Reverse mortgage may help some struggling seniors

Many senior citizens find themselves in financial difficulty as the Michigan economy continues to weaken and GM downsizes.

There are a number of things seniors can do at the first sign of financial trouble such as reduce costs, be more efficient with expenditures and perhaps even consider a part-time job. Another weapon in the senior arsenal during difficult financial times is a reverse mortgage.

A reverse mortgage is for seniors who are age 62 and older. Basically, the reverse mortgage provides a way for seniors to convert the equity in their home into cash. The beauty of a reverse mortgage is that as long as you stay in your home you never have to repay the mortgage.

The mortgage, including interest, is only due when the home is sold or the homeowner passes on. A reverse mortgage allows the senior to remain in the home for as long as he or she wants while enjoying the equity during his or her lifetime.

The proceeds from a reverse mortgage are for the homeowner to use for any purpose they choose. I generally recommend reverse mortgages to pay off primary mortgages, home equity loans or other types of debt. Reverse mortgages are also effective in providing money to cover living expenses. I generally don't recommend reverse mortgages for such things as vacations, long-term investing or any frivolous expenditure.

Reverse mortgages can be costly. Even though the government has capped origination fees, there are other fees associated with a reverse mortgage. Not all reverse mortgages and reverse mortgage companies are the same. Therefore, it pays to shop around and pay particular attention to cost and interest rates. The terms of reverse mortgages are not the same. Interest rate charges can either be fixed or adjustable.

In addition, there are different ways to get your proceeds. Therefore, before you decide that a reverse mortgage is for you, you need to do your homework. Take your time. There are many resources which can help you learn more about reverse mortgages. AARP offers a free guide “Reverse Mortgage Loans: Borrowing Against Your Home.” You can get a free copy of this pamphlet by visiting AARP's Web site at www.aarp.org/revmort. There are also other educational materials available on the Internet. The more you know before you begin the process of looking for a reverse mortgage, the more beneficial it will be for you.

Many senior citizens find themselves in financial difficulty as the Michigan economy continues to weaken and GM downsizes.

There are a number of things seniors can do at the first sign of financial trouble such as reduce costs, be more efficient with expenditures and perhaps even consider a part-time job. Another weapon in the senior arsenal during difficult financial times is a reverse mortgage.

A reverse mortgage is for seniors who are age 62 and older. Basically, the reverse mortgage provides a way for seniors to convert the equity in their home into cash. The beauty of a reverse mortgage is that as long as you stay in your home you never have to repay the mortgage.

The mortgage, including interest, is only due when the home is sold or the homeowner passes on. A reverse mortgage allows the senior to remain in the home for as long as he or she wants while enjoying the equity during his or her lifetime.

The proceeds from a reverse mortgage are for the homeowner to use for any purpose they choose. I generally recommend reverse mortgages to pay off primary mortgages, home equity loans or other types of debt. Reverse mortgages are also effective in providing money to cover living expenses. I generally don't recommend reverse mortgages for such things as vacations, long-term investing or any frivolous expenditure.

Reverse mortgages can be costly. Even though the government has capped origination fees, there are other fees associated with a reverse mortgage. Not all reverse mortgages and reverse mortgage companies are the same. Therefore, it pays to shop around and pay particular attention to cost and interest rates. The terms of reverse mortgages are not the same. Interest rate charges can either be fixed or adjustable.

In addition, there are different ways to get your proceeds. Therefore, before you decide that a reverse mortgage is for you, you need to do your homework. Take your time. There are many resources which can help you learn more about reverse mortgages. AARP offers a free guide “Reverse Mortgage Loans: Borrowing Against Your Home.” You can get a free copy of this pamphlet by visiting AARP's Web site at www.aarp.org/revmort. There are also other educational materials available on the Internet. The more you know before you begin the process of looking for a reverse mortgage, the more beneficial it will be for you.

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Are Reverse Mortgage Rates on the Rise?

In the face of a recession and a housing crisis, reliable financial programs sometimes need re-evaluation. But even with rising margins, the benefits of reverse mortgages remain strong and intact. While margins are going up, index rates are going down. What this means is that reverse mortgage programs continue to provide comfort and security for the older population, one of our country’s most financially vulnerable demographics.

The reverse mortgage has been around for decades, helping senior homeowners who are struggling to manage their rising medical bills and other expenses during their retirement, all on top of mortgage payments. The program allows these homeowners to convert equity in their homes to a tax-free income, without increased mortgage payments, and without the risk or reality of having to sell their home or sign over the title. But what happens to even the most stable and reliable of programs in the midst of an economic recession?

Normally, borrowers have a few options when it come to choosing their HECM program, but in an unstable economy with rising margins, consumers may feel they want to limit their choices to what is safe and affordable. With tightening credit, banks must raise loan margins in order to sell reverse mortgage loans on the secondary market. It would seem that when the margins increase on reverse mortgages the homeowner appears to end up with less money for their reverse mortgage—this would be true, except in this case interest rate index has gone down.

In the HECM program, the “margin” is the amount added to an interest rate index to determine the initial, current, and expected interest rates of the loan over its lifetime. Not long ago, a Constant Maturity Treasury (CMT) and margin was as low as 1.00. Lenders whose rates were stable at 1.5 were disappointed to see their margins go to 1.75. But now, Fannie May has added a 3.50 and 3.75 Treasury based monthly margin, 3.00 and 3.25 on the LIBOR monthly and on annual percentages up to 4.50. This is not as bad as it sounds because the index fluctuates as well. The basic formula to remember when it comes to reverse mortgages is index + margin = income. The index is the “base” to which contractually established amount, the margin, is added. If, for example, the index is 2.5% and the margin is 1.5%, the rate would end up at 4%.

In general, the higher the index and margin, the less money the borrower will receive. When the margin changes during the lifetime of a HECM loan, the borrower can end up losing a percentage of the income that they were expecting—but only to the degree that the actual fees change. When the interest rate index goes down, a rising margin will hardly impact the loan fees.

Even though their fees exceed those of private reverse mortgage loans, public HECMs cost less overall, with their low interest rates. In the long term, low interests rates equal higher savings over the life of an HECM reverse mortgage. State and local governments offer the lowest cost for reverse mortgages, though individual eligibility is stricter and the loans are limited to specific uses. It is frustrating for senior homeowners and their lenders that the margins on the HECM program keep going up and they begin to wonder why the rates must continue to increase, especially at a time when interest rates are low. But, the great thing about margins is that though they may go up, they can also fall right back down. Of course, this means that the currently low interest rates may rise, but that too is temporary. The roller coaster economy may be unpredictable, but what goes up must come down; rest assured, the rapidly rising margins will fall just as quickly as they rose.

The rates available when a borrower signs their contract may not be static over the entire course of the reverse mortgage, but a rising margin today is insignificant compared to the long-term benefits down the road. It will always be true that with a reverse mortgage the consumer is only liable to pay loans exceeding the cost of their home if the loan accumulates to equal the value of the home and they choose not to sell. If the home is sold, they will not be responsible for the loans exceeding the value of the home. The fundamentals of reverse mortgages will never change; heirs will never be liable for costs beyond the value of the home, and reverse mortgages will benefit seniors during their entire lifetime.

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Refinancing home and Mortgages consultants

Refinancing is the best way to pay your loans and debts. Mortgages are available worldwide to pay your loans and you have to lend your property to them and they pay your loans with easy refinancing. You can also purchase your home back if you your loan back there rates are affordable as compare finance companies.
Home equity is the value of a homeowner's unencumbered interest in their property, i.e. the difference between the home's fair market value and the unpaid balance of the mortgage and any outstanding debt over the home. But you don’t need to be afraid you can use tools like loan tool kits to get complete information and define your terms and conditions. Loans are not of same kind you can have different types of loans for different for different purchases and different home equities.
Refinancing is the best way to pay your loans and debts. Mortgages are available worldwide to pay your loans and you have to lend your property to them and they pay your loans with easy refinancing.
Visit http://www.home123.com company for Home Loans, Home Equity Loans, Reverse Mortgage and all other types of Mortgage, Home Purchase, Refinance and Equity Loans to make your life easy.

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Reverse Mortgage: The Line of Credit That Grows

A Reverse Mortgage Line of Credit that Grows in availability each month guaranteed by the federal government. This option allows borrowers a great deal of freedom when planning their finances.

The line of credit reverse mortgage is still the most popular option for senior borrowers when choosing how to access their funds with their reverse mortgage. According to AARP, borrowers have recognized this choice at about 66% of the time when obtaining a reverse mortgage as being the right choice for them. The credit line option allows borrowers a great deal of freedom when planning their finances. Borrowers like the fact that they can take as much as they want when the loan funds and then can take the funds only as needed from there.

But since the credit line reverse mortgage is only available in an adjustable rate, many may wonder why this option is even more popular than the fixed rate that is also available. The answer is flexibility. The fixed rate reverse mortgage option has only one way you can take your funds and that is all in a lump sum at the very beginning.

This option is fine it you need all the funds at the start such as to pay off an existing mortgage or for other purposes, but if you want to be able to access your funds as you go, the fixed rate option will not work. The credit line gives the borrowers the option of taking as much money as they wish at initial funding, but then with the remaining funds the borrowers can access the funds as they desire.

But there are other benefits to the line of credit option as well. For one, the borrower does not accrue interest on any portion of the funds that are not being used. Borrowers who do not have an immediate need for funds do not have to pay interest on the funds as long as they remain un-borrowed and available to the borrower.

The Home Equity Conversion Mortgage (HECM or “Heck-um”) line of credit is the one credit line that can never be frozen or closed while the borrower still has a remaining balance left on it. How many people do you know who have had a credit line from their local bank frozen during these tough credit times? It may even have happened to you. The senior HECM borrower with the credit line option has paid their federal mortgage insurance to insure that their line of credit will always be available to them.

Another extremely important feature of the line of credit option is the credit line growth. I have often heard this mischaracterized as interest earned which it is not, but the unused portion of the credit line grows at the same rate at which the loan accrues interest +.5% monthly.

In other words, in today’s market if the fully indexed accrual rate (index + margin) is 3.68% + .5% = 3.68% annual rate. If the Available Funds of your loan is $350,000 after the net Principal Limit and costs have been determined, and you don’t use those funds then your credit line begins to grow monthly based on the interest rates. If the rate did not change for 12 months, then in the first month, you would take $350,000 x 3.68% / 12 and your credit line would grow by over a thousand dollars that month alone.

The next month you start with a higher loan balance so the line of credit goes up even higher. After just 5 years of this scenario, these borrowers would have available credit of over $419,000 in their credit line, Over $500,000 if they should be lucky enough to be able to leave it there for 10! And here is a hedge against inflation, as the interest rates rise, the amount the borrowers accrue grows even faster. This same line of credit with an expected rate of 5.50% would grow from $350,000 to $670,000 in 10years.

Borrowers who opt for the line of credit option are also looking at the loan amounts available until December 31, 2009 under the Economic Stimulus Plan of 2009 and it does not require “upper math” skills to see that borrowers who take out a credit line reverse mortgage now, can lock in the higher credit lines now, before the loan amounts go back down at the end of 2009.

This means that a 72 year old borrower with a $625,500 home or greater can lock in a credit line of approximately $385,000 (depending on what happens to reverse mortgage interest rates and margins since they also will affect the amounts for which borrowers will qualify) instead of the approximately $253,000 that they would go back to under the limits prior to the Stimulus Bill.

The only real difference in the cost is in the increased HUD insurance for the higher loan amount for benefit received. However, the ability to accrue credit line growth at such an advanced rate has certainly made it well worth it to many seniors looking for a stable future.

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Mortgage- Free Helpful Guideline About Mortgage Loans

If you are looking for information about a mortgage, you will find the below related article very helpful. It provides a refreshing perspective that is much related to mortgage and in some manner related to discount a mortgage, interest only mortgage rates, mortgage rates land or 40 year mortgage calculator. It isn’t the same old kind of information that you will find elsewhere on the Internet relating to mortgage.

Mortgage Life Insurance: Mortgage life insurance is a mortgage insurance that can protect you instead of your lender. This type of insurance covers the amount of your mortgage if you should die, obtain a disability, or acquire a debilitating illness.

The capped mortgage is basically an adjustable rate mortgage in which the maximum interest rate is set. Any spike of interest rate over the maximum interest rate will not affect the mortgage repayment. The borrower knows the maximum mortgage payment.

The borrower usually purchases home through mortgage. It takes a huge amount income to pay off the mortgage. In case of critical illness, debilitating an accident, or depressing death of the borrower, the family needs to replace the loss of income to pay off the mortgage. With mortgage life insurance, the family does not need to worry about repaying the mortgage.

Don’t forget that if this article hasn’t provided you with exact mortgage information, you can use any of the main search engines on the Internet, like Ask Dot Com, to find the exact mortgage information you need.

Mortgage interest rates lift or dive at any given time. To fully see the advantage and disadvantage of switch, the borrowers must take annual percentage rate, mortgage insurance, and mortgage closing costs into consideration. Like any mortgage, Re mortgage comes with a price such as penalty, discount points, application fee, title search fee, and appraisal fee.

So long as senior citizens retire in the lovely state of Florida, Florida mortgage leads will continue to increase. It’s the perfect storm for an ageing population with increasing living costs. As a mortgage broker or lender, Florida mortgage leads will only swell, powered by reverse mortgages that are as juicy as an orange, the State’s second biggest industry.

It is the opposite of Single Purpose Reverse Mortgage in which the reverse mortgage loan can be used in any purpose. And, the mortgage is widely available anywhere. There are also no income or medical requirements.

We discovered that many people who were also searching for information related to mortgage also searched online for related information such as mortgage rate, mortgage interest rates, and even investment mortgages.

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ARMed and underwater

WASHINGTON (MarketWatch -- Question: I have a problem. Like most people out there, my mortgage is underwater. However, I have a double negative in that I bought my home in late June 2005 with an adjustable-rate mortgage with the idea of refinancing after three years.

Now, the economy has taken a plunge, along with the value of my home, which I purchased for $129,000 and is now worth $110,00-$115,000. My lender will allow borrowers such as me to refi only twice. I have gone that route once before, and I'm afraid to go there again because if I refi too early, I won't be able to do it again. My payments are $1,186 a month on a 8.625% interest rate and that hurts!

I live in a low-income area. I have spoken to another bank, which tells me my wife and I are qualified for an FHA loan. Both of us have good jobs and make enough money to cover the mortgage. But we feel its time to switch to a fixed-rate loan. So far, no lender has been able to help us.

Answer: You seem to be an excellent candidate for President Obama's Making Home Affordable program. But before you go there, I'd say that if your current lender is willing to refinance you out of an ARM into a fixed-rate mortgage, go for it. I doubt rates are going to fall much more than they already have, so I wouldn't be afraid to pull the trigger a second time because it's "too early."

There is nothing wrong with grabbing a rate in the 5% range right now, especially if it gives you payments you can afford. My gosh, that's better than a 3.5 point difference. So in your case, the second time could be a charm.

If you are not successful, check out www.makinghomeaffordable.gov, which outlines the administration's plan to help stabilize the housing market by reducing the mortgage payments of up to 9 million eligible homeowners.

The refinance portion of the effort gives up to 5 million owners with loans owned or guaranteed by either Fannie Mae or Freddie Mac an opportunity to trade in their loans for ones that are easier on their pocketbooks. And the loan modification part commits $75 billion to keep as many as 4 million other families in their homes by preventing avoidable foreclosure.

The Web site has detailed information about these programs along with self-assessment tools and calculators to empower borrowers with the resources they need to determine whether they might be eligible for a modification or a refinance under the program. Check out the Making Home Affordable site.

Borrowers also can use the site to connect to free counseling resources to answer any questions they may have about their own personal situations. You'll also find a checklist of key documents and materials to have ready when making that important call to your lender as well as FAQs from borrowers in similar circumstances.

Q: I enjoyed your article on tax credits for energy efficient home improvements. The question I have is, do the credits phase out at higher income levels like so many of the recent tax rebates and credits (typically over $75,000). See previous Realty Q&A.

A: Good news. There are no income limitations on the energy credits. So feel free to spend away.

Q: Great article on reverse mortgage for seniors who want to scale down the housing ladder. What happens to the lower property tax basis on the first house, the one in California? Who pays the property tax bill, and could they have used the lower or carryover basis of the old property tax basis since they over 55? See previous Realty Q&A.

A: I'm an East Coast guy who doesn't know all that much about the Left Coast. So I turned your question over to Robert D. Yeary, CEO of Reverse Mortgage Solutions. The Spring, Tex., firm has developed a specialized, state of the art system to service reverse mortgages in all jurisdictions. Here's his response:

"In California, you can transfer your old tax base to a new house, provided the county in which you purchase your new home allows that transfer. Not all counties do that. But even in jurisdictions that do allow a transfer, if you pay more for the new house, you can only transfer the tax base if the purchase price is no greater than 105% of the amount for which you sold your previous residence. If you wait a full year after the sale of your home, you can transfer 110% of the selling price."

If the new house is considerably less expensive that the home you sold, Yeary suggests considering what the property tax would be without transferring the lower basis to the new place.

"Surprisingly," he says, "in California, real estate taxes are fairly low thanks to Proposition 13. Taxes are set at the time you purchase the home and can go up only so much every year. There are plenty of houses worth $500,000 or more in California with low tax bases because they were purchased years ago for $35,000."

Yeary also notes that the Golden State offers several tax relief program for low and moderate-income seniors.

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Mortgage rates rise but stay below 5%

REAL ESTATE

Mortgage rates rise but not above 5%

Average rates on 30-year fixed-rate mortgages rose to 4.84% this week from 4.78% last week, the eighth consecutive week that rates have been below 5%, mortgage company Freddie Mac said.

The average rate on a 15-year fixed-rate mortgage rose to 4.51% from 4.48%. Five-year, adjustable-rate mortgages rose to 4.9% from 4.8%. One-year, adjustable-rate mortgages rose to 4.78% from 4.77%.

These rates do not include add-on fees known as points. The nationwide fee averaged 0.7 of a point for 30-year and 15-year mortgages and averaged 0.6 of a point for five-year and one-year adjustable-rate loans.

Reverse mortgage subsidy is sought

Falling home prices have forced the government to ask Congress for a $798-million taxpayer subsidy to prop up a program that lets senior citizens tap the equity in their homes.

The government said the Federal Housing Administration needs the money to support a program that lets homeowners older than 62 obtain reverse mortgages, which allow borrowers to convert equity to cash without making payments until they die or sell their home. Interest is then due.

But with the housing market in a slump, participating lenders may not be able to collect the full loan amount from some borrowers. The government, which insures participating lenders, is on the hook if the house is sold for less than the total loan amount.

Standard Pacific posts smaller loss

Irvine builder Standard Pacific Corp. said its first-quarter net loss narrowed to $49.5 million, or 21 cents a share, from $216.4 million, or $3, a year earlier. Revenue declined 40% to $209.5 million. Standard Pacific had $30.8 million of impairments, including $14.1 million for firing 380 workers. Its shares fell 3 cents to $2.23.

Countrywide and KB Home sued

Los Angeles builder KB Home was sued along with Bank of America Corp.'s Countrywide Financial over claims they conspired to rig appraisals to boost sale prices.

Countrywide, its appraisal unit and KB Home inflated home prices by as much as $2.8 billion in Arizona and Nevada during a three-year period, according to a federal complaint filed in Phoenix.

INTERNATIONAL

European bank cuts interest rates

The European Central Bank cut interest rates a quarter of a point to 1% and said it would buy euro-denominated bonds as well as offer longer-term credit to banks as it moves to get more money flowing through the 16-nation euro zone economy.

COURTS

Banks must face Adelphia suit

Bank of America Corp. and Bank of New York Mellon Corp. are among 26 banks that must defend a fraud lawsuit for billions of dollars brought by a trust pursuing claims on behalf of defunct Adelphia Communications Corp.

U.S. District Judge Lawrence McKenna ruled that the lawsuit could go forward against 26 banks and 22 investment banks. His ruling focused on legal issues, not the merits of the case.

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