BUYING A HOUSE; KEEPING THE HOUSE
 (  Generally takes two types of loans  )
The mortgage industry is certainly not new but it has been changed, and not necessarily to make it easier for borrowers.  In my opinion too many politicians without much experience
have tried to make over the industry and haven’t come close to making it one iota better.
They have changed the requirements that are needed for the borrower to qualify for the loan.
If they do what is asked of them and meet the new qualifications they will easily get the loan but can just as easily lose the house if the economy weakens and works against the borrower.
Here is the problem: the requirements are upside down.  There are 4 requirements and the
two top ones are the most important. The lenders want to see good earnings from the borrower(s) and secondly good credit.
I want to see a lower (60% or less) loan to value when the loan is approved and sufficient
reserves for 18 months of total obligations in the bank, or in other liquid investments. I am
sure that my way should be the one and only way, especially after seeing the damage from the last recession that way to many borrowers sustained.
In the recession not only did high paid employees lose their job, but many large companies close their doors for good and all of the workers lost their job.  Being the store manager with a healthy salary and pension didn’t save these people from losing their houses and other
possessions because they felt they were well protected.  They were, until everything went
down the drain.
If you have a low loan to value and trouble comes there are private lenders that will give you
loans if there is a way to pay the loan back.  They will do this because there is plenty of equity so the lender can recoup the loan.  The fact that you have good liquid asset reserves
is also a protection that unfortunately, most borrowers do not have.
The answer to the banks is do it their way but take a quick pay back of the loan.  You should
take a 15 year loan or less. This will build you sufficient loan to value to help you through
hard times.  If you don’t do that you should take a very low payment on a variable loan and
keep the payment low so you can put money into the bank for a crisis.  I prefer the 15 year loan but if you can’t make it work do the other.
Once you realize that your equity and your money in the bank is better than anything else
you are ready for either of the requirements.  Don’t ever quit putting away money and
improving your property to get a higher loan to value.
There is nothing better!
The reverse mortgages were designed for middle class borrowers and even borrowers who
are lower on the income scale so they could keep their house and live out their life where
they hoped to live.  Unfortunately the wealthy understand the use of money while the rest of
the population are trying to make more money, and are very skeptical of new ideas.
    Open your mind to the possibilities of a reverse mortgage.  First of all you do not pay your mortgage at all.  If your monthly payment on a fixed mortgage is $1620 a month, and you live
at your house for an additional 7 years, you would pay $136,000 over the seven years.  When you are making those payments you do not know if the house will increase by $136,000 so you can stay even.  But that is also faulty reasoning because your mortgage will not be reduced by that amount.  The payment is made up of principal and interest.  Interest payments do not decrease the balance on your mortgage.
     If you take the reverse mortgage, which allows you to not make the mortgage payment, you can invest the entire aforementioned $136,000, and all if it will count as principal.  Do not over reach with this money because you will be ahead if you have every dollar earn some money in
the investment.
     Meanwhile you will be accruing  interest on your reverse mortgage which will be added to the reverse loan.  You will owe more than you did when you started the reverse mortgage when you decide leave the property When you leave the property the mortgage has to be paid, refinance or sold.  You also can walk away if it isn’t worth what you owe, because the lender, FHA, cannot collect on any short fall from a lower value than it needed to be worth to break even.
    Now the TWO BIGGEST points: (1) If your house has equity in it when you are ready to move from the property you can pay off the place with a loan or your own money, or you or your he can sell it and keep the profit. (2)  If the property is not worth owning as it is worth less than you owe, you can walk away without any recourse to you.  Houses do lose value at certain times in this country and you will see how smart you were to take the reverse. If you used your prior monthly payment that worked out financially you are even smarter than you thought. This action is called “Leverage”.
    If you or your spouse, if you have one, are 62 years of age, or older,  and own a house you are qualified to take a reverse mortgage.  You can also buy a house with the use of a Reverse
Mortgage.  As a senior citizen you should at least look at a Reverse Mortgage and see if it
works for you.