Reverse Mortgages and Changes in HAMP

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.

This entry was posted on Wednesday, March 31st, 2010 at 2:20 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.