Having Money and a Purpose Are Important to Living the Good Life, Poll Finds

by Francine Huff
July 28th, 2010

People who have meaning and purpose in their lives tend to be happier no matter what their age is, according to a study by MetLife Mature Market Institute (MMI). Even those who have been impacted financially by the recession are more satisfied when they have meaning in their lives.

Living the Good Life

“Across the board, regardless of age, family and friends are most important above all else,” Sandra Timmermann, Ed.D., MMI’s director, said in a statement. “Further, people with purpose in their lives tend to be living ‘the good life.’ Even though many have suffered financial setbacks in the past couple of years, their priorities remain unchanged. Purpose is age-proof and recession-proof.”

The study polled people aged 25 to 74 and found that living the good life means having financial freedom, and being mentally and physcially healthy, creating deep relationships and a sense of purpose, and feeling like you belong. It also means being able to deal with significant life changes, such as a job loss, marriage, death of a loved one, divorce, retirement, etc. Older people, who aren’t as focused on earning and managing money as young people, spend more time on meaningful activities.

Reverse Mortgages and the Good Life

If you are experiencing major changes because of a drop in income, you can still live a fulfilled and meaningful life. And if deprivation isn’t your thing, a reverse mortgage could be one way to supplement your income and bring more financial security. Just remember that a reverse loan by itself won’t bring fulfillment to your life. Having relationships and activities that bring joy to your life are likely to be just as important.

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Talk with Your Kids about Reverse Mortgages

by Francine Huff
July 27th, 2010

Peter Miller recently wrote about whether or not adult children resent their parents getting reverse mortgages. Some adult kids resent losing out on any inheritance they may feel entitled to, according to the article. But it’s unlikely that most seniors who decide to borrow a reverse home mortgage are doing it to “stick it” to their heirs. Many of these people probably feel they have no choice but to tap home equity to supplement their retirement income.

Reverse Mortgages Have Pros and Cons

If you think a reverse loan may cause some tension with your kids, it may be a good idea to discuss the pros and cons with them early on in the application process. They may have some very legitimate reasons for not wanting you to get a reverse mortgage. While it’s ultimately your choice to borrow with a reverse mortgage, bringing them into the dialogue may help reassure them about supporting your choice.

Reverse Mortgage Counseling

You can choose to include reverse mortgage heirs in your mandatory counseling session. This step can help everyone gain an understanding of reverse mortgage guidelines. There are a lot of myths about reverse loans and your kids may be concerned about some of them without having all the facts. Likewise, you may be misinformed about just how much a reverse mortgage can change your financial situation. Go into the counseling session with an open mind so that you can really determine whether borrowing with a reverse loan makes sense.

Whether or not your kids fully embrace your choice to apply for a reverse mortgage, they may have to deal with it after you die. If you plan to leave your home to your kids, make sure they understand what their responsibilities are going to be when settling your estate. The reverse loan counselor can go through this information with you.

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Reverse Mortgage Borrowers Are Getting Younger

by Francine Huff
July 26th, 2010

During the past few months 62-year-olds have been the most comment reverse mortgage borrowers. Bank of America’s John Nixon recently did an analysis of the most common reverse mortgage age at his bank, according Reverse Mortgage Insight, who then did an analysis that found that trend reflected in the broader industry.

Reverse Mortgage Age Drops

Borrowers must be at least 62 to get a reverse home mortgage. According to the Reverse Mortgage Insight article:

Many of us who have been in the industry for a while have watched average age drop from 77 a decade ago, to 74 five years ago and roughly 72 last year. What has been masked by that “average” (or mean for the mathematically precise amongst us) is that the number of borrowers at each age has changed dramatically. John mentioned that in the past few months, 62-year-olds were the most common among his borrowers, which frankly shocked many folks in the audience [at the National Reverse Mortgage Lenders Association Irvine Roadshow].

Unemployment Among Boomers

What’s going on? Why are more younger borrowers turning to reverse loans? There are a variety of reasons, but the troubled economy is obviously a huge factor. Many baby boomers have been laid off from jobs and are having trouble finding employment. Also, many homeowners have found it difficult to sell homes in order to avoid foreclosure.

Not Enough Retirement Funds

Retirement benefits have also been hit hard during the recession, leaving many older Americans scrambling to piece together a comfortable retirement. The Employee Benefit Research Institute recently said that about 64% of Americans in the two lowest pre-retirement income levels are expected to run short of money after 10 years in retirement. About 29% of those in the next-to-highest income level and 13% of those in the highest-income level are expected to run short of money after 20 years.

To find out if a reverse mortgage can help your situation, schedule an appointment with a housing counselor approved by the Department of Housing and Urban Development. Take time to gather all the facts before signing up for a loan.

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Do Adult Children Resent Reverse Mortgages?

by Peter G. Miller
July 26th, 2010

It might seem as though reverse mortgages are a uniquely American concept but that’s not the case: You can find reverse mortgages overseas and with them many of the same issues we have here.

In an interview with the Indian publication MoneyLife.com, S Sridhar, chairman of the National Housing Bank, says in some cases reverse mortgages are “psychologically resented by children.”
read more

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Reverse Loans Continue to Be Targeted by Scams, FBI Report Says

by Francine Huff
July 21st, 2010

The Federal Bureau of Investigation (FBI) recently reported an increase in mortgage fraud during 2009, including scams involving reverse mortgages. Pending mortgage fraud investigations by the FBI rose 71% in 2009, compared with 2008. Also, 66% of pending mortgage fraud investigations by the FBI involved dollar losses totaling more than $1 million.

“While the total dollar loss attributed to mortgage fraud is unknown, First American CoreLogic (using mortgage loan data representing 97 percent of all U.S. properties) estimates that $14 billion in fraudulent loans were originated in 2009 ($7.5 billion in FHA loans and $6.5 billion in conforming loans),” according to the study.

Reverse Mortgage Fraud Makes List

The most common types of mortgage fraud include “loan origination, foreclosure rescue, builder bailout, equity skimming, short sale, home equity line of credit (HELOC), illegal property flipping, reverse mortgage fraud (currently the FHA’s Home Equity Conversion Mortgage [HECM] and the primary reverse mortgage loan product being offered by lenders and targeted by fraudsters), credit enhancement, and schemes associated with loan modifications.”

Industry Insiders and Fraud

Other emerging types of mortgage fraud involve short sale flops, condo conversion, and schemes involving economic stimulus programs. While much of the fraud is perpetrated by what the FBI calls “industry insiders, including mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, settlement attorneys, land developers, investors, builders, and bank and trust account representatives.” But there also has been an increase in mortgage fraud activity by gangs and organized crime.

There is concern that if the economy continues to struggle, mortgage fraud schemes could continue to spread, especially foreclosure rescue scams. If you are interested in getting a reverse home mortgage to avoid foreclosure, make sure you talk with a HUD-approved counselor to get the facts. You can also gather quotes from a reputable net work of reverse mortgage lenders here.

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Reverse Mortgage Lenders Dropping Fees

by Peter G. Miller
July 21st, 2010

There’s a new competition among reverse mortgage lenders, and competition is something which borrowers should applaud.

“A price war is on,” says Kiplinger.com “Reverse mortgage lenders want your business, and they are putting their products on sale by cutting loan fees. While borrowers can benefit from the competition, the terms of the reduced-rate loans could make them unsuitable for some homeowners.”

The article points out that discounts on monthly servicing fees and up-front origination charges may be available for borrowers who want read more

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10 Ways to Cut Spending Before Applying for a Reverse Mortgage

by Francine Huff
July 20th, 2010

Have you done everything possible to reduce your spending? It’s a good idea to cut the fat in your budget before applying for a reverse mortgage. Use the following tips to trim expenses and help stretch the proceeds from a reverse loan.

  1. Use generic drugs. Whenever your doctor writes a prescription, ask if there is a generic available that can help you save money.
  2. Review your bills carefully to make sure you are being charged correctly. Not reading through itemized statements can cost you big time.
  3. Use coupons for groceries, clothing, electronics, etc. Many retailers offer coupons or discounts in the newspaper and on the Web, so take the time to scout at deals. Sign up for special offers from your favorite stores.
  4. Watch your themostat. Adjusting your heat or air conditioner can help you trim your utility bills.
  5. Keep up with regular maintenance on your car, such as oil changes, to avoid bigger problems that require expensive repairs.
  6. Stop running up credit card debt. Focus on paying off cards and closing accounts.
  7. Always pay your bills on time. Being late with payments results in late fees and other penalties. For instance, a late credit card payment could cause your interest rate to jump.
  8. Ask your cable and cellphone companies to decrease your monthly rate. They may be willing to give you the rate being offered to new subscribers. Consider eliminating services that you don’t really need or use infrequently.
  9. Consider finding a roommate if you need help with housing expenses. Even if you apply for a reverse home mortgage, it can be helpful to have someone pay rent. Take time to screen prospective tenants carefully to avoid conflicts.
  10. Don’t live beyond your means. Pick and choose which hobbies and activities you really want to participate in and budget for them.

If necessary, consider downsizing to cut your expenses. Proceeds from a Home Equity Conversion Mortgage (HECM) can be used to purchase a less expensive home as long it is going to be your principal residence.

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by Francine Huff
July 19th, 2010

Planning for a comfortable retirement isn’t something that happens overnight. That’s why even though a reverse mortgage can help supplement your retirement income, borrowing money should not be your only game plan for funding your golden years. In addition to reverse loans, a solid retirement plan might involve other tools.

What Is a Reverse Mortgage?

A reverse home mortgage allows homeowners aged 62 and up to cash out some of their home equity. The money doesn’t have to be paid back until you move or die. Reverse mortgages have pros and cons, so find a reputable housing counselor who can help you learn more about borrowing money using your home equity.

Retirement Accounts

Saving money in a retirement account is a crucial piece of retirement planning. Among the options for building a nest egg are 401(k) plans offered by employers. A 401(k) plan offers tax-deferred earnings, and employers may match a certain percentage of contributions. Generally, you aren’t allowed to withdraw money without penalties until you reach a certain age, but you can borrow money from your own plan.

Other retirement accounts include IRAs and Roth IRAs. The difference between the two types of accounts is that Roth IRAs use after-tax dollars, so earnings are tax free when withdrawn if you meet the requirements. Traditional IRAs also require you to begin withdrawing money at age 70 1/2.

Downsize to Lower Expenses

It could may make sense to lower your living expenses by downsizing. You could choose to sell your home and move into a less expensive rental. Another option is to use the proceeds from a Home Equity Conversion Mortgage (HECM) to downsize to a less expensive home. The house must be your primary residence, so a vacation home does not qualify for a reverse loan.

An estate planner can help you research other tools and programs for seniors that might help fund a secure retirement. Take time to research your options to put together plan that can maximize your retirement savings and income.

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A Million Homes Could Be Lost to Foreclosure This Year

by Francine Huff
July 15th, 2010

Many homeowners are still struggling to keep up with mortgage payments. More than 1 million households are on track to lose their homes to foreclosure this year, according to RealtyTrac. Some of these homeowners have attempted to get loan modifications with no success.

Delaying Foreclosure Proceedings

There were foreclosure filings on 895,521 properties in the second quarter of 2010, RealtyTrac data showed. Bank repossessions rose 5% from the previous quarter and 38% from a year earlier. James J. Saccacio, chief executive officer of RealtyTrac, said in a statement:

The midyear numbers put us on pace to exceed 3 million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions. The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market.

Reverse Mortgages and Foreclosure

Seniors faced with the threat of foreclosure might find relief with the help of a reverse loan. Instead of struggling to keep up with housing payments, you could be end up receiving a cash payout by using a reverse mortgage to tap into home equity. Talk with a housing counselor to learn more about reverse mortgage guidelines and whether or not borrowing money could keep you out of foreclosure.

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Whatever Happened To Retirement Security?

by Peter G. Miller
July 14th, 2010

Fewer and fewer of us are “retiring,” if by “retirement” we mean a period of time when we no long work and live off a combination of investment income, low debt and Social Security.

“Americans at the leading edge of the postwar baby boom will hit 65 next year,” says a new study from Standard & Poors. “But will they ever be able to slide into retirement? Declining wealth, stemming from lower stock prices and falling home values, has hurt older households. In fact, Americans lost 18% of their net worth in 2008, and the decline disproportionately hit the households of those nearing retirement.”

Little Savings

The new study — “Pensions: Can We Ever Retire?” — says most Americans of retirement age will keep working simply because read more

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Reverse Mortgages and Bad Credit

by Francine Huff
July 14th, 2010

More Americans are dealing with bad credit. Thanks to the recession, about 43 million Americans have credit scores of 599 or lower, according to FICO. Having bad credit makes it unlikely you can qualify for a mortgage, auto loan, or other types of credit. If you have bad credit, you may be wondering if you can qualify for a reverse loan. Here’s why bad credit won’t keep you from getting approved for a reverse mortgage.

Reverse Mortgage Guidelines

Unlike a traditional mortgage, reverse loans don’t require credit and income checks. In fact, you can have bad credit and no job and still get approved for a reverse mortgage if you meet the right criteria. You don’t need an income because you don’t have to make monthly mortgage payments. Instead, a reverse loan pays you through a lump sum, regular payments, a line of credit, or a combination of methods. Once you receive the cash you can use it for any purpose, including paying off debt.

Reverse Mortgage Age

To apply for a reverse home mortgage you must be at least 62 years old. You receive a larger payout the older you get, so it could make sense to wait a few years before applying for a loan. The amount of money you receive also depends upon the amount of equity you have in your home. The reverse mortgage lender orders an appraisal to place a value on your property.

Having bad credit won’t keep you from getting a reverse mortgage. But before you cash out your home equity, make sure you have a solid plan in place. You want to make sure that getting money can help improve your financial situtation so you can begin to repair your credit.

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Unemployment and Reverse Mortgages

by Francine Huff
July 13th, 2010

Being laid off suddenly can feel like being tossed off a cliff without a parachute. How can you expect to pay your bills, eat, or keep a roof over your head without a job? Even if you’ve managed to accumulate some savings, that money can only last so long if it takes a long time to find employment.

Depending upon how desperate you are for cash, you may be considering tapping your home equity. Without an income, however, you won’t have much success trying to refinance. But if you are 62 or older you might be able to qualify for a reverse mortgage.

Reverse Mortgage Proceeds

A reverse loan won’t allow you to cash out all your equity. The amount of money you can receive depends upon the value of your home, which is determined with an appraisal. The reverse home mortgage payout also depends upon your age. The older you are, the more money you qualify to receive. Current interest rates also play in a role in determining how large a reverse mortgage you receive.

Reverse Loan Counseling

Before you can apply for a reverse loan, you must receive counseling from a qualified housing counselor. Although you may be convinced a reverse mortgage is the only thing that can help you during your unemployment, a knowledgeable counselor can discuss other alternatives that may be able to help your situation. For instance, the government’s Home Affordable Modification Program (HAMP) recently announced that unemployed homeowners could qualify to have mortgage payments temporarily suspended or reduced.

It’s important to get all the facts about reverse mortgages so you can make an informed decision about whether to apply for one. Familiarize yourself with reverse mortgage guidelines then begin comparing loan quotes here.

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Reverse Mortgages Make Time Magazine List

by Francine Huff
July 8th, 2010

Reverse mortgages are on a Time magazine list of the six problems that should be tackled first by the Consumer Financial Protection Bureau (CFPB). The article states that although “reverse mortgages should be a great financial innovation” that allows senior citizens to remain in their homes while tapping some of their equity, that isn’t always the case.

Some Abuse of Reverse Loans

The article states:

Fees on reverse mortgages often run three times as high as those for traditional mortgages. What’s more, having that large sum on hand all at once makes the seniors targets for other abuses.

Reverse Mortgages Scams Exist

There certainly have been many seniors who have borrowed with reverse loans without truly understanding their structure or fees. There also are instances of seniors being targeted by reverse mortgage scams. However, many abuses the Times described are already illegal, and those who borrower using FHA reverse mortgages called HECMs are required to get counseling fro, an FHA-a[proved counselor first. Finally, the fees on HECMs are limited by law.

The Times article also says that reverse home mortgage borrowers "basically sell their house [to the bank] but continue to live in it mortgage-free.” It’s important to note that homeowners who receive reverse loans are not selling their homes to anyone and continue to retain the title to their properties. They can even pass on their homes to heirs. If you want to get accurate information about reverse mortgage guidelines, talk with a knowledgeable FHA-approved reverse mortgage counselor.

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Appraising Your Home for a Reverse Mortgage

by Francine Huff
July 7th, 2010

You think your home is the nicest one on the block–after all you’ve probably put a lot of time and money into improving and maintaining it over the years. But is your home actually worth as much as you think? Given the lukewarm conditions in many housing markets across the U.S., you could have a lot less home equity than you think. It’s important to get a realistic appraisal for your home if you plan to apply for a reverse loan.

Reverse Mortgages and Home Equity

The amount of money you receive from a reverse home mortgage depends upon your home’s value, in addition to your age and current reverse mortgage rates. Before you spend money on a reverse mortgage appraisal, it’s smart to get an idea of your home’s value in today’s market. If you wouldn;t be able to borrow as much money as you’d like today, you might want to hold off, until increasing property values (and your increasing age) make it possible for lenders to advance you more money.

Real Estate Realities

While the inside of your home may look like something out of a home decorating magazine, the fact is that what’s outside your home has a lot to do with what your home appraises for. In addition to evaluating your property, appraisers look at what’s going on in your neighborhood. Having a lot of neighbors who neglect their properties can hurt your home’s value. Likewise, being in an area with a lot of foreclosures can bring down the price of your home. That’s because an appraiser considers recent home sales in the area whan valuing your property.

Estimate Value Before Applying for Reverse Loan

You can get a jump on valuing your home before applying for a reverse loan by talking with a real estate agent. He or she can do a comparative market analysis to get data on recent home sales. Home values can also be found on a variety of real estate Websites. Keep in mind that your home’s estimated value can vary widely depending upon which Websites you consult.

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Reverse Mortgages, Liability & Wall Street Reform

by Peter G. Miller
July 7th, 2010

The House has now passed the Wall Street Reform bill accepted by a conference committee of the House and Senate, whether it will also pass in the Senate is likely but not certain. What is certain is that we now know what the 2,323-page conference bill says, and especially what it says about reverse mortgages.

In basic terms, the legislation holds out the idea that lenders might soon face big penalties if they abuse reverse mortgage borrowers, penalties that could total tens of thousands of dollars — if not more.
read more

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