Our go-to gal, Nova Home Loan’s Sr. Loan Officer, Jeannie Bolger,  mentioned Reverse Mortgage’s the other day and I thought you’d all appreciate some insight into them.

Like the name implies, a Reverse Mortgage is a product that allows you to convert some of your home’s equity, from all those mortgage payments you’ve been making over the years, into cash without the need to sell your home or pay additional monthly sums. The only point of entry is age: You must be 62 or older to be eligible for a reverse mortgage. And if the state of your credit is on the rocks because it has “issues”? Get this: no credit check required.

If you’re still reading, you’re eligible, you know someone who’s eligible, you’re not so far from being eligible, or I’m just a captivating blogger who you read because you know you’re gonna’ hear something good. Whatever the reasons, having extra money for home improvement, taking care of healthcare expenses, paying off your current mortgage, or adding to your retirement income are all common reasons why people apply for a Reverse Mortgage.

Word on the street, is that there are numerous restrictions on how someone who qualifies for a Reverse Mortgage can use the funds, but Jeannie Bolger gives us the facts:

“The senior can use the proceeds anyway that they wish with one exception: they cannot pay someone simply for advising them to get a reverse mortgage. Seniors can use the money for:

• Medical expenses
• Travel
• Pay property taxes or insurance
• Purchase an equity or long-term health coverage
• Large purchases (RV, a second home, etc.)
• Early inheritance distribution
• Normal household expenses
• In-home health care
• Home repair or improvement
• Eliminate an existing mortgage payment
• Anything you want or need

And according to the Department of Housing and Urban Development’s FAQ on Reverse Mortgages, “Unlike a traditional home equity loan or second mortgage, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence or fail to meet the obligations of the mortgage.”

You can receive additional free information about reverse mortgages in general by contacting the National Council on Aging at (800) 510-0301 or   downloading their free booklet, Use Your Home to Stay at Home, a guide for older homeowners who need help now.

The Federal Housing Administration’s HECM reverse mortgage eligibility guidelines require that you:

• Be a homeowner 62 years of age or older
• Own your home outright
•         or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan,
• You must live in the home.
• Your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. (HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.)
• You are also required to receive consumer information free or at very low cost from a HECM counselor prior to obtaining the loan.
• You can find a HECM counselor online or by phoning (800) 569-4287.

The difference between a reverse mortgage and a home equity loan.

“With a second mortgage, or a home equity line of credit, borrowers must have adequate   income to qualify for the loan, and they make monthly payments on the principal and interest.  A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments.  With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.”

~ HUD

The Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to understand how reverse mortgages work, the types of reverse mortgages available, and how to get the best deal. See this link and Get the Facts before Cashing in on Home Equtiy

See Jeannie Bolger, Sr. Loan Officer for your direct connection to a Reverse Mortgage.

Licensed Mortgage Consultant #194387
Nova Home Loans
2850 E. Camelback Road, #270
Phoenix, AZ 85016
602-550-8674  Mobile
602-385-4812  Office
602-464-7322  Direct Fax
jeannie.bolger@novahomeloans.com
http://www.novahomeloans.com/jeannie.bolger

Everybody asked me, “Hey, I’m upside down in my loan, but I’ve never missed a payment. Why can’t I refinance and take advantage of the lower rates?”

This is a good question and the answer has a lot to do with making our economy better. Basically, rather than allowing a ton of properties to foreclose, the government could take a smaller loss by just allowing you to refinance at a lower rate, even if your house is worth less than the market. This puts actual dollars in the economy!

That is what the Obama Administration is doing now. Here’s the take away message: call the lender who gave you your loan and ask them if you can do this.

As you may recall, The Federal Housing Finance Agency and the Department of the Treasury introduced HARP in early 2009 as part of the Obama Administration’s Making Home Affordable program. HARP is only one of several refinancing options available to homeowners. This plan in unique in that  it is the only refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits.  Since April 2009 when HARP has helped approximately nine million families refinance.

To qualify you must meet the general criteria. Only mortgages sold to Fannie and Freddie on or before May 31, 2009, are eligible for refinance under HARP.  To learn if your mortgage is owned or guaranteed by Freddie Mac or Fannie Mae, you can visit their websites. Borrowers must be current on their loans and have no late payments in the last six months. Your current loan-to-value (LTV) ratio must be greater than 80%.  Mortgages that have borrower-paid mortgage insurance may refinance, but borrowers must keep the same level of mortgage insurance they had on the previous loan. And homeowners who have already refinanced through HARP are ineligible to refinance again.

So, why these changes now? When it was launched in March 2009, the program failed to meet regulators’ expectations. With mortgage interest rates at historic lows, now is a great time for eligible borrowers to refinance.  Importantly, such refinances bring benefits to borrowers, to housing markets, and to the Enterprises and taxpayers.

The proposed these enhancements become available November 15^th. If you have questions you can contact mortgage consultant Jeannie Bolger 602-385-4812. We are not certain what all of the rules will say on November 15th, but Nova Home Loans should be able to help you, regardless of where your original loan came from.