Straight Talk                                

2008. With negative mortgage news dominating the airwaves, seniors who wish to purchase or refinance may have a great new option available to them. Check out why a Reverse Mortgage might be right for you.

“With a reverse mortgage Income and credit history are irrelevant. Instead, the mortgage is based on the equity the homeowner has in the home.” Clients who are in foreclosure may still qualify for a Reverse Mortgage and save their home.

You never have a payback obligation until you pass away, sell your home or move out. Then amount borrowed must be repaid, plus interest. If the home is worth less than the loan amount, the Federal Housing Administration makes up the difference, not your heirs. With a traditional mortgage, the amount you owe decreases over time, and your equity may increase or decrease. With a reverse mortgage, your debt rises over time, and your equity can diminish.

Who Qualifies for a Reverse Mortgage?

Lenders require borrowers to be 62 or older. You also must be able to pay off your existing mortgage with the money received from a reverse loan or own your home outright. You can receive addition tax free money for any purpose you like.

Do I Have Options on How I Get My Money?

You can opt for a lump sum, monthly payments, a line of credit or any combination of the three. In the case of a line of credit, you are not charged interest until you actually borrow the money.

How Much Can I Borrow?

“It depends on your age, the current interest rate and the appraised value of your home. In general, the older you are and the more valuable your home the more you can borrow. Borrowers typically can borrow up to 75% of the equity in their home, said Peter Bell, president of the National Reverse Mortgage Lenders Association.”

What Fees Are Involved?

Closing costs on loans typically are considered expensive. But you don’t need cash to get a reverse loan. The costs can be rolled into the mortgage.

There is an origination fee that amounts to 2% of the loan limit or the home’s appraised value, whichever is less. A mortgage insurance premium fee tacks on 2% of the loan limit or the home’s appraised value, whichever is less. Half of a percent is added to the annual interest rate charged on the loan balance.

Other closing costs commonly charged include fees for document preparation, title search, title insurance and surveying.

What About My Heirs?

Debt from a reverse mortgage never can exceed the value of your home, so none of the debt will pass on to heirs. Your heirs will inherit the remaining equity in the home. The amount of equity is diminished by the debt, just like in a normal mortgage loan.

Why is Counseling Required?

To make certain you understand all risk involved. To find the nearest government-approved counseling agency, contact FHA at (800) 569-4287 or www.hud.gov/offices/hsg/sfh/hecm/ hecmlist.cfm.

Can a Lender Foreclose on My Reverse Mortgage?

Yes, but not because of mortgage payments or interest accumulation. If you fail to maintain your house or fail to pay your property taxes you may be forclosed on.

Who Offers Reverse Mortgages?

Life Settlement Financial Group has partnered with Primary Residential Funding to offer seniors the advantage of living Mortgage Payment Free while living in your own home.

Where Can I get More Information?

Contact Chuck Martin at Life Settlement Financial Group 804-306-2100