The Reverse Mortgage Saga Continues

Reverse Morgages Safe?

So, if you've been keeping up to date with, you will know that I, Mark, have been having in depth conversations with my mother about her decisions to pull out the equity on her home and get a reverse mortgage. This has caused me to have my own debates within my head and has had an extreme amount of pressure put onto me. I was always under the impression a reverse mortgage was a complete scam yada yada yada- but after doing some healthy amount of research I came under several different conclusions, which I thought my findings might be helpful for my readers.

The following comes from FTC's .gov website:

There are three types of reverse mortgages:

single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations
federally-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs) and backed by the U. S. Department of Housing and Urban Development (HUD)
proprietary reverse mortgages, private loans that are backed by the companies that develop them

Now, from my experience, the single purpose reverse mortgage was the one that always caused me to raise red flags. But most importantly, the proprietary reverse mortgage loan is the one that consumers should be most aware of. These types of loans are NOT federally insured and are known to be conducted by shady mortgage firms that have only one interest in mind, which is money.

After doing some more research on recent news regarding reverse mortgages, I came across this article on Examiner.

“The new jumbo program gives thousands of seniors the ability to tap into their home’s equity,” said Donald Gigantino, Vice President for Reverse Mortgage Space. “This will be a real game changer to the market.”

This was the article my mother came across where she referenced this new "jumbo program". As of now, there isn't much information about it, but, again, it is a federally insured loan which makes me feel a lot better. It's called the "HomeSafe" (I'm sure the home isn't safe after a reverse mortgage, regardless!), and it's a new option for seniors 62 and older. What's important is making sure that you KNOW who your lenders are, as many of them are money hungry sharks. The Coldwell Bankers are always someone to trust, but if they are not in your area, there are many other financial institutions you can be able to choose from.

Veteran's Loan Options

VA Loans and Mortgages

Being a veteran and struggling for money can be two combinations that really can cause some damage. There are some options that one can take as a veteran such as getting a mortgage or loan from the proper lender. A veteran co-worker of mine qualified for a VA loan which was offered for Florida residents. I'm just going to briefly summarize the qualifications that are needed in order to get one of these VA loans.

In order to be eligible for a VA home loan the borrower must have enough entitlement, which is simply the amount the VA will give to a veteran borrower. What is considered a full entitlement is normally adequate, which is the sum for $417,000.

The loans are to only be used specifically for the owned properties and homes. There are several things that are considered a "home", such as an approved condominium or a townhouse. These are also eligible for a VA home loan.

The borrower must have current residence at the property that they are applying for. Of course, you must have official documentation that you are a current resident of that home and that you will be a resident of that home for a period of time. If the borrower is on duty or deployed, the only person who is eligible for the "occupancy requirement" would be that soldier's spouse. However, the borrower has the option of getting an extension on the approved loan up to a period of 1 year.

The borrower is required to have enough income to qualify for the loan, and, at times, the credit score determinations might vary. The credit score determinations are set specifically by the VA lender and they can set minimums to what they choose. The normal debt to income ratio is 41% for a VA loan. However- a VA Stream-line loan doesn't call for income and credit requirements.

More information about the qualifications regarding the VA loan can be found on the internet. There are other options for when considering funding, as well. If you are a retired military personnel, you could qualify for a reverse mortgage. Also, has many options for financial assistance and funding specifically for veterans.

The Reverse Mortgage Debatable

Reverse Mortgaging your Home

Today my mother and I had a long discussion about what she plans to do after he retirement. In a few months, after decades of constant, tedious working, she will be retiring at the ripe age of 65. For those who haven't followed my previous writings, my mother is in a position where the only equity she has is in her house. She has no other income aside from social security, and the monetary assistant she gets from me (which most of the time she refuses). We had a long conversation about how she will be paying for many things she plans to do. She wants to go to Europe, she wants to go on a cruise or two, and she has a taste for fine-dining. That's fine and all, but my mother's funds are not quite in the position to be acting upon these ideas she has floating around. Personally, I am well off financially. I don't have really much to complain about. For the last few years she has insisted that she give me the house when she passes, but I've refused every time. To me, it's not a great big of a deal.

Reverse Mortgage Disadvantages vs Advantages

Today, when we had our talk, she offered it once again, and, as always, I refused once again. Out of the blue she stated that if that was the case, she's looking into a reverse mortgage. I have to give it to my mother, she is somewhat technical savvy. She knows how to use the internet to her advantage when it comes to researching and tapping into new resources- such as reverse mortgages. Now, I know what you're thinking. Reverse mortgages have had a very bad wrap lately. But that said, it's not always right for everyone. You must follow some strict criteria when planning to go after something of this magnitude and life changing. For example, my mom has no heirs on her house. If she doesn't actually pay off the loan- that's perfectly fine that the bank repossesses the house in her eyes when she passes. I, of course, had to do my own research on this subject because I have to admit that I wasn't well up to date with reverse mortgage qualifications and the downsides/plus sides. There are plenty of resources you can use at your disposal if researching online. For example, one must be very clear what the disadvantages are just as much as they are aware of the positives. Always be aware of interest rates and make an extra effort of finding a good lender.

Take into consideration that there are lot of sharks out there. You have to be very picky of who you contact when it comes to getting a reverse mortgage. These lenders can make a lot of money off of you and they're more than willing to say something or do something shady just so you will pull your reverse mortgage with them. I have compiled a lot of good information regarding this topic and will be giving it to my mother tomorrow. I will post again with the information that I've found out.

A Fresh New Start

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But let's get up to speed on a few things and make it less boring. The topic today is unemployment rates. What did president Obama promise? An unemployment rate under 7%. What is the unemployment rate today? 5.9%. So what are all the right-wing hawks complaining about when they scream Obama is a "JOB KILLIN' PRESIDENT"? We're not too sure, because the current unemployment rate is a vast improvement over the destructive policies of the last administration. So what are their excuses, now? Surely there's some explanation for such an improvement in the unemployment rate, right? Conspiracy theories are the goto choice for right wing talking heads these days. You hear everything from "the books are cooked" and a fun assortment of theories you'd only hear if you turned on the X-Files.

But, in reality, we are tired of these excuses, justifications, and dumb-whitted explanations that really make no sense. So, we salute the president in a quite great achievement regarding the unemployment rate. A rate that could have been only achieved via the policies Obama put into place, such as the stimulus and social safety net programs that kept the unemployed and the desperate afloat as the economy attempted to recover.

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