Reverse Mortgages and Changes in HAMP

by Francine Huff
March 31st, 2010

Changes in the government’s mortgage rescue plan are aimed at helping millions of homeowners who are at serious risk of foreclosure. Many homeowners have had little success with getting a loan modification or refinance deal through the Home Affordable Modification Program (HAMP), but may be eligible for assistance under the revamped guidelines. But if you are 62 or older, does it make sense to seek help through HAMP or apply for a reverse home mortgage?

Reverse Mortgage Pays You

So what is a reverse mortgage and how can it help you? A reverse loan takes some of the equity you have in a home and pays it to you in a lump sum or through installments. You can also choose to take the money as a line of credit. You aren’t allowed to convert all of your equity to cash; the amount you get is determined by your age, home value, and reverse mortgage rates.

The advantage in getting a reverse loan instead of applying for assistance through HAMP is that you may actually come away with cash in your pocket and no worry about monthly payments. Having enough equity in your home could get you out of financial distress without the hassle of going through the hoops to get approved by the foreclosure relief program.

Home Loan Modifications

You won’t qualify for a reverse loan without enough home equity. But being underwater on a mortgage won’t rule out the possibility that you could get help through the government’s mortgage modification program. The revised rules allow:

  • Unemployed borrowers to get a forbearance on mortgages for three to six months
  • Borrowers who owe more than 115% of their homes value on a mortgage may be considered for alternative modification approaches, including a principal write-down

Investigate All Options

There are several choices you can make about getting help with a mortgage. Talk with a qualified housing counselor to discuss pros and cons of reverse mortgages, as well as guidelines for getting a loan modification.

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Reverse Loan Can Help Ease You into Retirement

by Francine Huff
March 30th, 2010

You may feel like you’ll never be able to stop working and retire. While you may be facing some serious financial challenges when it comes to having enough retirement income, don’t give up hope of enjoying your golden years. Depending upon your financial needs, a reverse mortgage could help you ease out of the work world.

Keep Your Job as Long as Necessary

First, don’t quit your job if you absolutely need the income. Once you leave the work force it can be tough to find another job at the same pay level or even in the same industry. Many Americans can tell horror stories of being out of work a year or two — or even longer — after being laid off or quitting a job. Even if it’s tough to go to work every day, use your time wisely so that you can put away as much retirement savings as possible.

How Can a Reverse Loan Help?

Talk with a reverse mortgage counselor to get all the facts about these loans. Although you can apply for a reverse home mortgage as young as age 62, it may make sense to wait a few years. That’s because the older you are, the more money you may qualify to receive. Reverse loans are also based upon how much your house is worth, so waiting a few years could bring improved home values in your area.

Reverse Mortgage Plus a Part-Time Job

If working full-time is becoming tougher because of health problems, commuting distance, or some other issue, ask your employer if you can cut back to part-time hours. This may not be feasible if you don’t have health insurance or enough savings in place. But a reverse mortgage could supplement your part-time income enough for this plan to work.

If you are still able to work, run the numbers on a reverse loan offer carefully before committing to retirement. It’s important to make any money you borrow stretch for as many years as possible.

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Reverse Mortgages and Title Insurance

by Francine Huff
March 30th, 2010

You can only apply for a reverse mortgage if you are at least 62 and your name is on the title to your home. If you are married, you and your spouse must be on the title to apply for a reverse home mortgage together. As part of the process, a title search is done and you must buy title insurance.

Why Title Insurance Is Necessary

You may be wondering why you even need to take out a new title insurance policy if you’ve lived in the home for many years. Title insurance protects reverse mortgage lenders from any problems that may occur with the title to your property. Although most people probably won’t have any issue with their title, there could be instances where disputes come up if there are divorces and remarriages involved. Title insurance for owners protects you against any problems with the title.

Reverse Loan Scams

An up-to-date title insurance policy could also guard against reverse mortgage fraud. Some reverse loan scams involve people who attempt to strip seniors of their equity by transferring the title to their home. Avoid using reverse mortgage companies that don’t have a track record or try to pressure you to do things you are uncomfortable with.

If someone offers you a free home to live in as part of a reverse mortgage scheme, be aware that some type of fraud involving the title could be involved. Do not get involved with this type of deal.

Reverse Mortgage Closing Costs

Fees for title insurance are included with other closing costs. The amount varies depending upon how much you borrow. To get more information on reverse mortgage guidelines and the fees involved, shop around for quotes from several lenders. Before you apply for a loan you also are required to meet with a reverse mortgage counselor.

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3 Ways to Prepare for a Layoff

by Francine Huff
March 30th, 2010

Afraid you may be the next person at your job to receive a pink slip? Take steps now to shore up your finances in case you do get laid off. Use the following suggestions to get started.

  1. Consider converting home equity to cash with a home equity loan while you still qualify. Or if you lose your job you may take out a reverse loan. If you are 62 or older you can apply for a reverse home mortgage despite your employment status. You don’t have to take the proceeds from a reverse mortgage as a lump sum although that option is available. You can set up the loan as a line of credit that is available to draw on when you need it. Reverse mortgage lenders don’t require a credit check.
  2. Fine tune your budget. You may need to cut back on luxuries until you know for sure whether you are being laid off. Budget for the necessities and rank them in order of importance. Review your discretionary expenses to see where you can improve your spending. Review plans for cellphones and cable, club memberships, etc. to see if you can find a better deal elsewhere or can do away with these expenses altogether. Divert money you normally spend on entertainment or travel to pay off credit card debt or auto loans.
  3. Sock away money in your emergency savings account. If you don’t have an emergency savings then you need to make this a priority. Although you may receive a severance package if you are laid off, it’s important to have as much money in savings as possible to cover necessities like shelter, food, medicine, and utilities. Also remember that when you receive severance pay, you owe taxes on it so you won’t take home the entire amount.

Being laid off can be financially devastating. Take steps now to prepare yourself financially if you truly believe that a layoff is in your future.

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Reverse Mortgage Scams and Other Fraud Targeted at Seniors

by Francine Huff
March 30th, 2010

Reverse mortgage scams are just one type of fraud being targeted at seniors. Check out the following description of two common scams to watch out for.

Reverse Loans

Reverse mortgage scams may involve real estate agents or other financial services workers. In some cases seniors are offered free homes to live in, but they are really being used as straw buyers. Once the home is purchased, the scammer uses a reverse mortgage to strip the home of its equity. Other reverse loan scams may occur when someone offers to help a homeowner avoid foreclosure, but gets away with the proceeds from the mortgage. Also keep in mind that anytime you apply for a reverse home mortgage you must receive counseling from a HUD-approved agency.

Grandchildren in Distress

The grandchild scam has been making the rounds to prey on older folks. Be skeptical of phone calls from someone who says they are your grandchild — especially if they don’t say their name–and claims to need money because they were arrested or in an accident. Some calls may involve people who claim to be the police or an attorney. The caller usually pleads with you not to tell their parents and ask that you wire thousands of dollars to help them out. If you receive this type of call, don’t reveal your grandchild’s name or other information. Instead, try to verify the person’s identity by asking questions that only he or she might know, or calling them or their parents.

Whether it’s reverse mortgages, insurance, or other financial products always use caution when choosing who to do business with. Avoid signing up for products and services with people who knock on your door, call, or email you out of the blue. Finally, never reveal personal information if you aren’t sure who you are speaking with.

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Using Reverse Loans to Fund Retirement

by Francine Huff
March 29th, 2010

For some seniors, getting a reverse home mortgage is viewed as a way to get out of debt, pay medical costs, or fix up their homes. There are pros and cons of reverse mortgages when it comes to paying for retirement expenses. Let’s take a look at a few of them.

Home Equity Ups and Downs

About a quarter of U.S. homeowners are under water, owing more on their mortgages than their homes are worth. Even if you still have a healthy amount of equity in your home, take a look at your neighborhood to see where housing values are headed. There have been signs that the real estate market may be starting to improve in some areas, but you may not be out of the woods yet. Taking out a reverse loan at the wrong time would be a mistake, because you’d have access to a lot less money.

If you think your equity may continue dropping, getting a reverse mortgage now may allow you to convert some of it to cash before you lose more value. Think your home equity may rise? Then wait for the market to improve before applying for a reverse mortgage. If you’re set on getting a reverse loan at this time, consider sprucing up the place to improve your property value.

Reverse Mortgage Stimulus

A reverse mortgage could be your own personal stimulus package to help with financial hard times. Budgeted wisely, a reverse loan can allow you to live comfortably during your golden years. But borrowing money without a real plan and using it frivolously could put you in worse financial shape than when you started.

Getting Counseling

If you want to borrow money with your spouse, make sure you both grasp reverse mortgage guidelines to avoid any misunderstandings later. Both of you need to meet with a reverse loan counselor to discuss any questions and concerns. You need to be on the same page to reap the benefits of borrowing money this way.

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Reverse Mortgages and Title Insurance

by Francine Huff
March 24th, 2010

You can only apply for a reverse mortgage if you are at least 62 and your name is on the title to your home. If you are married, you and your spouse must be on the title to apply for a reverse home mortgage together. As part of the process, a title search is done and you must buy title insurance.

Why Title Insurance Is Necessary

You may be wondering why you even need to take out a new title insurance policy if you’ve lived in the home for many years. Title insurance protects reverse mortgage lenders from any problems that may occur with the title to your property. Although most people probably won’t have any issue with their title, there could be instances where disputes come up if there are divorces and remarriages involved. Title insurance for owners protects you against any problems with the title.

Reverse Loan Scams

An up-to-date title insurance policy could also guard against reverse mortgage fraud. Some reverse loan scams involve people who attempt to strip seniors of their equity by transferring the title to their home. Avoid using reverse mortgage companies that don’t have a track record or try to pressure you to do things you are uncomfortable with.

If someone offers you a free home to live in as part of a reverse mortgage scheme, be aware that some type of fraud involving the title could be involved. Do not get involved with this type of deal.

Reverse Mortgage Closing Costs

Fees for title insurance are included with other closing costs. The amount varies depending upon how much you borrow. To get more information on reverse mortgage guidelines and the fees involved, shop around for quotes from several lenders. Before you apply for a loan you also are required to meet with a reverse mortgage counselor.

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3 Ways to Prepare for a Layoff

by Francine Huff
March 23rd, 2010

Afraid you may be the next person on your job to receive a pink slip? Take steps now to shore up your finances in case you do get laid off. Use the following suggestions to get started.

  1. Consider converting home equity to cash with a reverse loan. You don’t have to take the proceeds from a reverse mortgage as a lump sum although that option is available. You can set up the loan as a line of credit that is available to draw on when you need it. If you are 62 or older you can apply for a reverse home mortgage despite your employment status. Reverse mortgage lenders don’t require a credit check.
  2. Fine tune your budget. You may need to cut back on luxuries until you know for sure whether you are being laid off. Budget for the necessities and rank them in order of importance. Review your discretionary expenses to see where you can improve your spending. Review plans for cellphones and cable, club memberships, etc. to see if you can find a better deal elsewhere or can do away with these expenses altogether. Divert money you normally spend on entertainment or travel to pay off credit card debt or auto loans.
  3. Sock away money in your emergency savings account. If you don’t have an emergency savings then you need to make this a priority. Although you may receive a severance package if you are laid off, it’s important to have as much money in savings as possible to cover necessities such as shelter, food, medicine, and utilities. Also remember that when you receive severance pay, you owe taxes on it so you won’t take home the entire amount.

Being laid off can be financially devastating. Take steps now to prepare yourself financially if you truly believe that a layoff is in your future.

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Reverse Mortgage Scams and Other Fraud Targeted at Seniors

by Francine Huff
March 22nd, 2010

Reverse mortgage scams are just one type of fraud being targeted at seniors. Check out the following description of two common scams to watch out for.

Reverse Loans

Reverse mortgage scams may involve real estate agents or other financial services workers. In some cases seniors are offered free homes to live in, but they are really being used as straw buyers. Once the home is purchased, the scammer uses a reverse mortgage to strip the home of its equity. Other reverse loan scams may occur when someone offers to help a homeowner avoid foreclosure, but gets away with the proceeds from the mortgage. Also keep in mind that anytime you apply for a reverse home mortgage you must receive counseling from a HUD-approved agency.

Grandchildren in Distress

The grandchild scam has been making the rounds to prey on older folks. Be skeptical of phone calls from someone who says they are your grandchild — especially if they don’t say their name –and claims to need money because they were arrested or in an accident. Some calls may involve people who claim to be the police or an attorney. The caller usually pleads with you not to tell their parents and ask that you wire thousands of dollars to help them out. If you receive this type of call, don’t reveal your grandchild’s name or other information. Instead, try to verify the person’s identity by asking questions that only he or she might know, or calling them or their parents.

Whether it’s reverse mortgages, insurance, or other financial products always use caution when choosing who to do business with. Avoid signing up for products and services with people who knock on your door, call, or email you out of the blue. Finally, never reveal personal information if you aren’t sure who you are speaking with.

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Ways to Improve Your Home’s Value Before Getting a Reverse Loan

by Francine Huff
March 19th, 2010

The amount you can borrow with a reverse mortgage depends upon your age, current interest rates, and the value of your home. Although many homeowners have seen home prices fall during the recession, there are some things you can do to try and boost your home’s value before applying for a reverse loan.

Clean up the Mess

It’s amazing that some people don’t even clean up their homes when putting them up for sale or getting them appraised for a reverse home mortgage. Clear away the clutter. You don’t have to spend a lot of money to tidy up the place. Get a roll of trash bags and start tossing junk that’s taking up space. Vacuuming, dusting, and elbow grease can go a long way. Catalog items that you can sell or give away and follow through on that.

Where to Spend Money

If you have a little money to spend on a few home improvements, figure out which ones can give you the most bang for your buck. Repairing a leaky roof can be a smart investment, as well as buying paint, new carpeting, or fixtures. You don’t have to get into renovating kitchens and bathrooms or making fancy upgrades. The goal is to spruce up the place and give it a more updated look.

Work Outdoors

When an appraiser looks at your home, he or she evaluates the outside, as well what’s on the inside. The appraiser also compares your house to others in your neighborhood. It’s important to keep the lawn cut and clear away junk sitting around such as old cars, rusted lawn furniture, or other eyesores. Look at the outside of your home with a critical eye to determine what needs to be improved.

If you’re thinking of getting a reverse mortgage, you probably don’t have much of a budget for home repairs and improvements. Choose free and inexpensive projects that can improve your property and help you get approved for the best reverse mortgage possible.

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Many Baby Boomers Have Adult Kids Living with Them

by Francine Huff
March 19th, 2010

Not sure whether to use a reverse mortgage to keep your home because it’s more space than you need? Before selling your house you might want to consider the fact that many people over 50 who expected to have an “empty nest” have seen their kids return home because of the economy.

Multi-Generational Households

About two-thirds of Baby Boomer women are running multi-generational boarding households, according to a recent survey by VibrantNation.com, a Web site for women over 50. Of the women polled, 63% said that one or more of their adult children have moved back in with them and 27% said they have grandchildren living with them. Of those women, 13% also have their own parents or in-laws living with them, too.

Footing the Bill for Family Members

“The Recession is making the ‘Empty Nest’ a historical relic, at least for Boomers,” VibrantNation.com Founder and CEO Stephen Reily said in a statement. “Our research suggests that they are footing the bill for their children, grandchildren, and even parents who have moved into their homes and are now assuming multi-generational housing responsibilities that we probably haven’t seen since the Great Depression.”

How a Reverse Mortgage Can Help

If your income is stretched trying to help family members who have moved in with you, a reverse loan could help. Reverse home mortgages allow you to supplement your income by converting some of your home equity into cash. The amount you can borrow is based upon your age, interest rates, and home value.

Keep in mind that reverse mortgage guidelines only allow people 62 and up to apply for a loan. If you and your spouse are on the deed you both have to meet the reverse mortgage age requirement.

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Pay off Your Home with a Reverse Mortgage

by Francine Huff
March 19th, 2010

It’s part of the American dream to be a homeowner. But for many people, home ownership is accompanied by a 30-year mortgage that takes a huge bite out of their incomes. If you are 62 or older, those monthly mortgage payments could be a thing of the past if you pay off your loan with a reverse mortgage.

What Is a Reverse Mortgage?

While a fixed-rate mortgage has a balance that decreases each month when you pay on principal and interest, the balance of reverse mortgages actually increase as you draw money. Proceeds from a reverse loan are paid as a lump sum or through installments. Some reverse mortgages are set up as lines of credit. The amount you can borrow is based upon your age, current interest rates, and a home appraisal.

One of the reasons these loans are so popular is that you can use the money for any purpose. So if you still owe money on your home, you can use a reverse mortgage to pay it off. The money you borrow won’t have to be repaid until you die or move.

Too Good to Be True?

You may be skeptical about reverse mortgages because they sound too good to be true. You may even have been warned about scams targeted at senior citizens. Yes, there are shady mortgage companies out there that you need to avoid, but reverse loan products are on the up and up. Take the time to find a reputable company that offers these loans.

There are pros and cons of reverse mortgages so it’s important to talk with a knowledgeable housing counselor who can give you all the facts about borrowing money this way. You won’t really know if a reverse loan is right for your situation until you evaluate the reverse mortgage guidelines and run the numbers.

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Ways to Improve Your Home’s Value Before Getting a Reverse Loan

by Francine Huff
March 17th, 2010

The amount you can borrow with a reverse mortgage depends upon your age, current interest rates, and the value of your home. Although many homeowners have seen home prices fall during the recession, there are some things you can do to try and boost your home’s value before applying for a reverse loan.

Clean up the Mess

It’s amazing that some people don’t even clean up their homes when putting them up for sale or getting them appraised for a reverse home mortgage. Clear away the clutter. You don’t have to spend a lot of money to tidy up the place. Get a roll of trash bags and start tossing junk that’s taking up space. Vacuuming, dusting, and elbow grease can go a long way. Catalog items that you can sell or give away and follow through on that.

Where to Spend Money

If you have a little money to spend on a few home improvements, figure out which ones can give you the most bang for your buck. Repairing a leaky roof can be a smart investment, as well as buying paint, new carpeting, or fixtures. You don’t have to get into renovating kitchens and bathrooms or making fancy upgrades. The goal is to spruce up the place and give it a more updated look.

Work Outdoors

When an appraiser looks at your home, he or she evaluates the outside, as well what’s on the inside. The appraiser also compares your house to others in your neighborhood. It’s important to keep the lawn cut and clear away junk sitting around such as old cars, rusted lawn furniture, or other eyesores. Look at the outside of your home with a critical eye to determine what needs to be improved.

If you’re thinking of getting a reverse mortgage, you probably don’t have much of a budget for home repairs and improvements. Choose free and inexpensive projects that can improve your property and help you get approved for the best reverse mortgage possible.

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Many Baby Boomers Have Adult Kids Living with Them

by Francine Huff
March 16th, 2010

Not sure whether to use a reverse mortgage to keep your home because it’s more space than you need? Before selling your house you might want to consider the fact that many people over 50 who expected to have an “empty nest” have seen their kids return home because of the economy.

Multi-Generational Households

About two-thirds of Baby Boomer women are running multi-generational boarding households, according to a recent survey by VibrantNation.com, a Web site for women over 50. Of the women polled, 63% said that one or more of their adult children have moved back in with them and 27% said they have grandchildren living with them. Of those women, 13% also have their own parents or in-laws living with them, too.

Footing the Bill for Family Members

“The Recession is making the ‘Empty Nest’ a historical relic, at least for Boomers,” VibrantNation.com Founder and CEO Stephen Reily said in a statement. “Our research suggests that they are footing the bill for their children, grandchildren and even parents who have moved into their homes and are now assuming multi-generational housing responsibilities that we probably haven’t seen since the Great Depression.”

How a Reverse Mortgage Loan Can Help

If your income is stretched trying to help family members who have moved in with you, a reverse loan could help. Reverse home mortgages allow you supplement your income by converting some of your home equity into cash. The amount you can borrow is based upon your age, interest rates, and home value.

Keep in mind that reverse mortgage guidelines only allow people 62 and up to apply for a loan. If you and your spouse are on the deed you both have to meet the reverse mortgage age requirement.

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Pay off Your Home with a Reverse Mortgage

by Francine Huff
March 15th, 2010

It’s part of the American dream to be a homeowner. But for many people, home ownership is accompanied by a 30-year mortgage that takes a huge bite out of their income. If you are 62 or older, those monthly mortgage payments could be a thing of the past if you pay off your loan with a reverse mortgage.

What Is a Reverse Mortgage?

While a fixed-rate mortgage has a balance that decreases each month when you pay on principal and interest, the balance of reverse mortgages actually increases as you draw money. Proceeds from a reverse loan are paid as a lump sum or through installments. Some reverse mortgage loans are set up as lines of credit. The amount you can borrow is based upon your age, current interest rates, and a home appraisal.

One of the reasons these loans are so popular is because you can use the money for any purpose. So if you still owe money on your home, you can use a reverse mortgage to pay it off. The money you borrow won’t have to be repaid until you die or move.

Too Good to Be True?

You may be skeptical about reverse mortgages because they sound too good to be true. You may even have been warned about scams targeted at senior citizens. Yes, there are shady mortgage companies out there that you need to avoid, but reverse loan products are on the up and up. Take the time to find a reputable company that offers these loans.

However, there are pros and cons of reverse mortgages so it’s important to talk with a knowlegeable housing counselor who can give you all the facts about borrowing money this way. You won’t really know if a reverse loan is right for your situation until you evaluate the reverse mortgage guidelines and run the numbers.

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