More Americans are postponing retirement and continuing to work. While some of those people enjoy what they do and aren’t ready to give it up, many are finding that they simply can’t afford to stop bringing home a paycheck. Consider the following things as you work on a timetable for retirement.

• A reverse mortgage can supplement your income whether you retire or continue working. To get a reverse loan you need to be at least 62 and have enough equity in your home to borrow against it. The older you are and the higher your home appraisal, the more money you qualify to borrow. However, a reverse home mortgage should not take the place of saving and planning for retirement.
• Retiring too early could be a mistake. Retiring without enough savings can result in tough financial times for the rest of your life. Without enough retirement savings even a reverse mortgage can only go so far. Another reason to avoid retiring too soon is having no plans for spending your free time. You can avoid boredom by finding hobbies and activities you enjoy. Running a home-based business can also keep you busy and provide income.
• Will working part-time be an option? To ease into retirement it may make sense to continue working part-time. This can allow you to continue saving for retirement and get used to having more down time. You also can get a better feel for whether or not you can get by on a reduced income. If you enjoy your current job, talk with your employer about cutting back your work hours. If you can’t wait to get out of there every day, maybe you can hunt for a part-time job that allows you to pursue a different interest.

Take time to put together a retirement plan to get the most out of your golden years. It may be prudent to continue working now in this economy, but don’t give up on any goals you have of exiting the work force for good.

Over the summer we saw the passage of the Wall Street Reform Act, 848 pages of dense legalese designed to make the financial system safer for borrowers.

As you might imagine, this is a major source of dislike among the major lenders and their representatives in Washington. So, of course, there is lots of pressure to overturn the bill with something that will make Wall Street happier and fatter.

That said, when it comes to reverse loans there is not too much of a cry to change the legislation. Why? Seniors won’t find as much help as other borrowers read more

Many people find themselves tapping their retirement savings to help pay for their kids’ or grandkids’ education. Generally, this isn’t a good idea because you’ll lose out on any earnings from the money you take out of a retirement fund. College students can apply for student loans, grants, and scholarships, but there are no financial aid programs for retirement. Likewise, using a reverse loan to pay college expenses is a bad idea. Here’s why.

Reverse loans and home equity

The idea behind reverse mortgages is that senior citizens can convert home equity into cash to supplement their income. The money can be used for any purpose and many people use it to dump debt, pay for medical care, or simply live more comfortably in their home. While a college education would benefit your kid or grandkid, there are better ways to pay for it that won’t rob you of money for retirement.

Also, how would you feel if you used the proceeds from a reverse loan to pay for college expenses, then a couple years later saw your student flunk out or simply decide that she doesn’t want to finish. Would you be disappointed, angry or resentful that your retirement funds were wasted?

Reverse mortgage counseling

If you’re going to tap home equity with a reverse home mortgage, make sure you’re doing so for the right reasons. A knowledgeable housing counselor can discuss reverse mortgage guidelines, as well as alternatives to borrowing money. There may be programs in your community that can help meet some of your retirement needs. As for your college student, he or she is better off working their way through school, attending part-time, or going to a less expensive school than having you use money from a reverse mortgage to pay the bills.

You can’t apply for a Home Equity Conversion Mortgage (HECM) without getting advice from an approved housing counselor. So what should you look for in a counselor? Use the following guide to get the most out of your reverse loan counseling session.

• A reverse mortgage counselor is there to help you learn more about reverse mortgage guidelines, but ultimately the decision to borrow money is up to you. You should never feel pressured to apply for a reverse loan.
• Reverse loan counselors must be pass a HECM exam approved by the Department of Housing and Urban Development (HUD), and must receive continuing education. Make sure that anyone claiming to be a reverse loan counselor can prove that he or she has the proper credentials. You can check the HUD Web site to find an approved counselor.
• Even if a counselor has been approved by HUD, try to check out that person’s reputation. You want someone who is trustworthy and is looking out for your best interest. Check with your local housing agency or organizations that help seniors in your community to find someone reputable.
• The counseling session can take place in person or by phone. If you receive counseling over the phone it may be require more than one session.
• Find out what kind of fees they charge and what services are provided. It’s important to have access to your counselor when you need it. Take time to shop around and compare fees and services (if the fees present a hardship you can get your counseling for free) before selecting someone to work with.

Getting a reverse home mortgage is a significant financial step. It’s important that you get as much information as possible about reverse mortgage guidelines before signing up for a loan. A knowledgeable counselor also will discuss alternatives to reverse mortgages that might help your situation.

Are you planning to use the proceeds from a reverse mortgage to make repairs or upgrades to your home? If so, it’s important to choose which projects you spend money on carefully to get the most bang for your buck. Here are some things to consider before spending reverse loan funds.

• Determine needs vs. wants. Decide which home improvements and repairs are necessary for you to live safely and comfortably in your home. While you may want high-end finishes if you’re doing a major renovation, they probably aren’t necessary. Don’t let your emotions take over or you may quickly burn through your cash. Do an inventory of your home to prioritize which projects need to be done.
• Set a budget for each project. Do you research before starting any project in your home. Get as much information as possible to set up a realistic budget that will cover the project. Don’t be surprised if you run into unexpected expenses during the course of your renovation, so it’s a good idea to include a bit of a cushion in the budget.
• Don’t bite off more than you can chew. Even if you haven’t done any major repairs or remodeling for a long time, it’s not a good idea to attempt a total renovation of your home. Consider the amount of time you may be displaced from certain parts of your home, such as with a bathroom or kitchen renovation. Instead of a large project, you may be able to make repairs and improvements on a smaller scale to improve the quality of life in your home.

When you tap home equity with a reverse mortgage, carefully plan how the money is going to be used. If you don’t have a large retirement account, limit home improvements to projects that can help you live comfortably in your golden years. Talk with a HECM counselor to discuss the best way to budget and use proceeds from a loan.

If you have a reverse mortgage or are considering one then you may wonder how the current robo-signing scandal might impact your situation.

Most likely reverse mortgages are about as safe as any form of real estate financing in the context of the affidavit debacle.

What we now have is a situation where large numbers of foreclosure affidavits have been signed without being read. This is a potentially huge problem because the content of an affidavit is supposed to be carefully reviewed by the signer, the affidavit is supposed to be true. If the affidavit is not read then it’s possible that it contains mistakes.

Now we have a situation where large numbers of foreclosure affidavits will have to be reviewed to determine if they are factually accurate. As an example, the state of Maryland is considering an audit of all recent foreclosure affidavits to see if they are accurate. In most cases the affidavits will be factually correct because the homeowner did not make required monthly payments. However, if there is a single instance where an individual has lost their home to a foreclosure which was not justified then a lot of lawyers and lenders are going to face enormous judgments, as they should.

But what about reverse mortgage borrowers? How are they impacted? read more

Reverse mortgage fraud and other scams involving home loans continue to be a growing problem, according to the Federal Bureau of Investigation (FBI). Estimated annual losses from mortgage fraud are $4 billion to $6 billion, according to the Prieston Group.

Boom in reverse mortgages

Reverse loans have been targeted by scams in part because more seniors are using them to supplement their incomes. Home Equity Conversion Mortgages (HECMs) increased more than 1,300% from 1999 to 2008, according to the FBI. In many cases the perpetrators of fraud are professionals who work in the real estate or financial services industries.

Is it reverse loan fraud?

Some signs that you could be the target of a scam include:

• Being offered a free home just because you are a senior citizen
• Being asked to sign documents you have not read
• Being pressured to sign up for a reverse mortgage at an investment seminars targeted at seniors
• Being offered money for a home you did not purchase
• Being solicited by people you don’t know who make promises that sound too good to be true

Understand reverse mortgage guidelines

One way to protect yourself from a potential scam is to educate yourself about any financial products you are considering. If you really want the real story about reverse loans, talk with a reputable housing counselor. Reverse mortgage counselors who are approved by the Department of Housing and Urban Development must pass an exam and receive ongoing training.

Have you been scammed?

If you believe that you have been the victim of a scam, you should file a complaint with your local police department and contact your local FBI office. You can also file a complaint with the FBI online. Complaints may also be filed with HUD by calling a hotline at 1-800-347-3735.

It’s National Save for Retirement Week, but many Americans are continuing to struggle with socking away money for their golden years. According to the 2010 Retirement Confidence Survey, more than half of U.S. workers have less than $25,000 in total savings and investments. While reverse mortgages can help some seniors live more comfortably in retirement, for many people tapping home equity won’t be enough.

If you’re still working and are concerned about having enough money to retire on, consider the following tips to plan ahead:

• Keep working as long as you can. Sock away as much of your income into an employer-sponsored retirement plan, such as a 401(k). For 2010 you can contribute up to $16,500 into your 401(k) account. Folks 50 and up can make an additional catch-up contribution of $5,500. At the least, make contributions that total the maximum employer match that may be offered at your company, which could be as much as 6% of contributions.
• Talk with a retirement specialist. Look for someone who gives you objective, unbiased information. Avoid working with a retirement counselor or investment adviser who tries to steer you into certain products without discussing all your options. You can also talk with a reverse loan counselor to find out more about how borrowing against home equity might benefit your retirement plans.
• Consider downsizing while you still have a healthy income. It may take some time to sell your home, but cutting back on household expenses can be a smart move heading into retirement.

Take time to really think through your expectations and goals for retirement. Even though the economy continues to struggle, don’t assume that you’ll never be able to retire comfortably.

It’s important to get all the facts about reverse mortgages if you plan on getting one. You must discuss reverse mortgage guidelines with a qualified housing counselor before applying for a loan. While gathering information keep in mind that there are a lot of myths out there about reverse mortgages, including the following:

• You can’t get a reverse loan if you have bad credit or a lot of debt. The fact is your credit score has nothing to do with being eligible for a reverse mortgage. Your ability to get a reverse loan depends upon your age (you must be at least 62), current interest rates, and home value.
• You will no longer own your home. When you get a reverse home mortgage you still retain the title to the home. Reverse mortgage lenders do not own properties when they fund a reverse loan. That means that you can sell the home whenever you want to.
• A reverse mortgage will solve all your financial problems. Reverse loans can help supplement retirement income, but you should take other measures to plan for future financial needs. A reverse mortgage should not be a subsitute for building a savings, putting together a budget, and setting long-term financial goals.
• You can’t leave the home to your kids. If you want reverse mortgage heirs to have your home, it’s important that they understand their responsibilities after your pass. It they choose to keep the home they must pay off the balance of the reverse mortgage with money out of their own pocket or cash from an insurance policy. If they don’t want the home they can sell it and keep any profit, or let the bank take it to pay off the reverse loan.

To get more information about reverse loans, find a reputable counselor to work with. You can search for a reverse loan counselor through the Department of Housing and Urban Development HUD).

News on the real estate front has been fairly grim since April 2007 when home prices reached their zenith. For those with a regular “forward” mortgage the loss in home equity has been a huge problem but that has not been the case for reverse mortgage borrowers.

Let me explain.

Since April 2007 real estate values nationwide are down 13.8 percent according to the Federal Housing Finance Agency. There are a lot of places where the fall has been far worse — think of portions of California, Arizona, Nevada and Florida as examples. The Huffington Post reports there are a number of congressional districts where values have actually fallen more than 50 percent.

When real estate prices fall there are few problems for those with fixed-rate mortgages who want to stay with their homes. Adjustable-rate loans could be a big issue but in the current crisis ARM rates have stagnated if not fallen.

But the story is different if people want to sell or refinance read more

The amount of credit card debt Americans are carrying continued to drop in August 2010, according to the Federal Reserve. Credit card balances have fallen for two years as many Americans either work to pay down debt or have accounts written off by credit card firms because they couldn’t collect on it.

Revolving debt, which is mostly from credit cards, fell to $822.2 billion from $827.2 billion in July. Total consumer debt was $2.414 trillion. If you’re carrying a lot of credit card debt, here are some ways to pay off those bills once and for all.

• Use proceeds from a reverse mortgage. A reverse loan allows you to tap home equity to get the cash you need. You must be at least 62 and own your home. Talk with a knowledgeable housing counselor to determine whether or not a reverse loan can help with your debt and other financial goals.
• Negotiate a debt settlement. If you owe a substantial amount of credit card debt and are already several months behind on payments, your credit card lender may be willing to negotiate. That usually involves allowing you to pay a smaller amount than what’s owed, but you’ll need a lump sum of cash to hand over.
• Ask for a rate reduction and new payment plan. Your creditor may be willing to lower the interest rate on credit card debt if you have a history of making payments on time. Also, a new payment plan could result in lower payments stretched out for a longer period.
• Look for ways to cut back on your expenses. You know what goods and services you can do without. Try to eliminate as many of these categories as possible so you’ll have more cash to put toward debt payments.

If you are retired or nearing retirement, it’s important to eliminate credit card debt so your income can stretch further. If necessary, work with a debt counselor and/or retirement planner to improve your finances.

If you’re at least 62 and a homeowner, you’ve probably heard about some of the ways a reverse mortgage might be able to help you. But if you don’t have a substantial source of retirement funds saved up, you may need more than a reverse home mortgage to live comfortably. Depending upon your finances you may need to continue working a lot longer than you anticipated.

Reverse mortgage proceeds

The proceeds from a reverse loan can be used for any purpose. So it’s up to you to decide how to spend the money. The amount you receive depends upon your age, current interest rates, and home value. So be realistic when considering the role of reverse mortgage money in your retirement plan. If you have a home that doesn’t appraise very high, reverse mortgage proceeds are only going to stretch so far.

The labor market

It’s a tough job market for people hunting for work. So if you currently have a job, it’s a good idea to hold onto it for as long as possible. If you are unemployed and want to find work, you may need to upgrade your resume by getting some new skills. Network among colleagues and friends to find out about job opportunities in your field. If necessary, hire a career coach who can help with your job search.

Revise retirement plans

It’s possible that you may have to change your retirement plans. Instead of retiring early and living a more leisurely life, you may have to work at least part-time and really stick to a budget to make your income stretch. While a reverse loan might be able to supplement your income, it shouldn’t be the only plan for funding retirement. Talk with a knowledgeable reverse mortgage counselor to discuss your retirement needs.

The average American has a retirement income deficit of $48,000, according to the Employee Benefit Research Institute (EBRI). Without Social Security, each individual would be $89,000 short of the income needed in retirement, according to the research group.

The role of Social Security

The organization’s estimates are present values at age 65. “These numbers show that the national retirement income deficit — which is already quite large — would almost double without Social Security benefits,” said Jack VanDerhei, EBRI research director, said at a Congressional hearing.

Can a reverse loan help?

If you’re coming up short on retirement funds, you may need to speak with a retirement counselor to help plan for the future. Among the solutions that may be discussed are reverse mortgages. A reverse loan can help supplement your income by allowing you to borrow against home equity. You must be at least 62 years old to get a reverse mortgage, but the older you are, the more money you may qualify for borrow.

Reverse mortgage proceeds

Reverse mortgage guidelines allow you to use the proceeds for any purpose. Many seniors use reverse mortgages to close gaps in retirement income, such as the shortfall determined by EBRI. Some common uses of reverse loan proceeds are to pay housing costs or medical bills, consolidate debt, or make home improvements. Because you must get reverse mortgage counseling before taking out a loan, you can get help deciding exactly how borrowing money can fit into your financial situation.

Pros and cons of reverse mortgages

Reverse mortgages have pros and cons, and it’s important to remember that borrowing money may not be the right solution for you. That is why HUD requires reverse mortgage counseling before you can take out such a loan. A HUD-approved reverse mortgage counselor should be able to discuss other alternatives that might improve your financial situation. But if you think a reverse loan can help supplement your income, you can begin comparing reverse mortgage products here.

Deciding whether or not to apply for a reverse loan is a big decision. For many people, buying a home is the biggest investment they’ll ever make. So it’s important to make the right choice when choosing whether to tap your equity with a reverse mortgage to supplement your income. Getting all the facts before applying for a reverse home mortgage is crucial.

A way to stay in your home

In the right situation a reverse mortgage may be the difference between being able to live comfortably during retirement or continuing to struggle financially. If you’re facing foreclosure, borrowing against your home equity could allow you to stay in your home. But it’s important to evaluate your financial situation carefully so that you understand all the ramifications of getting a reverse mortgage.

Alternatives to reverse mortgages

A reverse mortgage counselor can help review all your options before you commit to a reverse loan. There may be other programs available to you that can improve your situation without having to borrow against home equity. Do not rush into getting a reverse mortgage without investigating alternatives.

Reverse mortgage guidelines

You must be at least 62 to borrow with a reverse loan. You also must own a home and have enough equity to borrow against. If you are underwater on a mortgage because of the economy, you’re out of luck. Owing more on a mortgage balance that a house is worth means there is no equity to borrow against.

If you have enough home equity, the amount you can borrow with a reverse loan depends upon the value of your home as determined by an appraisal and current interest rates. The proceeds from a reverse home mortgage can be used for any purpose and does not have to be repaid until you move or die.

A new audit report for HUD’s reverse mortgage program finds that, whoops, the government did not know that nearly 13,000 HECM borrowers were in default. The losses from known and unknown defaults could be as much as $1.4 billion.

According to an audit report by Gerald R. Kirkland, the Regional Inspector General for Audit, Fort Worth Region, HUD “could not identify the deferred or defaulted loans in the Single Family Data Warehouse and did not track the number of borrowers who were unable to pay their property taxes or insurance premiums.”

“As a result,” says Kirkland, “HUD did not know how many loans had principal amounts increasing because the servicer had added payments for taxes and insurance to the loan amount. Since unreported defaulted loans were only obtained from 4 of a total of 16 HECM servicers nationwide, more defaulted loans may exist. Further, as HUD could not track these loans, it did not know the potential claim amount. In the event of foreclosure of the 7,673 loans for which HUD was aware and 12,958 loans of which it was not aware, HUD could lose an estimated $1.4 billion upon sale of the properties.”

How did this happen?

For a long time HUD has had an informal foreclosure deferral policy. When the policy ended HUD did not instruct services how defaulted loans — loans typically where borrowers were not paying property taxes or insurance — were to be handled.

“As a result read more