if they decide to sell their home.

However, borrowers must remember that they still need to pay the insurance and taxes of the house as well as the regular upkeep of their home. The requirements are the same as with a forward or traditional mortgage. If you don’t pay them, it will be considered as default under the loan’s terms.

What About The Interest?

There is a principal limit or maximum loan amount on every reverse mortgage loan. When it comes to how you receive the money and how fast the interest accrues will be up to you. More interest would accrue on the loan if you borrow more money and you borrow it earlier in the loan.

For instance, if you get a reverse mortgage loan under the line of credit option or payment option but you only draw a little every now and then, then the interest on your loan would not accrue as fast as those borrowers who take a lump sum on the whole amount.

This will make sure that the least amount of interest would accumulate and the balance is going to be the lowest possible once you pay back the loan. If you just want to settle an existing mortgage loan so you can stay in your house, if you don’t have any heir, then you can use the proceeds of the loan to may you live comfortably during your retirement years.

Call Reverse Mortgage Specialist now and learn more about the benefits of taking out a reverse mortgage.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Who Will Pay Back Your Reverse Mortgage?

Repayment is always a concern when it comes to any kind of loan. When is it due and who will pay it back? These are a few of the most common questions asked and they also apply to reverse mortgage loans. It’s best to take a first look at when a reverse mortgage need to be repaid if you wish to know the answer as to who needs to repay the loan. The time when the loan will be due would depend on different factors. They also determine the method of repayment and who’s responsible for repaying it.

When Is A Reverse Mortgage Due?

You don’t need to repay reverse mortgage loans until is due, though you need to deal with the homeowners insurance, property taxes, as well as the home maintenance costs. Provided that you follow these financial obligations, the loan won’t come due until you move out or sell the house, or upon your death. If the loan comes due under one of these situations, the one responsible for paying back the loan are as follows.

If You Move Out or Sell Your Home

Among the eligibility needs of the reverse mortgage loan is that your house should be your main residence. If your house is not your primary residence any more, meaning you live in the house for six months at most then your loan will become due. When this happens, you will be responsible for paying the loan back. Generally, the proceeds of the home sale can be used to pay the loan back. Any remaining amount from the sale will be yours to keep. Keep in mind that you pay only what you borrowed along with the interest that may have accrued as time goes by.

If You Die

A lot of people are concerned that their heirs would be left to pay back the loan after they die. Heirs will have a few options. If they want to keep the house, they could use the proceeds from the home sale to pay off the reverse mortgage in Greenville. Any remaining amount will be theirs to keep. They also have the option to sign the deed over to the lender and walk away from the house without any responsibility to sell the home or pay back the loan.

A Non-Recourse Loan

A reverse mortgage that is insured by the government is referred to as a non-recourse loan. This means, when the house sells for less that what’s owned on the loan, FHA insurance could cover the difference and not you or your heirs.

Call Reverse Mortgage Specialist now if you want to know more about reverse mortgages.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/