Posted on October 11th, 2010
Reverse Mortgages are providing more money
With the new changes and programs introduced on October 4th reverse mortgages are currently providing more money than they were a week ago. This is due to HUD lowering the floor limit used for the Expected Interest rate. Click here to read more on reverse mortgage interest rates.
Most reverse mortgage programs are currently below the Expected Rate floor set by HUD, which is now set at 5.0%. If interest rates start to go up, and are higher than the 5.0% floor, it will impact how much available money there will be. This is something homeowners considering to apply for a reverse mortgage have to be concerned with. Since the expected rate is not far below 5.0% on a couple of the adjustable rate programs, a slight increase in rates will start calculating less money. Our goal is to maximize the amount of money available for you and this is something you need to consider.
This reduction in the Floor Limit also caused a reduction in the Fixed Rate Reverse Mortgages available. Typically, the fixed rate reverse mortgages are set at the Floor Limit in order to calculate the most money. Then the closing costs need to be considered in determining the net available monies. Our goal is to keep closing costs as low as we can in order to maximize the amount of money you get.
One last option is to look into setting up a line of credit and letting it sit there and grow while rates are below the floor limit, which will maximize the amount of money available. If rates go up after you get a reverse mortgage your line of credit will grow at this increased rate as well. If rates go up before you establish your line of credit you could have less money available due to the higher expected rate at application. This can be confusing and we would be happy to discuss this in more detail as everyone’s situation is unique. We are always committed to helping you make the best decision possible.
Call us today if you would like a free/no obligation consultation with the new program changes.
Posted on October 8th, 2010
As of September 11, 2010 HUD has implemented a new protocol for the federally insured reverse mortgage HECM’s (Home Equity Conversion Mortgage). This change is to help improve the effectiveness of the counseling for homeowners considering a reverse mortgage. This is also causing a longer process in obtaining a reverse mortgage if you are not aware of these changes and properly prepared. HUD’s goal has always been to assure homeowner’s understand their options and responsibilities with a reverse mortgage.
We are also seeing agencies charge for their counseling services again. They have the ability to charge up to $125 for the HECM counseling. Many of the agencies receive grants from HUD which allow them to offer this for free. If the agency is lacking funds, along with the amount of time the new process involves, we may not see agencies offering this for free as often. If you are not certain a reverse mortgage is right for you does it make sense to pay $125 to find out? Our goal is to sit down with you and go over all your options and help you determine whether or not a reverse mortgage makes sense and which programs may be beneficial to you. There is no obligation or charge to sit down with us in order to learn your options. If you know this is the direction you want to go after sitting down the HUD counseling would be the next step.
It is also important to sit down with a company/individual experienced in the industry. We have noticed with all the changes occurring the counselors are not completely up to date on all the new programs and options available. A lot of the counselors wear many hats in their position and reverse mortgage counseling is only one part of their job. Many are new to reverse mortgage counseling as well. There have been instances where counselors have advised homeowners to get the lowest closing costs possible. This is a concern because there are options today with very low closing costs, but this option may not be in the best interest of the homeowner due to the potential interest that may accrue against the loan. And a company may be charging someone a higher interest rate in turn for lower closing costs. This could also cause the loan to be a lot more expensive over time due to the interest. We always sit down with people and go over the total costs of a loan, which includes not only the closing costs, but the potential interest that accrues. It is only through this review you can properly choose the best program for yourself. Our goal is to find the best program with the least ‘total costs’ for you.
To help you prepare for your counseling you will need the following items prior to your appointment:
1. Using Your Home to Stay At Home
2. Preparing for Your Counseling Session
3. Loan Comparison
4. Amortization Table
5. Total Annual Loan Cost (TALC)
When considering a Reverse Mortgage in Massachusetts you will need to remember the requirements set by the Massachusetts Division of Banks. You do not want to get reverse mortgage counseling by someone not approved by the MA Division of Banks. Please call us for further details on this.
We would be happy to email, fax, or mail these items to you in order for you to be properly prepared for your counseling. As always never hesitate to give us a call or send us an email. We will give you the same caring service whether you decide to move forward with a reverse mortgage or not.