Most people who hear about Reverse Mortgages have one or two idea who should be the target
for this “scary” mortgage. You should either be broke and don’t care how you get money, as long as it is legal, or you have a need to do something that looks good, even if you probably won’t have enough money to repay the house when it comes do. Not even close!
If you are an owner of a property that is your primary residence and are 62 or over you can apply for a reverse mortgage. You will end up, if you qualify, with a new mortgage on your property and
most likely a little or a large amount of cash. You do not make any payments on your house or the money you receive until the last owner of the loan leaves it permanently. Again no payments are made while you are living there, but interest is accruing on your new mortgage.
When you leave you can will the property to your heirs, sell the property and keep the excess profits over the loan or if the loan is more than the equity in the house you can send the lender the keys and walk away. THERE ISN’T A DEFICIENCY JUDGEMENT ON THIS LOAN! That is right.
The lender (U.S. Gov’t) is actually taking the risk, not the borrower.
I have a perspective client that wants the loan because he wants to retire. He works part time
to earn enough to keeps his payments on his house and his bills. The Reverse is just what the doctor ordered. If you have a current mortgage you can stop paying the monthly payments and only pay the property tax and the insurance policy. Those are a fraction to this client versus his total bills.
The final thoughts are simple: if the house doesn’t increase in value you are not getting hurt.
If it does increase in value you get the increase. Your covered either way!
It is time to join those who realize how good this option really is!!
Reverse Mortgages Don’t Lose Money: Smart Owners Make Money!
Let me start with the easy part. You will not lose money. To begin the Reverse Mortgage
you trade your current mortgage to the lender who gives you a new mortgage for the amount of
money to pay off your current mortgage and receive in most cases a stipend based on the
equity in the property and your age. The new mortgage doesn’t have a Deficiency Clause which means that whenever you leave your property, you or your heirs can sell the property for a profit, if there is one or if you owe more than it is worth you send the keys back to the lender and you are through with that transaction. No loss!! Before somebody writes me and tells me that the house burned down; as long as you have the proper insurance, your fine. Still no loss.
Now let’s look at the money making side. I will enumerate the ways you can make money.
1. You get all the appreciation on the house from the day the transaction closes until it
it is sold. You make no payments yet the house appreciates 9 out of 10 times and
it belongs to you when it is sold.
2. You can make your old payment as long as you want to yourself. When you are through
with the house you will have your money in your bank and you get the appreciation as
3, The lender is charging you for interest on the payments that they are adding to your loan.
In #2 I said you can make your old payment to yourself, but that old payment is both
principal and interest. Just pay yourself the interest that the lender is charging. The
lender is not requiring you to pay the principal. Less payment means more profit.
4. If the real estate market takes off and looks like it may slow down or even reverse
the growth, you can sell the house and pocket the gain at anytime you want.
Open your mind and your wallet and let us show you all you can do with your knowledge of
Reverse Mortgages. No payments, but appreciation doesn’t need more money to work. Let’s
get together and see how this can work for you.!!!
Realtor.Com is an organization that tracks real estate listings, sales and rentals across
the nation. They report on listings, open houses, pending sales and real estate sales. They can
help you find a lender, broker, real estate broker etc. Recently they have posted the top 10 real estate markets for growth and price improvement in this Country. I will list the top 10 markets
ans assure you we can help you with financial questions or loans in every state in the Union.
In reverse order we have the following areas for the 1st quarter of the year as Realtor. Com sees
Growth % Price %
10. Portland-Vancouver-Hillsboro 5.0 5.9
9. Tucson, Arizona 5.5 6.1
8. Raleigh, North Carolina 7.6 4.2
7 Orlando, Kissimmee,Sanford 6.1 5.7.
6. Jacksonville, Florida 7.0 4.8
5. Riverside, Ontario, San Bernandino 6.9 5.0
4. Sacramento, Roseville 4.9 7.2
3. Boston, Cambridge, Newton 6.3 6.1
2. Los Angeles, Long Beach, Anaheim 6.0 6.9
1. Phoenix, Mesa, Scottsdale 7.2 5.9
The warning from Realtor.Com is to get your houses listed as fast as possible, as well as stat
looking for a new place.
Several weeks ago we announced that Fannie Mae and Freddie Mac have raised the loan limits
on their loans in this country. You can review my blog and see how they have moved.
If you have any questions feel free to contact us and we will get back to you as fast as we can.
Do not even think about doing anything to your place until you get a permit
from the local officials. You must get a written document that will allow you
to do the changes you want; but if you do the changes without the permit
and something happens, even if it is an accident, they will chase you until
you are six feet under and YOU WILL still be liable for the result.
You wish to modernize, enlarge, make it easier to live in, etc. but you really aren’t prepared unless
you engage a realtor or contractor to tell you how your little plan will turn out. It is much better
to get an architect to draw what you want than to change it over and over again because it isn’t coming out right. The remodel will cost money and if you don’t want to lose it get a plan and someone to assure you that you have a real chance to make it work.
If nobody will give you that guarantee give it up, or start over with a new plan. You can make a
good amount of money if your plan is good, your workmanship is fine, and you haven’t over spent for the materials needed to finish the project.
I can go on for pages telling you all the areas that many people overlook which can seriously hurt
the out come. Don’t rush!, Make sure every thing you can think is in the right place.
Once you feel you are ready your had better check the housing market and which way it is heading: higher or lower! Do not try to buck the trend.
I have given you this little lesson in remodeling your house because it all counts toward having a winner and money maker if you get it right. BUT, it isn’t easy! I have remodeled many of my houses and most have turned out fine, but I have overspent, and started in the wrong season as well. Be more cautious than I have been and you could be a winner. GOOD LUCK!