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Reverse Mortgages Soar Amid Coronavirus Pandemic
Reversemortgage is getting a second look as a possible alternative source of stability amid the coronavirus crisis, which has caused the 401(k)s to shrink away and the stock market to behave just like an oscilloscope. The growing equity that many seniors have in their property is one of the many reasons behind the reverse mortgage’s new appeal.
The National ReverseMortgage Lenders Association said that homeowners who are at least 62 years old saw their housing wealth increase by $39 billion starting from the third quarter up to the fourth quarter of the past year, setting a new record of $7.23 at the end of the year.
The volume has increased substantially, at about 67% year over year growth for this specific sector. The customer of reverse mortgage loan is the older homeowner who are in their retirement, which recently got pummelled by around 20% and 30%. Most homeowners think they should be accessing their home equity instead of selling off their position or living off their retirement hoping that in time, it will all come back.
Even though economic crises are not new, the global depth as well as scope of the existing situation is unprecedented and has hit consumers, especially seniors, very hard. This has caused a lot of them to inquire about reverse mortgage loans.
Most of the borrowers of reverse mortgage Columbia are at the center of the crisis. Many of them are concerned about their financial health, stability, and ability to age in place. Many of them are wondering what they can do to hedge their risk during the current movements in the market and most are turning to the security and safety offered by reverse mortgages.
The inquiry levels are at levels that haven’t been seen in three years and can be considered as part of a much wider trend with more people turning to home equity to assist them in achieving a safer and more secure retirement.
One important aspect in driving this brand new consumer interest is working through the confusion by a lot of people about how the product works. Even though reverse mortgages have existed for several years, many consumers remain uncertain about the loan’s design.
There are still many misperceptions regarding reverse mortgage. One of the most common questions is how does it work. Aside from noticing a surge of inquiries from senior homeowners, more financial advisors are also asking questions and wanting to be educated about how reverse mortgage loan works so they could recommend it to their clients as an alternative to selling off their position.
The new push for educating consumers include making clarifications about the servicing difficulties in the conventional mortgage space, which is being buried in waves of forbearances. But many of today’s potential reverse mortgage borrower has already performed some form of homework in advance for any kind of lender conversation.
Call David Stacey, Reverse Mortgage Specialist, if you need to know more about reverse mortgage.
David Stacey Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 http://reversemortgagecolumbiasc.com/
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Reverse Mortgages: The What, The Who And The How
There are different types of home loans on the market. One of which is what we call reverse mortgage. Some people might think that this is similar to a traditional mortgage or home loan. The only similarity is that both are loans against a borrower’s home. To understand this type of loan further, let us first discuss what a reverse mortgage really is.
What is a Reverse Mortgage Loan?
A reverse mortgage borrower does not need to pay back the lending company as long as he/she still lives at the residence used as collateral. The loan amount will be based upon the home’s equity and the age of the borrower. A borrower has the options to receive the funds in different terms – monthly payments, a lump sum, a line of credit, or a combination of these methods. You must take note that in reverse mortgage, you are not required to pay the loan back unless you sell your home, move out or die. One of the many advantages of having this kind of loan is that you can use the loan money without having to move out, rent or repay the loan each month.
Who can Apply?
You or your spouse are at least 62 and are co-owners of the residence.
You must own a home (this home should also be your primary residence).
One of the good things about a reverse mortgage in Columbia is that you don’t need to have an income to qualify (however, you do need to demonstrate that you have the resources to pay the homeowners insurance and real estate taxes). Your home must meet the U.S. Department of Housing and UrbanDevelopment (HUD) standards to qualify. If you own a mobile home or cooperative house, you can’t apply for this kind of loan. Only single-family home, a one-unit to four-unit dwelling, a condominium unit or some other HUD-recognized dwelling unit are the only types of homes accepted.
How to Apply?
Shop and Compare. You can use the internet to look for loan companies and compare their rates and fees. It is always a wise move to shop around so you can weigh your possible options. You can also ask people you know like your family members, friends, relatives and co-workers what they know about this type of loan or read reviews. However, weigh their opinions against what is best for you. There are a lot of misconceptions about reverse mortgages and taking someone’s advice that is hot knowledgeable can hurt you. Choosing a legitimate and reliable lending institution can be a difficult task though, since a lot of scams have evolved in the market. Contact Reverse Mortgage Specialist and schedule a time to get all your questions answered.
After you have chosen a local lending institution, you can now fill out and submit the reverse mortgage application form. Be sure to have the necessary documents such as your credit report, proof of your identity, etc. Requirements may vary depending on your chosen lender.
You might need to present a property appraisal.
Once approved, make sure that you have read and understood everything before finally signing any contract or document.
Meeting with a qualified counselor like David Stacey is your best bet for making sure you are doing what is right for you and your future. Call Reverse Mortgage Specialist today to schedule a convenient time to meet.
David Stacey Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 http://reversemortgagecolumbiasc.com/
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Using Reverse Mortgage To Pay For Long Term Care
When it comes to long term care insurance, seniors have the option to use a reverse mortgage and other options to cover their long-term care expenses. Since long term insurance will ask you to be in excellent health, this isn’t always available to everybody especially for people who are older whose premiums tend to be prohibitive. In case you are at least 62 years old and you own your home, you can obtain a reverse mortgage to cover your care at home costs or your long term care expenses, which insurance policies don’t usually pay for.
A reverse mortgage loan allows you to borrow from the amount that you’ve already paid for your home. You are tapping into cash that’s otherwise made available to you only if you decide to sell your home. The remaining balance of the home equity will be given to your estate.
You can choose to receive monthly payments, as a line of credit, or lump sum. Plus, the proceeds that you receive are tax-free. Although the age of eligibility is 62 years old, it is ideal to wait until you are on your early 70s. If the borrower is much older, he or she will have higher chances of getting a bigger loan.
The federal government has also set some maximum limits regarding the amount of equity that could be borrowed. Generally speaking, just about 50% of the home’s value is made available through reverse mortgage.
You can use the money you get from the reverse mortgage Columbia loan to cover your home health care expenses. Since you should repay the loan once you decide to sell the house, the long term care in another facility cannot be paid for using the reverse equity mortgage unless the property’s co-owner qualifies to continue using the house as his or her primary residence.
Reverse Mortgage and Long Term Care Expenses
A study conducted by The National Council on the Aging (NCOA) revealed that using reverse mortgages to cover long term care expenses at home can help address what continues to be a real problem for most older Americans as well as their families.
The country spent $123 billion in 2000 for the long term care of those who are above 65 years old, with the amount poised to double over the next three decades. Almost half of those costs are covered out of pocket by people and just 3% are paid for the insurance companies while the health programs of the government cover the rest.
The study also showed that out of the 13.2 million reverse mortgage loan candidates, about 5.2 million are either receiving Medicaid or may need Medicaid in case they had to deal with covering the expensive cost of long term care in their homes. This segment of the older population of the country is economically vulnerable may get $309 billion in total from reverse mortgages that could help cover their long term care.
Call Reverse Mortgage Specialists if you want to know if taking out a reverse mortgage is the most suitable option for you.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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Who Will Own Your Home After Getting A Reverse Mortgage?
Many people think that getting a reverse mortgage loan means they are selling their houses to a lender for a lower value and that the lender will stand to benefit once the value of your home increases in the future.
If you get a reverse mortgage, just like when you obtain a traditional loan, the lender will take a security interest in your home’s value for the outstanding balance that you carry out.
With a traditional mortgage, you will own the house even though you owe a big amount of cash at the outset of your loan. You just pay off the amount of the loan over time until you have paid it off completely.
With reverse mortgage loans, you continue to own the house but you will owe a smaller loan amount at the start of the loan and the amount that you owe will grow until your death or once you have decided to move out of the house for good. You build up interest on the reverse mortgage loan so you owe much more than once the time comes that you have to repay the loan, which is usually done by selling the house.
Get The Benefits Of Selling Your Home
There is a misconception that with a reverse mortgage, the bank owns the house. That is not true. Although it may seem like you are selling your home to a lender. But the truth is, you are only selling them a part of your house.
The reverse mortgage will pay off your existing loan. You will have access to the equity of the house now so you could live the way you want, without the responsibility of paying repayments every month.
When you purchase a new house, you usually put down between 5%-20% of the purchase price, so it is like the bank is purchasing most of your house, but letting you live in it while you pay them back what you owe with interest.
This is a lot like reverse mortgage. If you have home equity remaining in your house at the end of the day when your home sells, it will still belong to you as the borrower or to your estates.
You Own The House
You might be thinking that a reverse mortgage Columbia may prevent you from repainting your home, renovating, renting out a room, or having a family member move in.
Once again, that is not true. A regular reverse mortgage will not restrict you from doing any of these things. With a reverse mortgage, you are the legal owner of the house and your name will remain on the title.
There are some restrictions on certain things like renting out the house while you are not living in it. It is because this kind of loan was created to allow retirees to age in place and that is why you should stay in the house and use it as your primary residence.
Call
Reverse Mortgage Specialist if you want to know if this type of loan is the best option for you.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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Tips To Avoid Running Out Of Reverse Mortgage Proceeds
Although a reverse mortgage is generally advertised as offering a secure income source for the rest of your life and they could, under the ideal conditions, running out of cash sooner than you anticipated is one of the main risks of taking out this kind of loan. A reverse mortgage is a kind of loan wherein homeowners who have significant home equity can use it to apply for a loan.
How To Receive A Reverse Mortgage?
There are six different ways for you to receive your reverse mortgage Columbia proceeds, and the one you select will have a significant effect on how easily and quickly you can use up your ability to borrow against your house.
1. Lump sum
2. Line of credit
3. Tenure reverse mortgage
4. Modified tenure reverse mortgage
5. Term reverse mortgage
6. Modified term reverse mortgage
All six options have different levels of risk to reverse mortgage borrowers.
How To Avoid Outliving Your Reverse Mortgage?
Lump sum
The lump sum is the only reverse mortgage payment plan that has a fixed interest rate. It may be a low risk method to borrow and you may know how much you need to repay but this option has its own set of unique disadvantages.
The common problem with reverse mortgage borrowers is that they don’t plan correctly. They have a tendency to mismanage the proceeds. When they have used up the cash, they don’t have any sources of income to rely on. The lump sum option is also risky for younger borrowers who have longer lifespans and don’t have a different retirement resources.
Line of credit
The possibility of you running out of cash with a line of credit option whether used alone or along with a term or tenure plan will depend on how you could use the payment plan. Just like a regular HELOC or home equity line of credit, a reverse mortgage line of credit payment plan can’t be revoked, which means it cannot be canceled or reduced due to the changes in your home value or finances.
With this plan, you won’t be at risk of losing access, your available line of credit will go down every time you draw upon it, and just pay the interest and mortgage insurance fees on the money that you borrow. Plus, a line of credit will give you access to more funds as time goes buy since the unused amount grows every year whether or not the value of your home increases. The unused part of the payment plan will grow at the same interest rate that you are paying on the money that you have borrowed.
Tenure reverse mortgage
This option has the least risk of running out of proceeds provided that the loan borrower keeps up with the property taxes, homeowner’s insurance, and home repairs. If the borrower fails to do any of these things then the loan will become due and payable. The interest rates are adjustable as long as the borrower will stay in their home as their primary residence.
Modified tenure reverse mortgage
It provides smaller payments per month compared to a straight tenure plan and the line of credit would be a lot smaller compared to a straight line of credit.
Term reverse mortgage
This payment plan will put the borrower at risk of outliving their loan proceeds. With this option, you reach the principal limit of your loan at the end of the term. After that, you will not be able to get more proceeds from your loan. But you’ll get to stay in the house with the caveats included in the lump sum option.
Modified term reverse mortgage
This option provides the borrower with only a monthly payments for a set of time. However, the line of credit will stay available until it is consumed. If the borrower plan how to use the line of credit, then he or she will unlikely run out of money.
One good way to limit your risks of outliving the proceeds is to wait as long as you can to take out this kind of loan. Change your payment plan if you have already taken out this loan and you think that you could be at risks of outliving the reverse mortgage loan.
Despite of what the ads say, there are several ways for you to outlive your reverse mortgage. Be sure to understand the situations under which this type of loan might not offer financial stability for life. You can use that knowledge to determine if you should take out this loan and which payment option makes the most sense and offers the best security.
Call Reverse Mortgage Specialist for more information about this type of loan.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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How Can Seniors Free Up Cash For Retirement Using Reverse Mortgage?
Do you want to free up as much as $4 million for your retirement fund or perhaps use the money to pay off your mortgage? In case you are a senior who has serious digs in areas like New York City, California, Myrtle Beach, or other markets where several homeowners are cash poor but house rick, you may be able to get such money with just your home. These has brought back jumbo reversemortgages back to life.
Reverse mortgage, wherein retirees get access to their homes equity through mortgages that do not have to be paid provided that they live there, were considered as the last resort. Then, finance professionals started to publish research about several years ago, which shows that the strategic use of the reverse mortgage loan can help retirement portfolios would better survive down markets or perhaps delay the their claim to Social Security benefits.
Reverse mortgages started to be on their way to become a mainstream product after that first wave of research. However, the federal government back in 2017 raised the initial insurance premiums and cut back on the lending limits for reverse mortgages that are federally insured, which shook up the market once more.
Now, lenders have been giving out proprietary jumbo loans that are not under the new federal rules. They have become famous in places where housing values are high and where retirees could be having a mountain of equity but still find themselves short of cash. For the meantime, most jumbo reverse mortgage loans involve lump sums. However, lenders are starting to provide jumbomortgages that have a lump sum or line of credit.
Seniors are using the reverse mortgages to settle conventional mortgages or to get money for their living expenses or long term care. Other seniors, even with the significant increase in premium, must still use federallyinsured reverse mortgage loans with a line of credit so they could stretch out their credit accounts.
How Does Reverse Mortgage Work?
The loans let seniors who are at least 62 years old to borrow against their home equity. The older the applicant is, the more money they are permitted to borrow. After the recent update, reverse mortgages that are federally insured has been capped at $765,600 starting January 1.
The loan is generally repaid when the borrower dies or if the borrower decides to sell the house. Provided that the borrower continues to pay the home insurance and property taxes, they are permitted to stay in their homes for the rest of their lives without having to make any mortgage payments. The loan won’t be recalled by the bank and that is why reverse mortgage loans carry higher fees compared to traditional mortgages.
Generally, seniors waited until they’re running out of cash before getting a loan. However, some researchers say this is not a good way to use them. They believe borrowers must take out reversemortgages Columbia early in their retirement years and use them to provide their retirement portfolio with protection during market downturns.
Call Reverse Mortgage Specialist if you are looking to take out a reverse mortgage loan but want to make sure if this is the best option for you.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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Tips For Handling Reverse Mortgages After Death
A reverse mortgage lets seniors live in their houses without having to pay mortgage payments and could also offer retirees with their much needed money. But just like all other loans out there, reverse mortgages need to be paid back eventually. Things can be complicated when it is time to pay back the mortgage. This will depend on the amount of equity you’ve got in your home and if you would like the house to remain in your family after you pass away.
Create a Solid Plan On How To Handle A Reverse Mortgage After Your Death
Get A Will
Your pay off plan should include creating a will before you take out a reverse mortgage loan to make sure that all of your assets, including your home, are transferred to the right individual upon your death. If you don’t have a will, your home would undergo a probate process and the state would decide who would inherit your share of your home.
Update Your Records Regularly
Under the tax laws that are set in place these days, reverse mortgage borrowers who purchase or make significant improvements in their homes could be eligible for a home interest tax deduction once the loan has been paid off. However, the only way for you to prove if the interest rate is indeed deductible is to make sure that you keep all your records so that you have the documents to prove how you used the funds from your loan.
Determine The Best Pay Off Option
In most cases, heirs just sell a house after the borrower of the reverse mortgage dies and your will could determine how you would like the remaining proceeds to be utilized once the loan is paid off.
One good way for you to pay off the reverse mortgage loan is to sell your house to your kids while you are still living, and use the sale proceeds to pay off the reverse mortgage loan. There’s also the option that involves renting the home back from your kids while you are alive. In case you decide to do this, you should consult an estate planning attorney or an accountant who can help you manage the sale of your home so you can avoid running into problems with gift tax laws. In case it’s important for your family to keep the house, you should think about paying off the loan while you are alive, probably with assets such as cash value in your life insurance policy or cash from an investment account.
Reverse mortgages Columbia are types of loans that can be quite complicated. Therefore, borrowers as well as their heirs have to know how to pay back the loan once it comes due. By knowing and understanding the options ahead of time, borrowers of reverse mortgages as well as their loved ones could decide what options are the best for their unique situations.
Call Reverse Mortgage Specialist if you are interested in knowing more about reverse mortgages.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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How Can Fed Rate Cuts Help Borrowers Of Reverse Mortgage?
The interest rates are in historic lows, thanks to the Federal Reserve’s recent cut. However, reverse mortgage borrowers would like to know how this would affect them. Borrowers or family members of loan borrowers who are at least 62 years old and over have to know how such rates will affect reverse mortgages as well as the options chosen by the reverse mortgage borrowers.
How Can Lower Rates Help You With The Reverse Mortgage You Would Like To Get?
Reverse mortgage loans are referred to as home loans. Just like the other types of traditional loans, you will repay less interest rates if the rate of interest accrual is low. But there are other benefits to a lower rate.
There are other rates you need to take into account when looking for a HUD home equity conversion mortgage or HECM. On the HECM loan offered by the US Department of Housing and Urban Development, there’s a beginning rate that will determine the interest that you will get, at least at the start period on the adjustable rate loan, and well as the expected rate, which is different form the beginning rate on the adjustable rate loan.
When it comes to the expected rate on the adjustable rate loans, the rate will be used as part of a formula that will determine how much you can borrow, however, it is not the rate at which you will accrue interest. By knowing what these rates are, the HUD floor, as well as how it will affect your loan together with your objectives will assist you in deciding the right loan option for you.
How Can You Be Affected By The Lower Rates?
Your goals will play a crucial part in how you will be affected by your mortgage rates. If there’s more room in the rates to provide varying margins to loan borrowers, there’s also varying flexibility that’s available to the lender. You might remember the time when lenders advertised “no borrower paid closing costs, but then they just disappeared. This is partly attributable to the secondary market value of the loans. But it is also because of the decreased floor rate.
If lenders need to provide the lowest possible margin only to maximize the advantages to the reverse mortgage borrower, then the loan won’t be worth that much to the lenders so there won’t be that much income that will be available from the loan’s origination to pay the fees in behalf of the borrower. If the rates are cut back as much as they have lately, it beings to provide lenders the chance to work with the borrowers once again to provide them with more options on rates and fees.
Now is the best time for you to compare different options to determine what lenders could do with the lower rates.
Reverse mortgage rates are all about the borrower. It’s not designed to benefit the lender. Reverse mortgage loans are made to be the last loan that a borrower will require. Make sure that you get a loan that suits your goals and needs.
Call Reverse Mortgage Specialist now and find out more about reverse mortgages.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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What Is The Reverse Mortgage Application Process?
The application process for a reverse mortgage loan usually takes between 30 days and 45 days from beginning to end and has five major processes involved. But, the longest part of the process is the decision making stage, which leads up to the loan application.
An average reverse mortgage applicant starts thinking of a reverse mortgage loan about six months before they complete an application. The homeowner generally researches reverse mortgage loans using various resources for several months. The next thing they do is to request information from a reverse mortgage specialist. Then he or she may invest at least one month meeting with the expert in person and checking the good faith estimate as well as the other pertinent documents for the loan.
Step 1. Initial Reverse Mortgage Loan Application
The reverse mortgage loan application will legally authorize the lender to start the application process. However, the lender can’t incure any of the cost on your behalf until counseling or step two of the process has been completed. The reverse mortgage application isn’t binding and could be cancelled at any time during the loan process. The application would determine the reverse mortgage fees, loan amounts, as well as interest rates.
Step 2. Reverse Mortgage Counseling
Although the reverse mortgage loan has been finished, the lender isn’t allowed legally to incur costs on behalf of the applicant until the latter has given an HECM Counseling Certificate that’s been signed. This will be proof that the applicant has gone through the required couseling session with a counseling agency that’s been approved by HUD. The counseling could be done before or after the initial loan application.
Step 3. Appraisal
The appraisal creates the legal value of the property of the applicant. The appraisal for the reverse mortgage loan should be performed by an appraiser that’s approved by the FHA and it should adhere to a certain FHA format. This implies that even when a homeowner already has an appraisal, it would most probably need to be reappraised at this time in the process.
Step 4. Underwriting
The lender would confirm the legal ownership of the applicant of the property by performing a title research and buying title insurance. They would also work with the applicant to clarify any concerns with bankruptcies, unpaid liens, or trust. When the lender has completed underwriting and has approved the application, the status will become clear to close. This implies it’s all finished and the closing date will then be set finally.
Step 5. Closing
The lender as well as the applicant will set a closing date wherein an attorney or a notary will meet with the applicant so they could sign the documents for the final closing. This is the opportunity of the applicant to check the closing paperwork to ensure that the fees, interest rate, as well as the loan amount are what you expected. After you sign, the application will then go into a right of rescission period which will last for three days. This implies that even if the closing has already happened, the reverse mortgage Columbia loan applicant could still decide to cancel the application without facing any penalty for three business days following the closing.
Following the waiting period, the title firm would give a check to the homeowner if the proceeds are available from the loan. In case the applicant was making use of a reverse mortgage loan to pay off a mortgage, the title firm would send the amount for the mortgage payoff to the lender.
Call Reverse Mortgage Specialist if you wish to know more about the reverse mortgage loan process.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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Understanding The Volatility of Mortgage Rates
With the economy in a mess, an increasing number of workers are being let go, and bigger parts of the country are ordered to stay at home to prevent the spread of COVID-19, record low interest rates for mortgages were one bright spot within the financial sector. But not anymore.
Both homebuyers and homeowners who are looking to refinance would be disappointed once they see the rates that have gone up and down in a wild manner during the past few days, and in some cases, even by the hour. This is an unprecedented kind of volatility, and it makes it harder for borrowers to lock in a lower rate, says the professionals. There is an upward surge on the mortgage rates even if the Federal Reserve has cut back short term interest rates.
Rates have increased from a low of 3.13% on March 2 by over a full percentage point to 4.15% on Friday. Other lenders reported the rates to be at the mid 5% range. Mortgage rates are extremely volatile, and it’s by a wide margin. At this point, borrowers who are looking for some good news would most likely be disappointed amid the coronavirus crisis.
Mortgage Rates Are On A Roller Coaster Ride
Mortgage rates tend to fall whenever the economy struggles. However, there is nothing normal about this time and there are many financial reasons why the rates are going up and down wildly.
First of all, it is the lenders’ reaction to the massive throngs of homeowners who’ve been wanting to refinance their current mortgages when the mortgage rates crashed earlier this month. The rush in gold was understandable. A few homeowners go to save hundreds or even thousands of dollars over the length of time of their 30 year loans after managing to have it refinanced at much lower rates. However, the rising number of people search to lock in these kinds of deals have turned out to be much more than a few lenders could deal with. Some have decided to increase their rates to slow down the whole process.
However, the mortgage backed securities within the secondary market are the driver of mortgage rate’s volatility. Once lenders make a mortgage, they generally do not want to keep it since it will tie up the cash they could use for new loans. So they end up selling their mortgage loans, which have been bundled into a group of mortgage backed securities like the mortgage bonds to investors who are in the secondary market.
Investors think they’re like the U.S. Treasury bonds. They are safer but these investments are less lucrative compared to the stock market. Given that the stock market is currently down, investors have conventionally turned to bonds. However, the market is now flooded with bonds because of the deluge of refis as well as the federal government giving out more bonds to fund the measures aimed to stimulate the economy. Therefore, the bond prices are currently low. Since mortgage rates are inversely proportional to bond prices, the mortgage rates are up if the prices of bonds are down.
Call Reverse Mortgage Specialist if you wish to know more about mortgage rates.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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How Much Can Retirees Spend?
With the interest rates declining and turbulent market volatility, a lot of people are thinking about their retirement plan’s viability. Will they have enough to meet their spending goals once they retire?
The 4% rule then comes into the picture. For those who don’t know, it is a basic rule that serves as a guide for retirement spending. It’s by far the highest rate of withdrawal that’s ideal with market returns in the United States for those who are modifying their spending for inflation every year and eyeing a 30-year retirement. You need to know that the 4% rule is not applicable to everybody nowadays since retirees deal with the lowest interest rate setting ever. It’s also not applicable to those who don’t want to hold 50% stocks throughout their retirement years.
Dedicated Income Sources
Dedicated income sources include setting up a bond ladder by keeping individual bonds until it matures so you can use it to support your expenses once you retire. You can also buy a basic income annuity that will transform a single premium into what they refer to as a protected lifetime income.
Can Retirees Spend More?
The first possible way for retirees to spend more is through buffer assets. These are the assets that are made available beyond the financial portfolio where you can draw from following a market downturn. The returns on such assets should not be linked with the financial portfolio because the main objective of these assets is to support the spending if the portfolio is down. Policy loans that has a cash value of entire life insurance and opening a line of credit are the two primary buffer assets that you should consider.
You can also use a variable spending strategy as a way to spend more during retirement. Spending could begin higher, but only since there’s the willingness to cut back spending as needed. There are different variable spending strategies and the most famous ones are the Guyton and Klinger decision rules. This method focuses on inflation adjusted spending, however, the inflation adjustment will be skipped during the time when the portfolio undergoes a loss, and the spending will then be reduced further by 10% permanently at any time during the first 15 years of your retirement wherein the rate of withdrawal from the assets remaining has increased by more than 20 percent beyond the initial level because of a reducing portfolio balance.
There could be a lot of these 10% permanent spending cuts especially during a bad market. Spending could also rise by 10% if the portfolio increases enough so that the existing withdrawal rate is about 10% lower from where it all began.
Insurance and Investments
If a retiree has a spending goal with 2% spending growth during his retirement. With investments only, the retiree will have a 2.88% spending rate. If he puts 30% of their assets into a SPIA, it will have a withdrawal rate of 3.8%. Adding investments and annuity, their withdrawal rate will at 3.92% from 2.88%. Since these bonds are by far the least effective way to support the retirement spending, this kind of mixed strategy may work better for those conservative retirees.
Call Reverse Mortgage Specialist now if you want to learn more about retirement planning.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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Reverse Mortgage: What Are The Requirements?
Reverse mortgage loans are a way for American seniors to have access to their home equity, which they can use as another source of income when they retire. But, strict guidelines and rules were established and they need to be followed by all those who qualify for such mortgages, and the amount this type of loan could offer.
In case you are thinking of taking out reverse mortgage loans, you should have a good understanding of the basic rules that need to be followed.
Overview of Reverse Mortgages
Reverse mortgages are loans that are made to applicants who are at least 62 years old. This type of loan lets homeowners convert their home’s equity into tax-free money without the need to pay any monthly payment.
Reverse mortgage loans are named as such because the lender pays their borrowers instead of the borrowers paying the lenders, which is how it works with a traditional loan.
The U.S. Department of Housing and UrbanDevelopment offers the most common type of reverse mortgages called Home Equity Conversation Mortgage. It is not a government loan but it is a type of loan that is backed by a part of the HUD or the Federal Housing Administration.
Reverse mortgages let the applicant borrow cash by placing their house as collateral. A bank provides the borrower with loan payments either as ongoing payments or as a lump sum according to a percentage of how much equity they’ve piled up in their house.
Reverse Mortgage: Requirements and Eligibility Guidelines
The homeowner must be at least 62 years old
The home you want to take out the reverse mortgage on should be your main residence
You should own a house or have a low balance on an existing mortgage if you apply for reverse mortgages in Columbia.
You should not be delinquent on federal debts
You should not have any problems setting aside a part of the loan funds at closing to cover things like insurance, property taxes, repair costs, and home maintenance.
Your home should be in good shape and should undergo counseling that is offered by a counseling agency that’s been approved by HUD. Through this, your eligibility will be checked and what are the consequences if you decide to take out such a loan.
For example, applying for reverse mortgage loans before retirement runs the risk of running out of cash later in their life when they will have lower income but their medical bills are higher.
Reverse Mortgage Fees
It’s crucial to remember that fees and interest rates are going to be added to your loan balance every month as a part of reverse mortgage loans. This implies that your debt will increase when you apply for this kind of loan because this is not free money. Apart from that, the borrower needs to pay homeowners insurance and property taxes.
Call Reverse Mortgage Specialist if you need the help of a professional to determine if you are the best candidate for this type of loan.
Reverse Mortgage Specialist Columbia, SC 29205 (803) 592-6010 https://www.yourhomeyourequity.com/reverse_mortgage_specialist/reverse-mortgage-specialists-columbia/
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The Unexpected Retirement Panic Attack
Retirement is challenging enough even without the added feeling of terror because of not knowing where the next check will come from. The trick is to convert your capital into an income that you get per month well before you leave the workplace. When it comes to retirement planning, there are a few simple steps that you could take to make sure that you have a steady income source the moment you retire, and arranging this ahead of time can help you avoid underspending overspending and even panic attacks.
Sources of Income
The first thing you need to do is to inventory the possible sources of income once you retire. For instance, you know that Social Security could only be given out as an income, there will be no lump sum benefit. You have to ask yourself if there are other possible benefits as well as assets that you can turn into a monthly check.
Pension Plan – in case you are lucky to have a well-prepared benefit plan from your employer, you should think hard before you cash it in. You can minimize your stress by taking a lifetime income rather than a lump sum.
401(k) – defined contribution plans build up as targeted posts of money during retirement. And even though taking a lump-sum distribution or even getting it into an IRA are the basic approaches, check if you can make withdrawals from your 401(k) funs as an annuity or systemized withdrawal. By using this approach, it is as if your employer is like paying you from a different account instead of another when you retire.
Deferred Compensation Plan – In case you are covered by a nonqualified deferred compensation plan, your employer could offer you different options as to how the funds will be paid out such as an ongoing income. Especially if you won’t be able to roll it over to an IRA, this could be the simplest way to add to your monthly income.
Immediate Annuity – In case you have a regular or average life span, make the most out of your good health to get a mortality premium by purchasing an immediate annuity. You lock in an income that you cannot live past your life expectancy, and when you live longer than expected, you will surely make the most out of pooling annuities. You may also take into account a deferred income annuity, wherein the annuity starts at a certain age in the future. If an annuity begins payments, later on, it is a good way to deal with your longevity risk’s tail end and you will cover the problem of living way too long.
Life Insurance – Have you got any cash value in your life insurance policy? Before you surrender the contract and pay taxes, find out if you could use the cash values to give you an income for several years. You could also tap into this equity by exchanging the policy into an immediate policy.
Reverse mortgage
In case you have significant home equity, you could choose a tenure option if you take out a reverse mortgage Columbia. This would offer you an ongoing income every month through accumulating costs against the equity in your home.
And that income would continue until you decide to leave or sell your or if you pass away. There is no recourse against the reverse mortgage loan, the lender could only tap your house for repayment, so it really could act as a stream of retirement income.
Structure Your Income Plan Ahead of Time
The majority of these income-generating concepts take some handling in advance if you wish for them to work, some are just a matter of ticking out the box and watching the money flow in.
Ideally, you wish to arrange your retirement income plan so that things will set in once you retire and you’ve got something less to worry about.
Consider Your Financials
You should avoid these panic attacks brought on by not having any income plan. You don’t want to get it done in such a way that it will cost you financially. These are the problems you have to factor into your retirement income planning so that you can maximize your cash flow as well as after-tax payouts.
Talk to Reverse Mortgage Specialist now and find out how you can live a financially stable and comfortable life after you retire by making sure that you have a steady income source like a reverse mortgage.
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How Does A Reverse Mortgage Work?
A reverse mortgage works by letting homeowners who are at least 62 years old borrow from their home’s equity without the being required to make mortgage payments every month. As the borrower, you may opt to take the funds in a lump sum, structured monthly payments, or line of credit. The loan repayment will be required once the last surviving borrower leaves the home permanently.
How Reverse Mortgage Works
- You can access a part of the equity of your home
- The percentage will be based on the age of the youngest borrower
- You will not make mortgage repayments every month
- The funds you get are tax free and can be used for anything
- The loan will be repaid after your death or if you decide to sell your home.
- The remaining equity will belong to your heirs
How Is Reverse Mortgage Different?
You might be wondering how a reverse mortgage is different from a traditional loan, or what they refer to as a forward loan, in that it works the other way around. The traditional loan is a rising equity loan, falling debt while the reverse mortgage loan is a rising debt loan, falling equity.
So when you make payments on a conventional loan, the amount that you owe will be reduced and the equity that you have in your home increases as time goes by.
With a reverse mortgage loan, you will not be required to make regular payments, so when you draw out the funds and as interest piles up on the loan, the balance will grow and your equity position in the house will become smaller.
You never have to make a payment on a reverse mortgage loan and there will be no prepayment penalty of any sort. This means you can make payments any time, including and up to payment in full, without having to deal with penalty.
How Much Will You Receive?
The amount you get in a reverse mortgage Columbia will be determined differently compared to a standard mortgage. You will not hear people mentioning things like loan to value ratio just like you would on a conventional loan.
On a conventional loan, the lender will agree to lend a specific amount that is identified as a percentage of the home’s value. This could change according to different factors, like the credit of the borrower, the needed loan amount, as well as the type of property.
The factors that dictate the amount you get includes the age of the youngest borrower, the home value, HUD lending limit, and interest rates.
Other factors that affect the loan amount include the costs to get the loan, existing liens and mortgages, and any remaining cash will belong to you or your heirs.
Reverse Mortgage Payment Options
There are different ways you can choose from to take the money available on your reverse mortgage.
You can get the reverse mortgage payment through a lump sum, a line of credit, a payment for a specific amount and period, also called term payment, and a guaranteed payment for life or tenure payment.
Call Reverse Mortgage Specialist if you would like to know if this type of loan is your best option.
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Is Reverse Mortgage A Cost Effective Way To Fund Retirement?
Seniors in the United States are unable to deal with $7.19 trillion worth of housing wealth. Although not historically part of a comprehensive and balanced retirement plan, tapping the equity of your home could a cost effective method of funding your retirement plan.
Accessing the equity of your home takes on a dual role of providing you with income and hedging against a possible correction the housing market.
When looking for extra income for retirement, there are a few retirees may want to downsize, relocate to an area with a much lower cost of living, or utilize assets from a retirement account. However, there are also a lot of people who don’t want to sell their houses or other investments.
A good solution is a reverse mortgage loan, which provides homeowners at least 62 years old flexible methods to use the equity of their home to help them meet their goals for retirement.
Understanding Reverse Mortgages
Before, reverse mortgage loans were the last resort. But now, things are different. Financial advisers and homeowners can now look at a reverse mortgage as a part of a holistic retirement plan.
Although individual situations and needs differ, one of the important drivers behind a reverse mortgage is to get rid of an existing mortgage or offer an annuity-type of payment. Both options help boost the household cash flow. The extra income can be used to cover expenses and other long term needs like in home care. It could also help maintain the retirement income at a level wherein their assets are totally depleted.
Additionally, a reverse mortgage in Columbia could offer an alternative source of revenue once stock investments are not performing well, so people do not need to sell stocks at relatively low values.
Please note that reverse mortgages are not suitable for everybody. There are different factors that need to be considered. One important consideration is the duration a potential borrower intends to remain in their house. Although many retirees want to age in place, one out of three baby boomers say they want to move at some point during their retirement years. Others say they would like to move in an assisted living or rent instead of owning a house. For such situations, traditional financing like HELOCs may be the best option to address shorter term funding requirements.
Reverse mortgages’ interest rates are comparable to that of traditional mortgages.
However, there might be significant closing costs because of the upfront Federal Housing Administration FHA mortgage insurance premium. Those costs are 2% of the value of the home. Therefore, if a home is worth $500,000, then its insurance premium will be worth $10,000. The insurance is exactly what makes a few reverse features possible. Most importantly, there are no needed principal or interest payments while residing in the house, or that the borrower or the heirs would never owe much more than the property’s value. In case these advantages aren’t of value to the senior borrower, traditional mortgages that doesn’t include this insurance premium makes much more sense.
For all the baby boomers who would like to age in place, the benefits of a reverse mortgage could be of great value. The insurance cost amortized more than 20 to 30 years could be a reasonable value proposition when taking into account not just those advantages, but others like the chance to have a line of credit that grows and adds up over time, regardless of what happens to the property value.
Call Reverse Mortgage Specialist if you are thinking of taking out a reverse mortgage.
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What Should You Do If You Have Been Disqualified For A Reverse Mortgage?
Nothing can guarantee that you will be financially stable and secure once you reach your senior years. You always have the option to save, or buy insurance. You can even invest or reallocate yearly. But despite all these strategies, you may still realize that medical bills, home repairs, and rising costs can create problems in what you believe as a foolproof financial plan. If this takes place, you may consider taking out a reverse mortgage.
But what if you don’t qualify for this type of loan? For a few borrowers, the answer is to reapply later. But for others, it may be that a reverse mortgage loan isn’t the right financial solution for their current circumstances. Fortunately, there are three alternatives that you may want to consider.
What is a reverse mortgage?
A reversemortgage Columbia is a kind of equity loan that is designed for borrowers who are at least 62 years old to provide them with a reliable source of income once they retire. Instead of making payments to a lender for the loan they’ve taken out, a reverse mortgage won’t require any until the time comes that the borrower no longer lives in the house.
Reversemortgage borrowers could access the money in a form of monthly payments from the reverse mortgage lender to their bank account. They could also get the money as a form of a lump sum or a line of credit. But this would depend on what the purpose the funds will serve. If the borrower dies or decides to sell the house, the reverse mortgage will be repaid through the value of the house.
Reverse mortgage provides a lot of benefits. In case you choose the monthly payment option, this specific income stream could help you maintain a comfortable lifestyle and make sure that you don’t have to sell your house. Senior homeowners have different needs and wants and if applicants would like to age in place, then this type of loan is a good alternative.
Factors That Could Disqualify You From A Reverse Mortgage
Just like with any type of loan, there are specific minimum requirements needed if you want to get approved for a reverse mortgage loan. If you don’t meet these guidelines then you will be disqualified.
Age
You need to be at least 62 years old if you want to be eligible for a reverse mortgage loan. You also have to note that the younger spouse’s age who is not applying for a loan could be the cause of your disqualification. Lenders want to make sure that the non-borrowing spouse is capable of sustaining themselves in the house over their lifetime, too.
Credit and Spending History
Although your credit score is not the only factor that would determine if you will qualify for a reverse mortgage loan, lenders will still take your current expenses and credit history into account.
If you want to be approved, lenders would like to see that you can fulfill your financial obligations. In some cases, that is with your current retirement savings. However, some people may not qualify for a reverse mortgage in case the loan itself will not offer sufficient cash to meet their expenses. Factors like property maintenance, food, and the costs of prescription drugs are going to be considered.
Your Property
There are instances when it is not the borrower that is disqualified. Sometimes, it is the property.
The property should be a single family home or a residential building with at least two units and is being occupied by a borrower. In some instances, condominium projects as well as manufactured houses might also qualify. Such properties also have to be in good condition. Although there’s no set amount of home equity needed to qualify, you still have to make sure that you’ve got at least 50% home equity. In case your current mortgage is very high, you may not be able to qualify for a reverse mortgage loan.
How To Requalify For A Reverse Mortgage
In many instances, a reverse mortgage disqualification isn’t permanent. You could still qualify in the future once your situation changes. Here are a few things you need to know.
What If I Was Disqualified Because of Bankruptcy?
In you case you are going through bankruptcy and you applied for a reverse mortgage, there is a possibility for you to be disqualified in case the procedures have not been finalized. When this happens, you can reapply once the bankruptcy has been discharged.
What If I Was Disqualified Because of Credit History?
In many instances, underwriters would take into account special situations and think about working around them. They could also reconsider you once you have improved your credit history. If you have improved your credit profile or perhaps explain your special situation, the reverse mortgage underwriters could reconsider approving your loan.
What If I Was Disqualified Because of Too Little Home Equity
You may be disqualified when the amount that you were approved to borrow in a reverse mortgage loan is not enough to pay off your current mortgage and sustain you. When this occurs, you could wait until you have made more principal payments on your existing mortgage and increased your home equity. If you want to speed this up, you should think about making larger payments.
Call Reverse Mortgage Specialist if you want to know how you can increase your chances in getting qualified for a reverse mortgage.
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Reverse Mortgage Pros and Cons
A reverse mortgage can be an important aspect of your retirement planning, giving you cash now and for the future. However, this type of loan is not for everybody. You need to understand the pros and cons of a reverse mortgage loan to help you decide if it is right for you.
The Pros of Reverse Mortgage
A reverse mortgage loan is a type of loan that can help homebuyers who are at least 62 years old to have a comfortable retirement.
They continue to live in their homes and continue to own the property. Just like any type of mortgage, the borrower must meet their loan obligation, make sure that the property taxes, insurance, homeowners association fees and the maintenance updated.
The borrower could choose how to receive the funds. It could be a line of credit, a lump sum, that you could tap as required. It could also receive it as a steady stream of payments per month for a certain duration or as long as you live in your house. It could also be a combination of all these options. Those who have chosen a fixed rate loan would get one disbursement lump sum payment. There are other payment options aside from all these but they are only available for an adjustable rate mortgage.
You can also use the funds that you get from the reverse mortgage Columbia to pay off your existing home mortgage. Although there remains a lien on your house for the remaining amount of the reverse mortgage loan, you won’t be required to pay the monthly principal and interest payments on the loan, and that means you will be freed from hassle of having to pay a monthly mortgage. Just like with any kind of reverse mortgage, you need to meet the obligations specified for your loan and that includes paying taxes, fees, etc.
Closing costs as well as ongoing fees including Federal Housing Administration, Mortgage Insurance Premium, could be financed using a reverse mortgage loan, which means out of pocket costs aren’t that high.
Loan proceeds are not taxable income. It will also not affect your Medicare and Social Security Benefits. But you should consult Reverse Mortgage Specialist to know the potential implications on your finances when you take out a reverse mortgage loan.
A reverse mortgage is considered as a non-recourse loan. Additionally, if the value of your house increases, then you should think about refinancing your reverse mortgage loan so you can access additional loan proceeds. Once you have repaid the loan, the remaining equity will be given to you or your heirs.
Cons of A Reverse Mortgage
The loan balance will increase as time goes by as the loan interest and other fees build up. As home equity is utilized, your heir would inherit fewer assets. You could still leave your house to your heirs however, they need to pay back the loan balance. In most cases, selling the house can pay off the loan. But you can also use a traditional mortgage or other funds.
Additionally, the fees associated with a reverse mortgage are higher compared to a traditional mortgage. The loan will become due and should be repaid if a maturity event happens like the last surviving borrower passes away, the house will no longer be the principal residence of the borrower, or the borrower vacates the house for over 12 months due to medical reasons or six months due to non medical reason. The loan would also become due once the homeowner is unable to meet the loan obligations. These include paying the insurance, property taxes, homeowners association fees, property maintenance, and more.
Call Reverse Mortgage Specialist if you wish to find out if this type of loan is suitable for you.
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