How Foreclosures Affect Your Reverse Mortgage

The appraisal on your home is one of the most important pieces of information a mortgage lender uses to decide how much money you receive through a reverse mortgage. Living in an area that is hard hit by foreclosures could decrease the value of the appraisal and the amount of your reverse mortgage loan.

Foreclosures Expected to Depress More Home Values

Nearby foreclosures are expected to push down the value of more than 69.5 million homes this year, according to a recent report from the Center for Responsible Lending. The total value lost because of nearby foreclosures is expected to be $502 billion. About 1.5 million homes have already been lost to foreclosure, and 13 million more foreclosures are expected over the next five years.

How Close Are You to a Foreclosure?

The closer you live to a foreclosed property, the more it affects your home’s value. A 2008 study found that people who lived within 300 feet of a foreclosure property usually experienced a 1.3% drop in their property value, and those who lived within 300 to 500 feet had a 0.6% drop, according to the New York Times. Home values are affected the most when the property is close to a foreclosed home in obvious disrepair.

Signs of Possible Foreclosures in Your Neighborhood

How can you tell if homeowners around you may be facing foreclosure?

• Neighbors are unemployed
• Properties aren’t being maintained
• Neighbors are holding yard sales to get rid of all their stuff

Your Reverse Mortgage Appraisal

Get reverse mortgage counseling to discuss your options if your property value may be affected by foreclosures in the area. Research property values online or have a real estate agent do a report comparing recent property sales and how they were affected by foreclosures. However, you won’t really know how much money you can receive from a reverse mortgage loan until you actually have your home appraised.

This entry was posted on Tuesday, September 8th, 2009 at 12:03 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.