A Reverse Mortgage Could Save Your Home
A Reverse Mortgage Could Save Your Home
You have worked hard all of your life, you have raised your family and were blessed to have purchased a home. With your pension and Social Security you believed that you could retire comfortably.
The cost of living continues to increase due to inflation. Ten years ago you could buy a loaf of bread for under a dollar, today; that loaf of bread is approximately three dollars. The same thing can be said for all commodity based products like gasoline and utilities all have had a huge price increases due to inflationary pressures.
Likewise, our health care system has been the envy of other nations for decades. However, today due to years of enormous price increases our hospitals have become so costly; that many employers can no longer provide health care insurance options for their workers. And the government is increasingly asking seniors to shoulder more and more of their own health care costs.
You are not alone
Because of the increased cost of living, millions of senior homeowners backed only by modest pensions and Social Security benefits have resorted to using their homes as their financial safety net. Many seniors have refinanced their homes using home equity lines of credit, second mortgages, or they have even resorted to using their credit cards to pay for necessities due to the ever increasing cost of living. All these loans require that the borrower make monthly payments, only driving the homeowner deeper into debt. And, inflation is not going away. In fact, the government is counting on weak to mild inflation to help pay for the ever increasing national debt; therefore, the need for senior homeowners to borrow money is sure to increase.
A better way to borrow
An FHA Home Equity Conversion Mortgage (HECM), also called a Reverse Mortgage, is a better way for the senior homeowner to borrow money. When qualified, a senior homeowner can use a Reverse Mortgage to borrow against the equity in his home to pay-off outstanding mortgages, credit cards, hospital bills and the like. Borrowers can put the balance of the proceeds from a Reverse Mortgage loan into a line of credit to cover future financial needs as they arise, or can they can get a monthly check from the bank to supplement their current income. They can even get a lump sum of cash to make other investments or any combination thereof. The unique feature of a Reverse Mortgage is that there are absolutely no monthly mortgage or loan payments to make on the loan. The bank can never foreclose on a homeowner due to a lack of payment. That’s right — there is never any worry about missing a mortgage payment, because there are no mortgage payments to make!
Loan Reimbursement
The bank is reimbursed on a Reverse Mortgage when the owner(s) sells the home or when the last owner passes away, at which time the principle and interest is due and payable. Proceeds in excess of the loan repayment are retained by the homeowner or by his/her heirs.
Since an HECM Reverse Mortgage is also insured by the FHA, the government is insuring the bank against financial loss; the loan becomes a non-recourse loan against the homeowner. In the event that one of the homeowner’s lives past 100 years old or the loan amount exceeds the value of the property, the homeowner nor his/her heirs can be asked for any reimbursement over the value of the home. The FHA typically repurchases the loan from the bank or reimburses the bank for any loss incurred after the sale of the property.
Loan Qualifications
Senior homeowners must be at least 62 years old and a legal resident with equity in their primary home (1 to 4 units) to qualify for a Reverse Mortgage. HECM Reverse Mortgage benefits are based on a government formula which includes the FHA 203-b limit for your area; current adjustable interest rate at the time of closing, age of the youngest homeowner, the home’s location and current FHA appraised home value. The actual loan proceeds for monthly tenure payments, line of credit, and lump sum payment are less the cost of current liens and mortgage payoff, loan and serving fees, and any costs of bring a home up to the FHA minimum property standards. Other FHA qualifications may apply. Homeowners interested in a Reverse Mortgage should talk with a Reverse Mortgage specialist to identify how much money they can receive and if this loan is appropriate for them. Reverse Mortgage counseling is also provided by the FHA to ensure that seniors are fully educated about the program before making a financial decision.
For seniors, a Reverse Mortgage is often one of the best solutions for remaining financially solvent. Not only can a Reverse Mortgage be hedge against inflation, but a Reverse Mortgage can allow seniors to avoid high interest rates charged on many credit cards and loans from predatory mortgage lenders. Reverse Mortgages can provide a homeowner peace of mind, knowing that money is available when needed to pay unexpected expenses.
Steve Spicer is a Senior Loan Officer for AmeriBanc Mortgage specializing in Reverse Mortgages. Senior homeowners can receive a free no obligation loan analysis by calling Steve at (949) 689-0762 or at www.careverselending.com using the websites easy loan application form. AmeriBanc Mortgage Corporation is an Equal Housing broker licensed by the California Department of Real Estate and Department of Corporations.
