Seniorstoday often live with a great deal of financial uncertainty. The retirement they imagined may not be consistent with the reality they face.
Incomes are flat or declining, living and medical expenses are higher than ever and few income boosting alternatives exist. Even those who have heard about Reverse Mortgages may be unsure about how they work or what questions to ask. As they search for information, they often turn to their financial institution for guidance and information. By becoming familiar with the product, you can be an even more valuable resource to your clients providing them with income supplementing alternatives to drawing down assets.
What is a Reverse Mortgage?
A Reverse Mortgage is a special type of loan that allows a homeowner to convert a portion of the equity in their home into cash they can access. The funds are not taxable to the homeowner and typically don’t interfere with eligibility for Social Security or Medicare benefits. (However, in the federal Supplemental Security Income program, beneficiaries must keep their liquid resources under certain limits.) The customer retains title to the home as well as right to any appreciation in home value when the loan terminates after it is paid off. The loan remains in force until the last titleholder dies, permanently leaves the home or sells the property; the borrower can't be forced to sell or move by the lender. The loan may be repaid at any time. But unlike a traditional home equity loan or second mortgage, no monthly payments are required. Instead of putting further pressure on an already stretched budget, a Reverse Mortgage can free a senior homeowner of monthly debt obligations.
Most Reverse Mortgages today are Home Equity Conversion Mortgages (HECMs) and are FHA-insured and guaranteed. Because HECMs are subject to FHA lending limits, proprietary products have also been developed to help homeowners with properties in excess of the FHA lending limits.
Who qualifies for a Reverse Mortgage?
All titleholders must be 62 or older and own a home with some equity. There are no income or credit qualifications. Existing mortgages or liens must be paid off, but are often paid with proceeds from the Reverse. The homeowner must also remain current on insurance and property taxes, but these can also be paid with proceeds from the Reverse.
How might one describe Max Beerbohm to someone who knows nothing about him? Well, for a start, one might imagine D. H. Lawrence. Picture the shagginess of Lawrence, his thick beard, his rough-cut clothes, his disdain for all the social and physical niceties. Recall his passionateness—his passion, so to say, for passion itself—his darkness, his gloom. Think back to his appeal to the primary instincts, his personal messianism, his refusal to deal with anything smaller than capital “D” Destiny. Do not neglect his humorlessness, his distaste for all that otherwise passed for being civilized, his blood theories and manifold roiling hatreds. Have you, then, D. H. Lawrence firmly in mind? Splendid. Now reverse all of Lawrence’s qualities and you will have a fair beginning notion of Max Beerbohm, who, after allowing that Lawrence was a man of “unquestionable genius,” felt it necessary to add, “he never realized, don’t you know—he never suspected that to be stark, staring mad is somewhat of a handicap to a writer.”
—Joseph Epstein (b. 1937)
How can a borrower use the money?
The funds can be used for any purpose from making ends meet to living retirement dreams. The top reasons for funds used given typically by borrowers are:
Paying off debts, primarily mortgage and credit cards
Home repairs and remodeling
Living expenses
Travel
Health care or long-term care
Friendship is a serious affection; the most sublime of all affections, because it is founded on principle, and cemented by time. The very reverse may be said of love. In a great degree, love and friendship cannot subsist in the same bosom; even when inspired by different objects they weaken or destroy each other, and for the same object can only be felt in succession. The vain fears and fond jealousies, the winds which fan the flame of love, when judiciously or artfully tempered, are both incompatible with the tender confidence and sincere respect of friendship.
—Mary Wollstonecraft (1759–1797)
Easing the financial burden on children
Education
Hobbies
Escalating property taxes www.mlsreversemortgage.com.
Fixed Rate Reverse Mortgage
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Mike Borba (President of MLS Reverse Mortgage) is a broker that has been in the mortgage and real estate field since 1980. Toll Free (888) 888-4834. Visit our website. Read more of our articles online. Read frequently asked reverse mortgage questions.