Reverse Mortgages in Orange County – Love it or Leave it?

Posted on October 27, 2015. Filed under: Informed Investor Alliance, Lenders & Loan info | Tags: , , , , , , |

Reverse Mortgage Answers orange countyWe’ve all heard good and bad about the reverse mortgage market, so today I went to a class given by Dirk Pierce with Retirement Funding Solutions at the OC Register building to find out more information. Knowledge is power, right?! Plus it’s not fair to form an opinion about something until the proper research and due diligence is done.

What is a Reverse Mortgage?

Basically, a reverse mortgage lets homeowners convert a portion of the equity in their homes into cash, and eliminate their monthly mortgage payments.

Interestingly enough, Reverse Mortgages are over 100 years old, and they are also available in Britain, Chile, Canada, New Zealand, Australia, and Korea. They were designed to help people who where house rich and cash poor, and were also known as ‘shared equity’. Fast forward to 1989, and Ronald Reagan helped to create the first government regulated Reverse Mortgage plans under the FHA umbrella.

Another variation of a reverse mortgage is HECM for Purchase; both share similiar features:

  • Both are FHA
  • Neither have monthly payment requirements
  • Both offer adjustable or fixed rates

You’ll use HECM for purchase when you are planning to buy a new property, for example to downsize, etc.  Reverse Mortgage is when you stay in your existing home, and simply refinance.

HECM for purchase is an FHA loan that enables a person age 62+ to purchase a home with as little as 40% to 51% down and never make monthly mortgage payments.  So basically you can get a 500K home for 250K and never make payments if you meet the age requirements. BUT….interest still accrues on your mortgage balance. The nice thing about the programs is they come with the following protections:

  • Guarantee that FHA will honor the terms of the loan if the lender becomes insolvent
  • Guarantee that you would never owe more than the house was worth
  • Guarantee that there is no personal liability for repayment of the loan by you or your heirs. It is truly a non-recourse loan.
  • Guarantees that the loan won’t become due until the last remaining borrower leaves the home.

Frequently there is remaining equity in the home…what happens with that? After the home is sold, any remaining equity goes to the heirs.

Do you qualify for a reverse mortgage?

  • minimal credit requirements
  • minimal debt to income ratios

What types of properties are allowed?

  • single family
  • PUD
  • 1-4 unit property
  • FHA approved condo
  • new construction
  • NOT second homes or investment properties, sorry!

More reverse mortgage facts:

  • Only YOUR name is on the title, so don’t believe the rumors that the bank is on title.
  • The loan becomes due when the last remaining borrower leaves the home.
  • You can sell whenever you want to, and they do not have a prepayment penalty.
  • Family has up to a year to either refinance your property with a normal mortgage or sell it before the loan is officially due.

Reverse Mortgages are all age based, so contact Dirk today if you’d like a chart to see what your down payment would be at your age.  Want to learn more? Register for his class at http://www.OCHomeFair.com on Jan 30th, 2016.

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Mortgage Payment Relief – will the New Stimulus Package help?

Posted on February 28, 2008. Filed under: First Time Buyer help, Informed Investor Alliance, Orange County Real Estate | Tags: , , |

Hi All!
Manny Piceno, one of our OC preferred lenders, wrote an informational email about the new Stimulus bill that Congress has been working on.  Call him at 949-285-0216 if you would like more info….
So where is the relief? As you know, President Bush signed the Economic Stimulus Bill into law Wednesday February 13th.
HUD has 30 days to publish the median area home prices, Metropolitan Statistical Areas and mortgage principal obligation limits after this bill became law. 
The New Proposed Fannie Mae and Freddie Mac loans (what we know so far):
·         125% of the area median home price not to exceed $729,750.
·         Changes are set to expire on December 31, 2008
·         The new limits will apply to 30 year and 15 year fixed rate, fully amortizing (sorry no interest only) and OWNER OCCUPIED homes!
·         Adjustable rate mortgage are being considered but don’t count on it.
This is a huge undertaking, and isn’t likely to happen fast. Today’s lending environment is difficult but for those prepared, great opportunities exist. Stay informed. I will keep you posted on any changes that may impact your investments. If you have questions, call or write.
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    Orange County, CA Real Estate for hip first-time buyers and investors. Plus, fun things to know and do in OC.

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