“Approximately 75% of the metros covered by the Real Estate Market Reports posted annual increases in home values – a sign of the national housing recovery continuing to take hold.”

You may be wondering if now is the best time to sell your home, right size to a smaller or more manageable home, or stay in your current home. Depending upon the amount of equity you have accumulated in your home, your age, and other qualifying factors, you may be eligible for a reverse mortgage loan.

A reverse mortgage loan may be available to qualified homeowners aged 62 and older who qualify under the Home Equity Conversion Mortgage (HECM) program insured by the Federal Housing Administration (FHA). The amount of the loan is determined by the age of the youngest borrower, current interest rates and the lesser of the appraised value of the home, sale price and the maximum lending limit.

The S&P Case-Shiller index showed that in February, 2013, home values in 20 major markets have increased by about 9% over home values from the same time last year. This is the largest 12-month gain since May 2006². If you are currently living in an area that is seeing home value increases like this, it may be a good time to apply for a reverse mortgage loan.

Though the housing recovery is uncertain, you can take a loan out at your current value and that amount is guaranteed for a reverse mortgage loan, regardless of what happens with the recovery.

Another benefit of a reverse mortgage loan is the flexibility of how the loan proceeds can be disbursed. The loan proceeds are available as a line of credit, monthly payments or a lump sum. Borrowers can choose from available loan options that offer either a fixed rate or an adjustable rate.

Reverse Mortgage Loan Product Changes

Beginning April 1, 2013, the FHA suspended the standard fixed-rate reverse mortgage loan product. However, the HECM Saver is still available as a fixed rate option. The Saver product offers lower upfront costs, but borrowers will not be able to access as much of their equity as they would under the other HECM options.

Anyone considering a reverse mortgage loan should work with a trusted financial advisor to see which reverse mortgage loan option would be best for your needs and financial situation.

If you are interested in learning about a reverse mortgage or how you may qualify for a reverse mortgage loan, please contact us for more information at 866 751.6105.

The post Make Retirement Plans as Home Prices Increase appeared first on Liberty Reverse Mortgage.

This allows seniors to purchase a home that may better fit their needs or allows them to be closer to family members. Just as families outgrow homes as they have more children or their children get older, many seniors would like to down-size to a smaller or more convenient home after retirement. Others choose to install modifications in their home such as ramps, widened doorways, handrails, etc., move to a single story or handicap accessible residence to make the home more comfortable for their needs or move to an independent retirement community.

Financial advisors and Realtors are able to use this program to customize a plan for their clients to purchase homes that might not be available to them otherwise.

HECM for Purchase Requirements:

• All title holders must be aged 62 years or over
• The difference between the purchase price of the new home and the HECM loan proceeds must be paid in cash from qualifying sources such as the sale of a prior residence or homebuyer’s other assets or savings
• Your new home must be your principal residence and must be occupied within 60 days of closing
• Your home must meet FHA minimum property standards
• Evidence of a completed counseling session with a HUD-approved Reverse Mortgage counselor is also required. A list of counselors in your area can be found here or by calling (800) 569-4287.
• Your home must be a single-family residence in a 1 to 4-unit dwelling, or FHA approved condominium.

Benefits of a HECM for Purchase

A HECM for purchase can eliminate monthly mortgage payments, increase purchasing power and allow the individual to make only one initial investment (down payment) for the purchase of your home.

While many retirees are obtaining traditional reverse mortgage loans to stay in their home, a growing population is choosing to right-size into a home that better suits their needs. If you have questions about which reverse mortgage loan option would be best for you, please click here (or call 866 751.6105).

The post Using a HECM To Purchase Your Next Home appeared first on Liberty Reverse Mortgage.

Both HECMs and HELOCs require the borrower to repay the loan and follow through with specific responsibilities of the loan, including continuing to pay for all required taxes and insurance and maintaining satisfactory condition of the home and property.

Home Equity Conversion Mortgages

Homeowners who are 62 years of age or older and have sufficient equity in their home may qualify for a HECM loan. Any existing mortgage is paid off using the proceeds from the reverse mortgage loan. Therefore, homeowners will not have to make monthly mortgage payments. Typically the loan becomes due when you sell your home, move out of the home as your primary residence or pass away.

Failure to meet loan obligations may also cause the loan to become due and payable. The amount of money you can receive from a HECM loan depends on the borrowers’ ages, interest rates, equity in the home, and the lesser of the home’s appraised value, sale price or maximum lending limit.

HECM loans are insured by the Federal Housing Administration (FHA). This insures that borrowers will continue to receive their loan proceeds even in the event that the lender becomes insolvent. Borrowers are also assured that neither they nor their heirs will ever owe more than the home’s value provided the home is sold to repay the loan.

Borrowers are also required to complete counseling from a Department of Housing and Urban Development (HUD) approved agency. Professional counselors will go over the specifics of a HECM reverse mortgage loan with the borrower and can answer any questions.
Borrowers have the option of how they will receive their funds from the loan. The fixed rate HECM loan program allows borrowers to receive their loan proceeds as a lump sum. The adjustable rate HECM loan allows borrowers to receive funds monthly as a term or tenure payment, a line of credit, a lump sum or a combination of these disbursement options.

Home Equity Line of Credit

To meet the requirements of a HELOC, borrowers have to meet specific credit and income qualifications and the loan must be repaid in monthly payments. Borrowers may withdraw funds during the draw period.

Like HECMs, borrowers may obtain either a fixed rate or an adjustable rate HELOC, however this is dependent upon the lender and these loans are often attached to a prime rate plus a margin.

The post HECM vs. HELOC – What is Best for Me? appeared first on Liberty Reverse Mortgage.

Home Equity Conversion Mortgages are a popular option for seniors planning to age in place. If your parents are looking in to this option, there are some things to make sure they understand as they move forward.

Is Counseling Required?

The federal government requires anyone interested in moving forward with a HECM to participate in reverse mortgage counseling approved by the Department of Housing and Urban Development agency (HUD). During the counseling session, the counselor will explain how a HECM works, any costs that may be associated with the loan, other options that may be available and will answer any questions your parents may have.

How Much Money Will They Receive?

There isn’t a universal amount of funding that borrowers receive. The amount will depend on the age of the youngest borrower, the amount of equity in the home, current interest rates, the home value and sale price or maximum lending limit.

What Happens When My Parents Pass Away?

When your parents no longer live in the home, the full amount of the loan becomes due. The heirs will not be required to pay more than the value of the home at that time, even if the loan balance exceeds the value of the home. Some heirs choose to pay off the loan to prevent selling the home. In this case, the full amount of the loan must be repaid even if the balance is higher than the home’s value.

If only one of your parents is on the title of the home, the reverse mortgage will not automatically transfer to the surviving, non-borrowing spouse and the loan will become due. This is also true for adult children or others living with the borrower.

The post My Parents Are Interested in a Reverse Mortgage Loan appeared first on Liberty Reverse Mortgage.

Your age, current interest rates, and the lesser of your home’s appraised value, the sale price, or the maximum lending limit are used to determine the size of your reverse mortgage loan. A lender will consider these factors to calculate how much home equity you can access, and this money is then loaned to you for as long as you remain in your home and maintain it as your primary residence.

Your Payment Options

The majority of borrowers who take out a reverse mortgage own their home outright, or have a significant amount of equity in their primary residence. If there is a balance, the reverse mortgage loan proceeds must be used to pay off the loan at the time of closing. Any remaining funds from the loan can be received in the following ways:

• Lump sum: all of the funds in one payment
• Term: a monthly amount of money to be paid for a set time period
• Tenure: a monthly payment for the life of the loan
• Line of Credit: unscheduled payments/installments of however much you need when you need it, until the credit line is exhausted
• Some combination of these options

Types of Interest Rates

You can choose either a fixed rate interest for your loan, or one with an adjustable rate.

If you choose a fixed rate, lenders require that borrowers take any reverse mortgage proceeds in a lump sum. Adjustable rates, on the other hand, offer more flexibility in how you can receive your funds.

Lines of credit, for example, are only available with an adjustable rate loan. If you choose this option, the unused balance of your available funds actually increases over time through a “credit line growth rate,” which is the current interest rate plus half a percent, according to the Department of Housing and Urban Development.

Like any mortgage product, you will be charged an interest rate on your reverse mortgage. Since you’re not required to make monthly mortgage payments, any interest accrued is added onto your reverse mortgage loan balance. As a homeowner, though, you are still responsible for keeping up with the property taxes and homeowners insurance associated with your property.

Options For Repayment of the Loan

When you die or move out of your home, the reverse mortgage must be repaid. This is usually accomplished through selling the house, although in some cases your heirs may choose to pay off the loan to keep the home in the family.

FHA-insured reverse mortgages are non-recourse loans, so even if your loan ends up exceeding your home’s value due to factors such as falling home prices and accrued interest, you or your heirs will never be required to pay more than what the home is worth when the loan is repaid.

If you’re interested in learning more about how a reverse mortgage works and how one could work for you, try our reverse mortgage calculator in the upper left hand corner for a free eligibility analysis.

The post How Does a Reverse Mortgage Work? appeared first on Liberty Reverse Mortgage.

The most traditional reverse mortgage loans are Home Equity Conversion Mortgage (HECM) loans. With a HECM loan potential borrowers must meet with a Housing and Urban Development (HUD) approved counselor before their application may be processed. HECM counseling is designed to educate and allow homeowners to make their own decision about utilizing a reverse mortgage loan.

Reverse mortgage counselors assist homeowners in looking at the homeowner’s entire situation which ranges from finances, level of health, and desired retirement lifestyle. HECM counselors are required to pass an exam and receive specialized education in order to be HUD approved. HECM counselors discuss the:

• Homeowners purpose for using a reverse mortgage loan
• Life factors that could affect the homeowner’s ability to age in place
• Different reverse mortgage loan types
• Amount of loan proceeds the homeowners may be able to receive
• How much a reverse mortgage loan may cost
• Other services and product options that may help the homeowner’s situation

A list of agencies with HUD approved HECM counselors can be found at: HUD Approved Counselors

If you are considering a reverse mortgage loan, do plan ahead and do not delay in scheduling a HECM counseling session – HECM counselors are required to send a packet of information to each homeowner, and allow time for the homeowners to review all documents, before the counseling session can take place.

The post Purpose of HECM Reverse Mortgage Counseling appeared first on Liberty Reverse Mortgage.