HECM for Purchase Program.  While not accepted in some states due to technical wording and conflicts of state laws and constitutions, the overall program allows for mature borrowers to apply for a reverse mortgage and use the equity to purchase a new home which fits their needs.

Fixed Interest Rate HECM.  Typically the HECM program has an adjustable interest rate which may change on a monthly basis.  The newly rolled out fixed reverse mortgage interest rate HECM allows for the borrower to receive a fixed interest rate over the life of the loan which gives the borrower a peace of mind regarding their payment amounts at the end of the loan.  This program does not have the flexible payment options offered in the adjustable interest rate programs but the peace of mind often outweighs the lower rate available with the ARM HECMs.

Flexible Payments.  Using an ARM HECM gives borrowers the opportunity to receive the varied or combine payment options of a onetime lump sum payment, monthly payments, and/or a line of credit.  Again with the fixed interest rate HECM there is only one payment option which is the lump sum available only at time of closing.

New Margin Index.  The mortgage industry will no longer use the CMT index to measure margins for reverse mortgages or mortgages as a whole.  This is due to the rising costs associated with wider margins for mortgage loans.  Meaning lenders were allowed to charge mature borrowers more at closing for their reverse mortgage which left the borrower with less cash to receive.  The new margin index is a London based index known as the Libor.  The Libor offers more reasonable margins in hopes of maximizing the borrower’s cash return.

Ethics Codes Strengthen.  The National Reverse Mortgage Lending Association has enforced two new ethics advisory, the 2009-02 Lead Generation State Licensing Requirements and Ethical Advertising and the 2009-01 Ethical Offers of Other Financial and Insurance Products and Services.  Both advisories provide borrowers against borrowing misdeeds in ethical practices in the reverse mortgage industry.

New Counseling Requirements.  Due to more and more mature borrowers being unable to fully understand the requirements of the reverse mortgage program the U.S. Department of Housing and Urban Development and the Federal Housing Administration collaborated and implemented new counseling requirements for borrowers interested obtaining a reverse mortgage.

Loan Limit Increases.  For the fiscal year 2009 the Obama Administration has increased the amount a borrower can receive on their home.  The reverse mortgage limit increased from $417,000 to $625,500.  The increase will end on December 31, 2010.

Refinancing Updates.  HUD and FHA have updated the refinancing guidelines for mature borrowers who have made it to their maturity date on their present reverse mortgage.  The new terms of refinancing a reverse mortgage includes the Anti-Churning Disclosure form which prohibits mortgage lenders from benefitting from a reverse mortgage refinance on behalf of the borrower.

A lot is happening with the economy now that reveals that things are not the same as they used to be. This all tends to make the future more than a little financially unsure – especially for seniors who have to live on a fixed income. One way to meet those uncertainties and provide for your senior years is with a reverse mortgage.

A Reverse Mortgage Can Provide You with Some Excellent Benefits

There are a number of benefits that can be gained from a reverse mortgage loan which will be especially useful in your senior years. Since there are probably some questions, here is a brief overview of what does not happen in a reverse mortgage.

For one thing, your home will stay under your control. You will not lose it as long as you live in it, pay the insurance and taxes and keep the home in good shape. There are no payments to make, and any money left over will get passed to your heirs. If for some reason, you decide to sell the home after you get a reverse mortgage – you can do so because it is your house. Of course, the mortgage will need to be paid off immediately.

A Reverse Mortgage can provide monthly payments

One of the best benefits of reverse mortgages is that it can supply you with a monthly payment for life of the loan. You have control over how the reverse mortgage is set up, and you also choose how you want to receive the money.

You can choose between a lump sum, a line of credit, monthly payments, and some combination of them. For instance, you could get a lump sum of 20%, a line of credit of 20%, and monthly payments for the balance. This could enable you to travel, pay off a bill, buy a car, or anything else, and still have money left over.

A Reverse Mortgage Requires No Payments

Regardless of what your income is now, you do not need to be concerned with payments on the new reverse mortgage for as long as you live in the house. The lender will be paying you instead. These payments are your increased cash flow and you can use the money as you need or want to.

Qualifications Are Easy to Meet

It is easy to qualify for a reverse mortgage. Even if your credit rating is bad and you have a lot of bills – you can still qualify because they are not considered in the application process. There really are only two requirements. The first is that you must be at least 62 years old. The second one is that you must have more equity in the home than what you owe on the house.

Counseling Will Be Required Beforehand

Before a reverse mortgage can be issued, you should receive counseling from a third party agency. This counseling session will ensure that you understand the process, your options, and it will also help you understand whether or not it is in your best interest to do so. Any questions you have will be answered by the counselor to your satisfaction. One thing that you want to find out about is whether or not payments from a reverse mortgage will affect your future Medicare or Medicaid payments.

A reverse mortgage loan can be the ideal tool for your retirement years. Your home’s equity can be put to excellent use and give you the security you want during that part of your life. Your relatives will not have to be concerned about how to provide for you and it can even help pay for medical bills as you grow older.

How Does A Reverse Mortgage Work?

A reverse mortgage provides seniors with some of the money that has been accumulated in their home’s equity. The money is provided on a loan basis and charges and fees do apply.

The home remains the property of the owner and they are allowed to live in it for as long as it is needed. At the end of that time, up to a year may be given to either pay back the loan or sell the house to do so. Any money remaining in equity is passed on to the estate.
How Can A Reverse Mortgage Provide for Your Retirement Years?

When a reverse mortgage loan is obtained, the first thing that happens is that the current mortgage will be paid off. The remaining money in equity is then able to be used as you determine. You can get the money as a lump sum, a line of credit, or as monthly payments. A combination of these features is also possible, which allows you to get the best usage of your money.

The older you are the more money will be available to you. This is because the money will be distributed over a shorter period of time. It is not possible to owe more than the value of the home. While you live in it, you do not need to make any payments to the lender.

What Kind of Homes Are Eligible?

Many homes can qualify for a reverse mortgage. This includes nearly all single-family dwellings, along with other ones up to four units. Manufactured homes that are on a permanent foundation and on personal property are also available. Trailer homes are not qualified. The home must meet standard FHA guidelines.

The maximum amount of money that can be paid toward a reverse mortgage is $625,500. This figure is set by HUD and is good until the end of 2009. After that, it is yet to be decided by Congress.

What Should You Know Before You Get a Reverse Mortgage?

Getting a reverse mortgage is something that requires that you know all the facts first. You should not enter into a reverse mortgage without knowing all the details.

For one thing, there are a number of fees and costs that will be involved. Interest rates can affect how much you receive. Higher rates mean that you will receive less. In addition, a home’s value can decrease, which will also reduce the amount you will be eligible to receive.

Medicaid may also be affected by amounts you get, too. You will need to check on this prior to signing anything if you are hoping to be able to get Medicaid benefits.

Many people, however, can live a more comfortable life while in retirement with a reverse mortgage. It can enable you to receive a sizable amount of money, pay off your bills, and have money available for medical costs. Third parties are available to discuss whether a reverse mortgage is right for you. Why not get started today and discover if a reverse mortgage is right for you?

Like any loan, a reverse mortgage must be repaid to the lender—otherwise, there would be no incentive for them to hand over such quantities of money. Of course, unlike a regular mortgage the borrower will not pay back the money immediately. In many cases the borrower’s lifespan will not outlast the breadth of the loan, meaning the lender gets paid through the posthumous sale of the house. If the borrower sells the home, refinances, or relocates, the loan must begin to be repaid.

A reverse mortgage liquefies the existing equity in the home, making it accessible where it was not before, but it also diminishes the equity in the home. To qualify for a reverse mortgage the original mortgage must be fully or almost fully paid off, so invariably the home has a high equity to begin with. Homeowners near the end of life will generally have enough equity to last for the duration of their time in the home, however diminished equity also means diminished inheritance for family left behind.

You cannot receive a reverse mortgage if you have not finished paying off a certain amount of your house. If you are close to paying off your mortgage, you will have to use the funds that you receive and possibly some of your savings for that purpose, until your home is paid off. If you owe too much, you will not be able to qualify for the reverse mortgage.

Since there is a longer waiting period for the lender until receiving repayment of the loan, they must charge higher fees for their service than those of traditional loans. A reverse mortgage is a greater risk for the lender, and a greater loss overall of home value for the homeowner. In many cases, the benefit of receiving home equity in the form of cash reasonably outweighs the added costs of a reverse mortgage. What is considered worth the investments should be determined on a case by case basis.

People tend to be suspicious of the reverse mortgage program due in part to misunderstanding and in part to less than honest reverse mortgage lenders. The key to making the right choice is to be informed about the product, correctly inform friends and family members who have stake in your decision, compare the different services, and review alternate options before signing anything.

Be wary of lenders who make the program sound too good to be true. There are real disadvantages that accompany the advantages of a reverse mortgage, and some salespeople trying to turn a profit will avoid telling you the full truth when they can. In the end, some of the costs associated with a reverse mortgage are there for your own protection, so a lender offering a cheaper than average deal may turn out to be a riskier product in the long run. There is plenty of legitimate information available that you can use to compare and contrast the different lenders you are considering working with.

If you carefully consider the disadvantages to receiving a reverse mortgage on your home and it still seems right for you, than you should feel free to get excited about great benefits the program has. Reverse mortgages are regulated by the government, and safety nets are updated frequently to protect consumers. By law, you will receive counseling to ensure that you know what you are getting yourself into. Living off a reverse mortgage, you can gain personal independence by having enough money to support yourself in your retirement years, and to even enjoy yourself! You are protected from the lender ever taking your home, and a reverse mortgage can be the difference between moving away and staying in the neighborhood that you have made your home. You can custom tailor your program to suit your own needs, from the amount you receive to the rate it is disbursed. It is a program that, at is best, is designed for the benefit of the homeowner.