Reverse Mortgage News

There are many different things that people do with their reverse mortgage money. Some use it to pay monthly bills. Others use it to travel. Still others use it for investment. But one of the biggest reasons that people get reverse mortgages today is to renovate their homes.

If you head over to the HUD website to learn more about home equity loans for seniors, you'll also be able to learn about the top ten improvements that seniors can make to their homes. These improvements are about two different things: making the home more accessible to the senior's changing physical needs and making the home safer for the aging individual.

Improvements that might be made to the home using reverse mortgage money specifically include those changes necessary to adapt a home to a senior's need for a wheelchair or walker. This may include such changes as widening doorways. Safety improvements include adding handrails to stairs and putting grab bars in bathrooms.

Question of the Day: What improvements would you like to see made to an aging parent or friend's home?

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The reverse mortgage is frequently cited as a terrific tool for assisting seniors in leveraging their home equity to their advantage. However, obtaining and understanding a reverse mortgage home loan is not always a simple process. That's why people who get these loans are required to undergo counseling to understand the way that the loan will work for them.

Residents of Maryland who are interested in reverse mortgage loans now have a new resource for obtaining this type of pre-loan counseling. The Frederick Community Action Agency (FCAA), a social service agency serving a diverse range of needs in the area, has announced the creation of two different programs for residents facing home foreclosure.

One resolution to home foreclosure is the use of a reverse mortgage loan to pay for the home. The FCAA has a history of providing this type of information to its residents. Combined with their new programs specifically intended to assist people in the area facing foreclosures, this could result in a great deal of financial assistance to the community.

All people who are facing home foreclosure and are considering a reverse mortgage as the way out of that problem will be required to undergo reverse mortgage counseling. Those communities which provide this counseling in conjunction with an overview of other options are doing their best to meet the needs of seniors in tight financial positions.

Question of the Day: Would you prefer to work with a personal financial planner or an agency like FCAA to better understand the application of the reverse mortgage to your financial and housing needs?

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If reverse mortgages are going to be a reasonable financial option for elderly homeowners, they have to be affordable. The problem in the current lending market is that the fees associated with obtaining a reverse mortgage loan are higher than those associated with other loans. Legislation that is currently pending could help to cap those fees and make it easier for seniors to obtain reverse mortgage home loans at reasonable rates.

The legislation in questions is called the FHA Modernization Act of 2007.

The pending FHA Modernization Act of 2007 would set a national loan limit for reverse mortgages at $417,000 and would cap origination fees at 1.5 percent (subject to minimums) instead of the current 2 percent. Currently, states have different limits. (source)

One of the major concerns that consumers have about reverse mortgage loans is that they don't want to get swindled by predatory lenders. One such thing that happens is that the fees associated with the loan are excessive. The homeowner may not even realize this since the fees come out of the equity, not out of their own pockets. This type of legislation has the potential to reduce the risks associated with reverse mortgages.

Question of the Day: Are you for or against this legislation?

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Home foreclosure is a very real threat to many people today. The changes in the mortgage market and the downturn of the economy have made it so that many people simply can not afford to continue living in their homes. If they've failed to make payments, this can result in foreclosing on the home and trying to figure out where they are going to live.

Luckily, there are solutions to this problem. An article over at FortWayne.com goes over thirteen different alternatives that might be considered be people who are facing home foreclosure. This is a great article that should be printed out and passed around to others that you think might be dealing with this problem.

Some of these options might not be reasonable for people who are facing financial troubles. For example, 'reinstatement' (in which you make a lump sum payment to your lender covering all of what you owe so far), may be something that the average borrower can't afford to do. However, there are solutions, such as the reverse mortgage loan, which provide ways to keep your home even though you can't truly afford it.

If you're facing home foreclosure, you should consider hiring a finance professional to assist you. Yes, spending money on professional services seems difficult when you're already dealing with debt. But it helps to have someone who knows what they're doing go over these options with you.

Question of the Day: Of these thirteen choices, which would you say is the best for dealing with home foreclosure?

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The baby boomer generation is currently facing something that they've been looking forward to for many years: retirement. While this is an exciting time of life for people, it's also a time that can be more than a little bit scary. That's because there is a sense of financial insecurity during retirement for this generation that didn't exist for their parents and grandparents.

CNN Money recently released an article touching on this issue. In this article, it is suggested that most baby boomers do have enough money to retire comfortably if they have not only a retirement income plan but also a Plan B. The article also suggests that the Plan B for many baby boomers might just be the reverse mortgage.

The problem is that the retirement 401K simply doesn't cover the cost of mortgages and debt that many baby boomers still face as they enter retirement. Tapping into home equity may have been unheard of for this group's parents and grandparents but it's what makes the most sense for the baby boomer generation.

Question of the Day: What do you wish was different for your retirement?

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There was an interesting question that came up in an advice column this week. A woman who is getting divorced was trying to determine whether or not she should take her husband's offer to keep their house but to keep her hands off of his military retirement money. The determination in the advice column was that the situation required the help of a skilled divorce attorney to sort out the specifics of the case. (The assistance of a smart financial planner would be good here too!) But it brings up an interesting issue that doesn't often get discussed when we're talking about reverse mortgages.

Divorce rates are high and that doesn't exclude people who are reaching retirement age. People who own a home together do have to decide what to do about that home if they divorce. Selling it and going their separate ways is one option. But for some people, a divorce settlement that lets them keep the house could be a way to secure financial stability in the future. If the home is paid off, at least in part, it is possible to use the home later to support other financial needs. The reverse mortgage could be used to assist with the change in income that occurs after a divorce and could keep one half of the couple on her feet during the transition.

Of course, this will depend on the details of the situation. It will also require making changes to the mortgage using a sale to one party or refinancing. But it's something to consider as an important issue facing older people who are divorcing today.

Question of the Day: Would you want to keep the house if you got divorced?

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Take a look at this statistic which was published in a recent online news article about reverse mortgage issues:

An article on reverse mortgages published in this week's New York Daily Times money section points out something that many people might not realize: the reverse mortgage has been around for a long time. This type of loan is just now starting to get the attention of the general public but it's not something that's new; it's been tried and tested over the years and has withstood those tests.

There are several reasons why reverse mortgages are currently getting so much attention. These include:

- Changing mortgage economy. Reverse mortgages are one of the few mortgages that have stayed stable as other mortgages have gone downhill.

- Baby boomers facing retirement. This generation is starting to deal with aging issues including the need for home equity after retirement.

- Education and awareness. There has been a push to educate people about the pros and cons of reverse mortgages and that has made more people interested in learning about them.

Despite that these things are just now bringing the reverse mortgage to light, it's an option that's been in the market for some time. This is important to note because it helps take credibility away from the idea that the reverse mortgage is just a fad.

Question of the Day: How long do you think the reverse mortgage has been on the market?

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IndyMac Bank disappointed many people when it announced the number of mistakes that it made in the last year. In a letter to shareholders, the company acknowledged that many of its choices led to significant financial losses. However, they also pointed out that they had done some things right. Their work in reverse mortgages is one of those things.

When the rest of the mortgage industry has been going awry, the reverse mortgage industry has held strong. This benefits the people who need these loans but it also benefits the banks that are struggling in the current economy. IndyMac is an example of a bank that took some hits but was able to hold steady as the result of good work in the reverse mortgage area.

Question of the Day: Can reverse mortgages save businesses like IndyMac?

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There are many things to consider before you get a reverse mortgage loan. A recent news report broke this decision-making process down and specified five different things that you should look at to see if you're going to be a good candidate for the reverse mortgage loan.

Some of these factors are related to the terms and requirements of the reverse mortgage loan. For example, you have to be a certain age to even be allowed to get a reverse mortgage loan.

Other factors were more about being cautious in considering whether the reverse mortgage loan applies to your life. For example, if you think that you might move soon then it's probably not a good idea to get a reverse mortgage loan.

Learn more from MSNBC.

Question of the Day: What do you think is the most important thing to consider before getting a reverse mortgage?

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Some people are starting to spread the word that what happened with the subprime mortgage bust is bound to happen with reverse mortgages. While there are some concerns that predatory lending practices could create situations for certain seniors which are similar to those that affected subprime mortgage borrowers, the reality is that the bulk of these fears are bunk.

First of all, we are much more aware of the ways that we must protect ourselves from predatory lenders as a result of the subprime mortgage bust. Consumers as well as finance regulators are working to make sure that the same type of thing doesn't happen again.

Additionally, the way that a reverse mortgage works is different enough that the two types of mortgages can't reasonably be compared. Most seniors are happy with the way that a reverse mortgage works for them.

Learn more about this topic here.

Question of the Day: What fears do you have about the reverse mortgage market?

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You've heard all of the reverse mortgage hype. You even have a basic idea of what's true and what's not when it comes to getting a reverse mortgage. But that doesn't mean that you know what to do to get one.

Here are the steps to take when seeking to get a reverse mortgage:

- Look realistically at your finances. Consider the amount of home equity that you have and the amount of income that you're going to need in the years to come. Make sure that the money works out on paper so it can work out in real life.

- Speak with your family. Many family members get upset when they find out that a reverse mortgage has been obtained. Clear the air and resolve issues before the loan has been obtained.

- Compare lenders in your area and choose the one that seems best. Do not go with any lender that tries to oversell his products.

- Get reverse mortgage counseling. This is a requirement of getting a reverse mortgage and it's just a plain old good idea.

- Speak with a lawyer about the details before the loan goes through. You may have questions about signing over home deeds in the future or making changes to the loan. A lawyer can answer those more honestly than a lender can.

The main thing that you should remember when getting a reverse mortgage loan is that it's a big decision. Take it seriously, think it through and you should be pleased with the end result.

Question of the Day: What steps do you think have been left out of this reverse mortgage planning list?

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Reverse mortgage seminars are getting increasingly popular. They are offered at local senior centers and through neighborhood association programs in various cities throughout the United States. In most cases, they're free to attend. They can be a great way to get more information about a reverse mortgage loan if you've been considering one.

Here are the steps that you need to take to attend a reverse mortgage seminar:

- Locate one. Check the community events listing in your local paper. If that fails, call up a seniors organization and ask if they can point you in the right direction. Reverse mortgage lenders and AARP representatives are additional resources that might have information about a reverse mortgage seminar near you.

- Mark the date. Since they're free, you usually won't have to register but make sure you review those details in advance.

- Do your research. You want to know who it is that is giving the presentation so you can judge how biased they are in the information that they provide.

- Attend, ask questions and consider the information. Reverse mortgage seminars should always be purely information so don't buy anything that might be sold there.

Seminars are a good way to get started on learning about reverse mortgages. However, you should speak with a finance professional before further considering a reverse mortgage application.

Question of the Day: What reasons would you have for attending a reverse mortgage seminar?

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There are certain people that you should be able to trust when it comes to getting reverse mortgage information. Then there are people you should be wary about. And at the other end of the spectrum are the people that you should ignore.

Here's a guide to who should be heard and who should be silenced when it comes to discussing your reverse mortgage:

You can basically trust:

- Your AARP representative
- A lender that you're familiar with
- A lawyer with experience in senior financial issues
- A financial planner with reverse mortgage experience

You should listen but with a wary ear to:

- Your adult children.
- Lenders you don't know too well.
- Well-intentioned friends.
- The media.

You should ignore:

- Lenders that seem predatory.
- Family and friends that have anything to gain from it.
- Organizations that pressure you about your finances.
- Real estate professionals.

In general, you should look to the person giving you advice before considering how much of it to believe. A second opinion is always a good idea before making a financial move such as obtaining a reverse mortgage loan.

Question of the Day: Who do you trust and distrust about reverse mortgage issues?

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Anyone who is familiar with Research and Markets knows that this is a resource for obtaining in-depth information on a variety of different topics. This information is provided in the form of reports which the reader must pay to obtain. Therefore, it's only really good for those folks who are truly interested in the most up-to-date statistical information on a given topic. For those people who feel this way about the reverse mortgage, Research and Markets has just released a new report called Reverse Mortgages in the United States, 2008.

The report takes a close-up look at the reverse mortgage situation. Unlike many of the media reports available about reverse mortgages, it appears that this one takes an unbiased review of the situation. It presents the positives and negatives of the reverse mortgage market, analyzes current trends and reports on predictions for the reverse mortgage market's future.

In addition to looking at reverse mortgages, it looks at the financial situations of those people who are entering the age when a reverse mortgage might become a viable option. It also reviews the multiple factors that influence the development and change of the reverse mortgage market. Overall, it provides a strong resource for those who are interested in really seeing where things are at in the reverse mortgage market today.

Question of the Day: What would you consider a fair price for obtaining this report?

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People who are interested in reverse mortgage news have been keeping a close eye on the political agenda where it concerns the FHA Modernization Bill. Lawmakers are currently in basic agreement that changes will be made but are debating about the specifics of those changes.

According to a report by Newsday, there are four major changes that could take place regarding reverse mortgages:

1. Reverse mortgage homes could be sold without penalty for the specific purpose of purchasing a new primary residence for the homeowner. This is a big one because people now are frequently concerned that they're going to have to stay in their homes forever if they get a reverse mortgage home loan.

2. Loan limits would be set by a national standard not determined by individual counties. This is controversial because home values vary so dramatically between locations.

3. Co-ops would be allowed to be included in reverse mortgage loans. This isn't of particular importance to most peopel but ask older citizens living in New York City and they'll say that this is something which must be done.

4. "The bill would eliminate the cap on the overall number of loans the FHA is authorized to insure."

It should be noted that these changes apply only to the federal home equity reverse mortgage loan. Private reverse mortgage lenders may have different rules already in place regarding these issues.

Question of the Day: Which of these proposed changes do you think is most important to reverse mortgage borrowers?

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We're always happy to see situations in which a person gets a reverse mortgage home loan and it works out in their favor. A recent case exemplifying this was written about by the Los Angeles Times. This report tells the story of a seventy-three year old woman who was forced to retire because of health issues and who used the reverse mortgage option to maintain her lifestyle after that retirement occurred.

In addition to allowing her to remain in her home after retirement, the reverse mortgage home loan assisted her in funding home remodeling that made the home more comfortable and safe for her to live in. She was also able to afford to keep her car and pets as a direct result of the money gained from the reverse mortgage loan.

To see other reverse mortgage success stories, click here.

Question of the Day: What's the biggest reverse mortgage success story that you've seen?

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There are changes pending in FHA regulation which could allow New York co-ops to begin counting for reverse mortgage loan qualification. Hearing about this, you may ask yourself why they didn't count already? And that might lead you to wonder whether there are other types of senior housing that don't count in the reverse mortgage lending market.

As was pointed out in a recent online article, there are certainly some homes that don'y qualify for reverse mortgage loans but most of them will as long as they are the primary residence of the reverse mortgage loan applicant.

Single-family dwellings should qualify without any problems. Townhouses and condos typically also qualify for reverse mortgages without questions. There may be some additional information required for manufactured homes, modular homes, mobile homes and multi-unit homes to qualify. Work with a finance professional if you seek to better understand whether or not your home will qualify for a reverse mortgage loan.

Question of the Day: What other types of homes should qualify for reverse mortgages?

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A reverse mortgage professional writing with the Central Denver Blog provided readers with three "nevers" that pertain to reverse mortgage loans. These three things clear up several of the questions that many people have when it comes to getting and using a reverse mortgage loan.

One of the biggest questions is whether you aer going to lose your house if you get a reverse mortgage loan. The big "never" to consider here is that you are never giving up the title to your house when you get a reverse mortgage loan. You are tapping in to the equity which means that more is going to be owed to keep the house later on so if your family wants to inherit the home, they may need to pay something down the line.

Explore the other "nevers" here.

Question of the Day: What is the biggest concern that you have about reverse mortgage loans?

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People who live in Arizona, Southern California, Florida and other nice sunny states are highly familiar with the term "snowbird". This refers to retirees who live in colder climates but winter in these warm locales. Many of these retired people keep a home in the warmer place in order to have somewhere to go when the weather changes. And people who are currently hoping to be snowbirds may find that a reverse mortgage is a great way to buy that winter home.

As Second Homes 411 points out, the reverse mortgage loan can be obtained on a primarily residence in order to access a lump sum amount of cash. There will be no additional mortgage payments on the primary residence and the lump sum can be used to purchase or place a down payment on a second (winter) residence. As long as the reverse mortgage home remains the primary residence of the borrower, this is perfectly within the legalities of the reverse mortgage rules.

Question of the Day: Where would you winter if you could purchase a second home?

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One of the biggest concerns that people have about reverse mortgage loans is that it will impact the inheritance that they can leave to their children. The reverse mortgage loan essentially consists of the bank giving you the equity of your home back in the form of cash. At the end of your life, this may mean that the total worth of the home is now owed to the bank so that if your kids want to keep the home when you die, they'll have to pay for it.

A review of the book More Wealth Without Risk suggests a solution to this problem. Instead of getting the reverse mortgage loan from your bank, get it from your children. Have your child purchase the home from you in the form of either lump sum or monthly payments as you would from a reverse mortgage. A condition would be that you can live in the home until you die, upon which time your child owns the home that he or she has paid for.

Question of the Day: Would the reverse mortgage by child be a viable option for you?

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