Maggie's Reverse Mortgage Blog : August 2008

How the Housing Recovery Act, HR 3221 helps senior homeowners through FHA Reverse Mortgages

The housing and credit crisis of 2008 doesn’t limit its impact to speculators and risk takers. Senior homeowners have also been impacted. Home equity represents a large portion of net worth for the older set. Often, people sell their family home and downsize after retirement. But, in many areas of California and Nevada with home prices realizing dramatic reduction as we enter the fall of 2008, selling a home at this time may not be a good option or may not be an option at all! That’s where the reverse mortgage comes in. You can stay in your home, pull cash out and you don’t have to make payments (but you can if you want). We’re all waiting in anxious anticipation for HUD to announce exactly when, where, how and what the new lending limits will be. We do know there are exciting advances with reverse mortgages that will help more people get more money and enjoy more financial security. We do know the lending limits will increase soon. Many people with existing reverse mortgages will be able to refinance and have more money available, especially if they live in an area that had reduced lending limits up to now. Stay tuned to see what the new limits will be. Up to now, you could only get a reverse mortgage if you already had title to the home. With the new bill, people will be able to purchase a home using a reverse mortgage for financing. A larger down payment that standard financing is required (because no payments are required over the life of the loan). Since we are in a buyer’s market, this is a great opportunity for older people to purchase a new home. Reverse mortgage financing will also be available on Co-ops. The bill puts a cap on the origination fee a reverse mortgage originator can charge. But with the increasing limits and the 2% HUD charges for mortgage insurance, the loan is still costly in terms of up front fees (but no out of pocket fees). It is worth the cost over the long run when it helps maintain a comfortable lifestyle. I’ve always been adverse to cross selling financial products with reverse mortgages and I’m glad to see it has been addressed in the FHA Modernization Act that is part of this large housing bill, although there seems to be some contradiction on the bill. One paragraph strictly prohibits an individual from cross selling a financial product using HECM proceeds, if they receive financial incentive for the sale of the financial product and the reverse mortgage. However the second paragraph indicates that this maybe permissible if a lender has “safeguards and firewalls.” HUD lawyers are working on this but they way I see it, the reverse mortgage works well on it’s own. If you are interested in other financial products, that’s your business. Get your reverse mortgage through a knowledgeable reverse mortgage specialist (I know a good one if you are in California or Nevada), and get rid of mortgage payments, or get a monthly income or establish a line of credit for the future. And you know it’s safe!  by Maggie OConnell www.ReverseMortgageStore.com  800-489-0986

Comment balloon 1 commentMaggie O'Connell • August 17 2008 05:38PM
How the Housing Recovery Act, HR 3221 helps senior homeowners through…
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The housing and credit crisis of 2008 doesn’t limit its impact to speculators and risk takers. Senior homeowners have also been impacted. Home equity represents a large portion of net worth for the older set. Often, people sell their family home and… more