Posts Tagged ‘reverse mortgage’
Homeowners with upside-down mortgages exhibit Dorothy tendencies…hoping to find solace in the Emerald City…if they could just get an audience with the loan modification wizard.
In January of 2010, California had 1 out of every 185 housing units in foreclosure…a total of 71,817 properties. Florida had 1 out of every 185 housing units in foreclosure…totalling 47,069 units. Arizona had 1 out of every 126 housing units in foreclosure…or 21,048 properties.
As the months flew by in 2010…did alternative foreclosure experts hear from any of those distressed homeowners…not a one. Because those homeowners are all seeking the Holy Grail…the loan modification.
As my father used to say…everyone wants to get to heaven, nobody wants to die. Admittedly as I child I found this bit of wisdom way over my head…until puberty. Then it became crystal clear…you want a certain result…you better learn what works…not what you hope works…but what it is that actually, for real, in this world…works.
February rolled into view and Nebraska foreclosures piled up 1125%, New Mexico was up 680% and self reliant Montana with one of the lease population densities in the free world was up 708%. As we talked to people in the know…no one heard from a distressed homeowner. Not a one. Why…again because they, like lemmings going over a cliff…were chasing the loan modification pied piper. Or as my father used to say…you guessed it…everyone wants to get to heaven…no one wants to die.
Fast forward to October 2010, to top 10 counties of Florida: Broward, Palm Beach, Miami-Dade, Hillsborough, Orange, Lee, Pinellas, Volusai, Pasco, Duval…accounted for 40,666 active foreclosures. Did anyone of those homeowners contact someone outside their inner banking circle…no. Why…because everyone wants to get to loan modification heaven…no one wants to die. Are people ‘in the know’ upset…you betcha. Having stumbled upon a legal maneuver, steeped in contractual law, with a precedent dating back to the magna carta…who wouldn’t be upset. But like that line in the Godfather, uttered by Meyer Lansky…’some one gave the order…I didn’t ask why…because this is the business we have chosen.’ What is so wonderful, so captivating, so mesmerizing, so mentally satisfying about seeking a loan modification from an industry whose published figures show a 1% success rate?
What is so tantalizing that homeowners, like dutiful children, line up by the hundreds…to get on the sinking boat to happy town. Considering that the core of a loan modification is the ability to repay…which means you believe you will have a job for the duration of the loan…yet the economic bean counters know…Since 1986, 15 million high-paying manufacturing jobs have left the US and more are sure to follow…your chances of maintaining a well paying job are slim-to none. In July of 2010 131,000 jobs were lost.
And boys and girls…you must develop courage. As a little kitten practices swatting woolen balls to someday as a full grown cat…it will snatch birds out of the air. A’hem…back to our loan modification story. You must develop courage to speak truth to power. Having done a title search, you realize the pretender-lender…aha…has no legal standing to issue a foreclosure on your home.
Harris Smith runs the home equity line of credit website. Don’t Miss Out!
There are still responsibilities to owning a home that you must do, even if you are enjoying the payment free reverse mortgage.
Let’s take a look at what you are required to do so you can keep your home and not break the rules. Most importantly, you are still required to pay your taxes and your homeowner’s insurance. Few people choose the tax reserve account, but even if you did, this money is set aside for a specific number of years and when it runs out, you will be required to pay your taxes and insurance on your own.
If you live in Oregon, you may be able to defer your property taxes. You will want to do it after you get your reverse mortgage, or you will have to reapply after it is closed. But this is a way you can restrict some of the cash flow that has been leaving your household. Be aware that it will have to be paid someday, like when you get a new loan or if your transfer the title of your home.
Additional items like supplemental insurance (e.g. fire flood earthquake etc.) are not included in your reverse mortgage. You will still need to make the payments as they come due. This also includes the condo fees or association dues or any other property related fees. These are still your responsibility and not paying them could have negative results.
Since most people’s largest expense is the monthly payments on their mortgage, the great news is that these payments are going away. You will see a big difference in your monthly out go, effectively making your other expenses more affordable. If you don’t have a mortgage, your monthly out go won’t change, but you will have access to reserve funds that will help you with other monthly expenses.
The last item that is your responsibility is to live in the home as your primary residence for at least six months of every year. You can be gone for up to a year, but the preceding six months and the six months following the one year away, you will need to be living in your home. This does not mean you can’t go somewhere for a week here and there. If the home is truly your primary residence, there will never be a problem.
In summary, we can see that a reverse mortgage is an ideal way to eliminate monthly mortgage payments. You are still required to maintain the property, and keep up the other property related payments, and by doing so, you are ensuring a home to live in as long as you desire to live there.
Want more reverse mortgage information? You can get all the information you need on several HUD reverse mortgage programs in addition to answers for the questions you didn’t know you had. There is also a free reverse mortgage calculator.
I won’t lie to you buying a house is an expensive thing to do, there are fees to get a loan, there are closing costs, there is the time and money you spend when you are looking at houses. It sometimes seems that every single phone call is someone wanting some more money from you. It can be easy to discount the costs that are not required to get a loan, the home inspection usually falls into this section but forgoing it can be a mistake.
You have to remember that not everyone is an ethical person. What this means is that some home sellers will go to great lengths to hide any previous defects that happened with the home. For instance, they may go back and repaint all of the ceilings after there is a major leak in the roof. The buyer, without an inspection, will have absolutely no way of knowing that there was a previous roof leak.
Buying a house is expensive, but the home inspection is not the thing to do without in the hope of saving a few hundred dollars. A new roof will cost you somewhere in the region of $15,000 so it is worth spending a few hundred to check that you won’t be needing a new one any time soon. No matter how nice the home owner appears it is not good enough to just trust that they will even know about any problems their house has never mind telling you about them.
Finding a home inspector that is certified is important, don’t be tempted to ask a friend who is a contractor to look over the place just so you can save a few dollars. Home inspectors are specially trained to be able to spot problems in your home that you (or your contractor buddy) would miss, most of us have no knowledge of electrical systems or plumbing beyond the turning on of lights and the flushing of the toilet.
Remember the home inspector is working for you so if you are nervous about something, whether it is the tree that seems to lean into the house or the funny noise coming from the lights, make sure to ask him while he is there. It is a wise idea to make a list of questions before he comes to inspect the house, so nothing is forgotten. Once he is gone then it is too late to ask him to take a look at something.
Wondering what a reverse mortgage is exactly? I have no simple way to explain but if you are at or very near the age of retirement then it is well worth finding out more on.
Whenever customers call my office looking for reverse mortgage information, the first thing I ask them is about the value of their home. Although a lot of these individuals tend to guess high, the have a very strong idea of how much they value their home. In fact, these individuals are very intelligent when it comes to separating market value from the inherent value of the home to them.
Despite the constant movements in real estate prices, the inherent value that a home has to a borrower is usually much higher than market value. Our homes are more than cinder blocks and wood. They often represent the very essence of our lifestyles and are the places that give us the most comfort. The value of these aspects of our home cannot be quantified in the open market. For many individuals, these inherent aspects of our homes represent the most important and meaningful parts of a home that can’t be value through an appraisal or sale of the home.
[youtube:Xjshi6e0jec;Florida Reverse Mortgages;http://www.youtube.com/watch?v=Xjshi6e0jec&feature=related]For individuals considering a reverse mortgage, the fair market value of their homes is not the main concern. These borrowers are looking to stay in their homes long-term and usually have no plans to sell. Although the market value of the home plays a major role in the size of a reverse mortgage that the borrower is eligible for, the real issue for these individuals is about efficient asset allocation. Individuals who consider reverse mortgages understand that placing too many eggs in one illiquid asset may not be the most intelligent retirement strategy. These individuals usually understand the advantage of using their home’s equity to create significant retirement freedom.
As the old saying goes, “You can’t take it with you”. However, that doesn’t mean you should squander it away either. Prudent borrowers incorporate their reverse mortgage proceeds into their overall retirement plan to maintain or increase their standard of living throughout the entirety of their retirement years. What you do with reverse mortgage proceeds is entirely up to you. However borrowers are best advised to plan carefully and think holistically.
Retirees who think carefully about their overall asset mix and consider their home value in this analysis are more likely to enjoy their retirement years comfortably. Seniors who consider their homes “off limits” will be ignoring one of the greatest assets they have to preserve their standard of living. Although reverse mortgages are not for everyone, if your home is a major part of your overall assets, you should definitely consider how they can help your home equity to work for you during your retirement years.
If eliminating pesky monthly mortgage bills, freeing up additional cash and owning your home for the rest of your life fits into your retirement plans, then looking into a reverse mortgage may make sense for you. You would be wise to investigate this flexible financing vehicle closely. You may be shocked at what a reverse mortgage can do for you.
Looking for more information on a mortgage or mortgage rates interest rates? Then make sure to check out Tim Begert’s online resources.
There are several misapprehensions regarding reverse mortgage. The biggest one would be the repayment schedule. The functions of reverse mortgages can bewilder family members and siblings when trying to get knowledge on this product.
The intentional use of reverse mortgageis that no repayment of any kind is required to be paid back over the life of the borrower. The client may decide, based on their circumstances, to make payments toward the Reverse Mortgage loan or not. It is not required, but in some cases it can make sense. I would like to describe to you one of these cases.
Towards the start of the year, I sat down with a past client who needed to refinance his condo loan. With him still in the work force and making a reasonable source of income. Both him and his spouse were 63 years old. There was some equity left in their condo, but the market had dramatically affected the appraisal value.
This gentleman’s main goal was to assist (not pay for entirely) his son’s Graduate School Education. The gentleman and his wife’s dream was already achieved, they paid off their condo. A traditional forward mortgage wouldn’t save him any money on a monthly basis due to several factors. These factors include the real estate market, their income, their age and present value of the property.
We went over in detail the foundation and characteristics of what a reverse mortgage could do for him and his situation. A wonderful feature of reverse mortgages is that you can dictate what you want to pay on a monthly basis. There was a time like this; it was called the 2000′s. Remember, “Pick Your Pay” and the myriad of other programs that allowed so many well-meaning people to get in over their head. ‘Just get the adjustable now and in five years, you can refinance – With the market doing so well, it won’t be a problem’ I think we all know how that story ends.
My client has the option of making a monthly payment or not because he chose a reverse mortgage. The first month, my client made a $125 payment. The next month, he was able to skip a payment entirely. A few months later, he picked up a new client and was able to make a $500 payment. The pressure of making a mortgage payment was not there. Are you feeling kind of stress? A reverse mortgage could be the answer for you.
Go to my website to get more information on reverse mortgages or give me a call.
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