Using A Reverse Mortgage To Purchase A Home
A Reverse Mortgage is a national program which typically is offered to homeowners 62 years and older but some private programs have recently been opened to borrowers down to 59 1/2 years old which allows the homeowner access to their equity in the form of cash, monthly income to the homeowner, or a combination of both with the homeowner never making another loan payment for life. The money the homeowner receives is usually tax-free and does not affect Social Security benefits or Medicare (check with your financial advisor for your circumstances). There are very minimal credit requirements and no income requirements to qualify, borrowers can even be in foreclosure and still obtain a reverse mortgage.
Did you know that if you are a senior borrower, aged 62 and over you can use a reverse mortgage to purchase a home as well as just to refinance your existing home? Many senior borrowers have heard about the benefits of paying off an existing mortgage with a reverse mortgage, that they never have to make another mortgage payment, but many are still unaware of the fact that they can also purchase a new home or second home using that same reverse mortgage.
This enables borrowers to purchase the home, you don't have to pay 100% cash for the home and you still never have to make a mortgage payment for life!
Many senior borrowers are set with their current homes and have no desire to move. However, there are also a growing number who need to downsize, have decided that their current home just doesn't fit their needs and can't easily be changed to do so(like wheel chair access or multiple stories) or have amenities that they wish to get away from that they no longer desire (like large lots with pools and excessive landscaping, etc). Some wish to keep their current homes but want a second home near children and grandchildren, near favorite activities, or in climates more favorable during certain times of the year. But with no steady income streams and the fear of starting again with mortgage payments, many have thought that they just can't buy the properties they want.
Some are almost in a position to buy these homes, but it would take all their available savings and they do not want to use all their funds. The reverse mortgage has become an excellent tool for these seniors to purchase the homes they desire without qualification requirements and with no payments for life all without having to pay for the homes outright.
So if you, a loved one or a client of yours are 60 or older and are looking to buy a new primary residence or second home or always wanted to downsize but never thought you could actually do it and still get a home you would be happy with, give a specialist at All Reverse Mortgage Company a call and let us show you how a reverse mortgage might be just the tool for you!
Did you know that if you are a senior borrower, aged 62 and over you can use a reverse mortgage to purchase a home as well as just to refinance your existing home? Many senior borrowers have heard about the benefits of paying off an existing mortgage with a reverse mortgage, that they never have to make another mortgage payment, but many are still unaware of the fact that they can also purchase a new home or second home using that same reverse mortgage.
This enables borrowers to purchase the home, you don't have to pay 100% cash for the home and you still never have to make a mortgage payment for life!
Many senior borrowers are set with their current homes and have no desire to move. However, there are also a growing number who need to downsize, have decided that their current home just doesn't fit their needs and can't easily be changed to do so(like wheel chair access or multiple stories) or have amenities that they wish to get away from that they no longer desire (like large lots with pools and excessive landscaping, etc). Some wish to keep their current homes but want a second home near children and grandchildren, near favorite activities, or in climates more favorable during certain times of the year. But with no steady income streams and the fear of starting again with mortgage payments, many have thought that they just can't buy the properties they want.
Some are almost in a position to buy these homes, but it would take all their available savings and they do not want to use all their funds. The reverse mortgage has become an excellent tool for these seniors to purchase the homes they desire without qualification requirements and with no payments for life all without having to pay for the homes outright.
So if you, a loved one or a client of yours are 60 or older and are looking to buy a new primary residence or second home or always wanted to downsize but never thought you could actually do it and still get a home you would be happy with, give a specialist at All Reverse Mortgage Company a call and let us show you how a reverse mortgage might be just the tool for you!
Mortgages - Top Tips For Switching Mortgage Deals
If your mortgage deal is no longer competitive, it may be time to switch. However, choosing the wrong mortgage could cost you thousands of pounds a year. Here are the most important things to consider when planning to switch mortgages.
Compare mortgages
Your bank may advise you to take on one of their mortgages. Before doing so, make sure you compare all kinds of mortgages and consider taking a mortgage with a different provider -- there may well be better mortgage deals elsewhere.
Consider the pros and cons of different types of mortgage
Particularly if you are taking on a long-term mortgage, you need to consider whether interest rates are likely to rise or fall. For low or falling interest rates, you could be better off with a tracker mortgage. If you think rates will rise, it may be better to go with a fixed rate mortgage.
Calculate monthly outgoings
You will need to make monthly payments on your mortgage. Consider what these will be and whether you can really afford them on a long-term basis. Also take into account the possibility of losing your job or of a steep rise in interest rates -- either of which could cause your mortgage to become unaffordable. Remember, if you do not keep up your monthly installments, your mortgage provider will have the right to repossess your home.
Consider additional features
Think about your personal circumstances in relation to other features offered with some mortgages. For example, if you regularly receive bonus payments or windfalls of some kind, it may benefit you to have an overpayment option with your mortgage deal. This will allow you to pay in lump sums on top of your monthly payments, meaning you could potentially pay off your mortgage more quickly.
Talk to your current provider
While you don't need to remain loyal to your current lender, it can be useful to talk through options with them. Some mortgage lenders have special deals available only to current customers which you might be able to take advantage of. Once you have done this, always compare mortgage deals with different lenders before taking the plunge.
Look out for hidden fees
Given that you are remortgaging to save money, it's vital to make sure that other costs like set-up fees will not cancel out your savings. The same applies to exit fees and redemption penalties applied by your current lender. Take all costs into account before switching.
Read the small print
When you switch mortgages you will probably be presented with a mountain of paperwork. It's important to understand all of those terms and conditions before you sign up, so take time to read through and take it all in. If there is anything you don't understand, don't be afraid to ask questions until you do.
Make a note of when your chosen mortgage deal ends
Once you have switched mortgage deals, you need to be aware of when your latest mortgage deal is going to end, and remember to compare mortgages again once this has happened. The cheapest mortgage deals usually last around two to three years, so be prepared!
At Credit Choices you can compare mortgage deals with our mortgage calculator
Compare mortgages
Your bank may advise you to take on one of their mortgages. Before doing so, make sure you compare all kinds of mortgages and consider taking a mortgage with a different provider -- there may well be better mortgage deals elsewhere.
Consider the pros and cons of different types of mortgage
Particularly if you are taking on a long-term mortgage, you need to consider whether interest rates are likely to rise or fall. For low or falling interest rates, you could be better off with a tracker mortgage. If you think rates will rise, it may be better to go with a fixed rate mortgage.
Calculate monthly outgoings
You will need to make monthly payments on your mortgage. Consider what these will be and whether you can really afford them on a long-term basis. Also take into account the possibility of losing your job or of a steep rise in interest rates -- either of which could cause your mortgage to become unaffordable. Remember, if you do not keep up your monthly installments, your mortgage provider will have the right to repossess your home.
Consider additional features
Think about your personal circumstances in relation to other features offered with some mortgages. For example, if you regularly receive bonus payments or windfalls of some kind, it may benefit you to have an overpayment option with your mortgage deal. This will allow you to pay in lump sums on top of your monthly payments, meaning you could potentially pay off your mortgage more quickly.
Talk to your current provider
While you don't need to remain loyal to your current lender, it can be useful to talk through options with them. Some mortgage lenders have special deals available only to current customers which you might be able to take advantage of. Once you have done this, always compare mortgage deals with different lenders before taking the plunge.
Look out for hidden fees
Given that you are remortgaging to save money, it's vital to make sure that other costs like set-up fees will not cancel out your savings. The same applies to exit fees and redemption penalties applied by your current lender. Take all costs into account before switching.
Read the small print
When you switch mortgages you will probably be presented with a mountain of paperwork. It's important to understand all of those terms and conditions before you sign up, so take time to read through and take it all in. If there is anything you don't understand, don't be afraid to ask questions until you do.
Make a note of when your chosen mortgage deal ends
Once you have switched mortgage deals, you need to be aware of when your latest mortgage deal is going to end, and remember to compare mortgages again once this has happened. The cheapest mortgage deals usually last around two to three years, so be prepared!
At Credit Choices you can compare mortgage deals with our mortgage calculator
5 Facts How The Reverse Mortgage Lending Is Changing
The need for a new office and new rules comes from the fact, that this industry includes a lot of scam artists, which do not follow any good practices. They utilize the fact, that the reverse loans are complicated products and many seniors do not understand, what they sign.
1. What Is The Consumer Financial Protection Bureau?
It is a Federal Agency, which operates under Dodd-Frank and works against the predatory practices and other abuses in the reverse mortgage industry. Earlier these tasks were split between seven different agencies. The main focus is to protect senior people from the predatory practices by the rulemaking and enforcement authority in the banking and security industries, where the senior people have lost their homes.
2. What IsThe Office Of Older Americans?
That will be formed by the end of January 2012. The target is to focus on the financial products and the deceptive practices, which concern the older Americans. The office will develop, implement and evaluate the programs of Consumer Financial Protection Bureau.
3. The Study Will Be Done.
The Office Of Older Americans will conduct a study about the reverse mortgage lending before july 21 2012. The study tries to identify all unfair practices in the origination of the reverse mortgage lending to protect borrower seniors. It also tries to find out, whether the financial product fits to the circumstances of the seniors.
4. The Results Of The Study.
The study may lead to the new legislation and the removal of many unfair practices, which will be found out. It may touch practices, when the reverse mortgage fits to a senior. It may also touch the cases, when the reverse loan funding is used for the investments. Th earliest time, when the new rules will be effective is late 2012, which means, that the lenders have a lot of time for comments and for the change of their practices.
5. This All Will Improve The Image Of The Industry.
The fact is, that the reverse mortgage industry still include scam artists, whos only target is to milk the seniors. The new legislation and the study will improve the marketing circumstances a lot, which will strenghten the brand image of the reverse mortgage industry.
The reverse loans are financial products, which include a lot of alternatives and details, which make the understanding difficult. The new legislation will help seniors, because new things will be conducted by the law. The products become safer. However, it is sure, that the industry will develop new approaches, which again require new legislation.
1. What Is The Consumer Financial Protection Bureau?
It is a Federal Agency, which operates under Dodd-Frank and works against the predatory practices and other abuses in the reverse mortgage industry. Earlier these tasks were split between seven different agencies. The main focus is to protect senior people from the predatory practices by the rulemaking and enforcement authority in the banking and security industries, where the senior people have lost their homes.
2. What IsThe Office Of Older Americans?
That will be formed by the end of January 2012. The target is to focus on the financial products and the deceptive practices, which concern the older Americans. The office will develop, implement and evaluate the programs of Consumer Financial Protection Bureau.
3. The Study Will Be Done.
The Office Of Older Americans will conduct a study about the reverse mortgage lending before july 21 2012. The study tries to identify all unfair practices in the origination of the reverse mortgage lending to protect borrower seniors. It also tries to find out, whether the financial product fits to the circumstances of the seniors.
4. The Results Of The Study.
The study may lead to the new legislation and the removal of many unfair practices, which will be found out. It may touch practices, when the reverse mortgage fits to a senior. It may also touch the cases, when the reverse loan funding is used for the investments. Th earliest time, when the new rules will be effective is late 2012, which means, that the lenders have a lot of time for comments and for the change of their practices.
5. This All Will Improve The Image Of The Industry.
The fact is, that the reverse mortgage industry still include scam artists, whos only target is to milk the seniors. The new legislation and the study will improve the marketing circumstances a lot, which will strenghten the brand image of the reverse mortgage industry.
The reverse loans are financial products, which include a lot of alternatives and details, which make the understanding difficult. The new legislation will help seniors, because new things will be conducted by the law. The products become safer. However, it is sure, that the industry will develop new approaches, which again require new legislation.
Reverse Mortgages - What is the Maximum Claim Amount?
Once a senior homeowner 62 years or older learns the general features of a reverse mortgage, they usually want to find out how much the loan can offer in proceeds. This can be done in several ways: by looking up a reverse mortgage proceeds calculator on websites (not always an accurate indicator); by talking to various lenders by phone; or by face to face appointment with a loan officer who brings actual figures to the senior for their review. Since a senior will want to know enough about the loan officer to trust they are providing accurate information, a face to face interview is recommended whenever possible.
In a face to face conversation, a loan officer will usually use a Reverse Mortgage Comparison Sheet to show what proceeds the homeowner can expect to receive. This sheet contains different loan products offered by the lender. Currently, only government insured Home Equity Conversion Mortgages known as HECMs are widely available. The primary differences will be whether the product is a fixed rate or monthly adjustable rate HECM.
The heart of a Reverse Mortgage Comparison Sheet contains columns of numbers that are labeled with names that may make little or no sense when read for the first time. The first label that comes to mind (because it's usually near the top of the list of terms and numbers) is "The Maximum Claim Amount."
The Maximum Claim Amount is actually an insurance term. Thinking of it that way will help in understanding where the number comes from. FHA has a maximum limit (currently $625,500) of home value that it will insure. Put simply, FHA is willing to insure a reverse mortgage for the appraised value of the home up to the maximum claim limit. Therefore, if a home is appraised by an FHA approved appraiser at $400,000, the Maximum Claim Amount will be $400,000. On the other hand, if a home is appraised by an FHA approved appraiser at $700,000, the Maximum Claim Amount will be $625,500 or the current maximum limit that FHA will insure.
The Maximum Claim Amount is generally estimated until the senior receives counseling by a HUD approved reverse mortgage counselor, an application is signed by the borrower(s), and an FHA Case Number is assigned. Only then does an FHA approved appraiser physically conduct an appraisal to assign a value to the home.
Although the Maximum Claim Amount may be $625,500 and a house may be worth $800,000, do not expect a HECM to provide the homeowner with $625,500 of proceeds. The Maximum Claim Amount is only one of three factors used to determine the proceeds that can be offered. The other two factors are the age of the youngest borrower (must be at least 62), and the current expected interest rate (based on the current 10 year London Interbank Offered Rate, or LIBOR rate, plus a stated margin for the adjustable rate HECM and based on the current fixed interest rate for the fixed rate reverse mortgage). The rule of thumb is: the higher the Maximum Claim Amount, the higher the proceeds available to the borrower; the lower the Maximum Claim Amount, the lower the proceeds available to the borrower.
Take a little time and learn what the terms such as Maximum Claim Amount mean on a Reverse Mortgage Loan Comparison Sheet. Such knowledge can help in making an informed decision about whether a HECM Reverse Mortgage is a loan product that could help you either now or in the future.
In a face to face conversation, a loan officer will usually use a Reverse Mortgage Comparison Sheet to show what proceeds the homeowner can expect to receive. This sheet contains different loan products offered by the lender. Currently, only government insured Home Equity Conversion Mortgages known as HECMs are widely available. The primary differences will be whether the product is a fixed rate or monthly adjustable rate HECM.
The heart of a Reverse Mortgage Comparison Sheet contains columns of numbers that are labeled with names that may make little or no sense when read for the first time. The first label that comes to mind (because it's usually near the top of the list of terms and numbers) is "The Maximum Claim Amount."
The Maximum Claim Amount is actually an insurance term. Thinking of it that way will help in understanding where the number comes from. FHA has a maximum limit (currently $625,500) of home value that it will insure. Put simply, FHA is willing to insure a reverse mortgage for the appraised value of the home up to the maximum claim limit. Therefore, if a home is appraised by an FHA approved appraiser at $400,000, the Maximum Claim Amount will be $400,000. On the other hand, if a home is appraised by an FHA approved appraiser at $700,000, the Maximum Claim Amount will be $625,500 or the current maximum limit that FHA will insure.
The Maximum Claim Amount is generally estimated until the senior receives counseling by a HUD approved reverse mortgage counselor, an application is signed by the borrower(s), and an FHA Case Number is assigned. Only then does an FHA approved appraiser physically conduct an appraisal to assign a value to the home.
Although the Maximum Claim Amount may be $625,500 and a house may be worth $800,000, do not expect a HECM to provide the homeowner with $625,500 of proceeds. The Maximum Claim Amount is only one of three factors used to determine the proceeds that can be offered. The other two factors are the age of the youngest borrower (must be at least 62), and the current expected interest rate (based on the current 10 year London Interbank Offered Rate, or LIBOR rate, plus a stated margin for the adjustable rate HECM and based on the current fixed interest rate for the fixed rate reverse mortgage). The rule of thumb is: the higher the Maximum Claim Amount, the higher the proceeds available to the borrower; the lower the Maximum Claim Amount, the lower the proceeds available to the borrower.
Take a little time and learn what the terms such as Maximum Claim Amount mean on a Reverse Mortgage Loan Comparison Sheet. Such knowledge can help in making an informed decision about whether a HECM Reverse Mortgage is a loan product that could help you either now or in the future.
Reverse Mortgage and Medicaid
If you are on Medicaid or are potentially going on Medicaid, there are a few things you need to know. Do not do a reverse mortgage without considering the following facts. Doing it wrong, could cost you dearly.
There is a limit on the amount of money you can have in your bank accounts when applying for Medicaid or while you are on it. This is a program that is for seniors that are in a financial hardship. So it makes sense, if you have a bunch of money, you will be disqualified.
When you do a reverse loan, you could actually disqualify yourself in a couple of ways, and not even know you did it before it is too late.
1. Take a lump sum.
A reverse mortgage allows you to take a lump sum if you desire to have some cash for any reason you want. The most common is if you are going to do repairs to your home, or pay off credit cards and bills. You ask the lender for, in our example, ten thousand dollars to do a major roof repair and have some operating cash. They will wire the money to your account in a couple of days. So when Medicaid checks your accounts and you have all this money in there, you will be disqualified.
In this example, you don't want the money in your account, and it is necessary to get it to do the repairs. You may consider drafting a cashier's check immediately upon the funds being available to avoid a disaster. Writing a check may not be enough, since the contractor could wait to cash it for a week, or if it took a few extra days to clear the check.
2. Monthly installments.
A common way to use a reversible mortgage is to get a monthly installment so you can supplement your income to cover your expenses. If you have money left over every month, and it goes into a savings account, you could, over a period of several months, accumulate "too much money". If you do, you will be disqualified from the program.
Medicare and Social Security questions come up sometimes in this conversation, so let's address it here. The reverse mortgage is a loan, so it should have no affect on these benefits. They are impacted when your income increases, not when you borrow money. Hopefully you see that there are some considerations when you get a reverse mortgage and are on a government aid program.
Just be careful by knowing the rules of the program, and your reverse mortgage will work perfectly for you. On the other hand, not knowing the rules could cause big problems. Get more information on a reverse mortgage by clicking the links in this article.
There is a limit on the amount of money you can have in your bank accounts when applying for Medicaid or while you are on it. This is a program that is for seniors that are in a financial hardship. So it makes sense, if you have a bunch of money, you will be disqualified.
When you do a reverse loan, you could actually disqualify yourself in a couple of ways, and not even know you did it before it is too late.
1. Take a lump sum.
A reverse mortgage allows you to take a lump sum if you desire to have some cash for any reason you want. The most common is if you are going to do repairs to your home, or pay off credit cards and bills. You ask the lender for, in our example, ten thousand dollars to do a major roof repair and have some operating cash. They will wire the money to your account in a couple of days. So when Medicaid checks your accounts and you have all this money in there, you will be disqualified.
In this example, you don't want the money in your account, and it is necessary to get it to do the repairs. You may consider drafting a cashier's check immediately upon the funds being available to avoid a disaster. Writing a check may not be enough, since the contractor could wait to cash it for a week, or if it took a few extra days to clear the check.
2. Monthly installments.
A common way to use a reversible mortgage is to get a monthly installment so you can supplement your income to cover your expenses. If you have money left over every month, and it goes into a savings account, you could, over a period of several months, accumulate "too much money". If you do, you will be disqualified from the program.
Medicare and Social Security questions come up sometimes in this conversation, so let's address it here. The reverse mortgage is a loan, so it should have no affect on these benefits. They are impacted when your income increases, not when you borrow money. Hopefully you see that there are some considerations when you get a reverse mortgage and are on a government aid program.
Just be careful by knowing the rules of the program, and your reverse mortgage will work perfectly for you. On the other hand, not knowing the rules could cause big problems. Get more information on a reverse mortgage by clicking the links in this article.
Reverse Mortgage Condo Changes
If you are looking into buying a condominium, or already have one, and want to use it to be able to get a reverse mortgage on it later, you need to be aware of the new rules from HUD. These rules, which are explained in the Mortgagee Letter 2009-19, apply to everything that occurs after October 1, 2009. It may also apply if you have recentlIf you are looking into buying a condominium, or already have one, and want to use it to be able to get a reverse mortgage on it later, you need to be aware of the new rules from HUD. These rules, which are explained in the Mortgagee Letter 2009-19, apply to everything that occurs after October 1, 2009. It may also apply if you have recently tried to get approval for a reverse mortgage, too.
Previous Pre-approvals for Reverse Mortgages Are Canceled
If you currently own a condominium and had applied recently for the reverse mortgage program, then you will need to apply again. Literally, everything that had been pre-approved by the FHA prior to September 2009, under what was called the "FHA Spot Condo Affidavit," has now been erased.
New Approvals Are Only Temporary
When a condominium project owner applies for approval now, the approval only lasts for two years. That means that there will need to be a new approval given. HUD wants to ensure that the property and mortgage insurance is maintained, which is required under a reverse mortgage loan.
Two Ways for a Property to Be Approved
In place of the Spot Condo Affidavit, two processes have been established for approval.
1. The HUD Review and Approval Process (HRAP)
This will be the regular process for getting a condominium project approved.
2. The Direct Endorsement Lender Review and Approval Process (DELRAP)
This is for lenders that are already approved by HUD to make this kind of approval.
There are two exceptions that will not fall under this need for a two year approval. The first one is a new condominium project - which will be given a 10-year approval. The second one is a condominium that is in the process of being built and it is too late for HUD to require any changes in the plans.
Condominium Rules for Reverse Mortgage Approval Are Specific
Getting approval on a condominium can be rather tricky, and the owner will need to determine whether or not their condo is even qualified before they apply. The letter provides details as to what kind of condos are qualified - and which ones are not.
The document declares that certain types of condos are not qualified for a reverse mortgage. This includes houseboats, condominium projects or spaces that have more than 25% of it used for commercial purposes, multi-dwelling units, and buildings known as condominium hotels.
Condos That Can Qualify for a Reverse Mortgage
The rules in the letter are specific about what types of condominium structures qualify for a reverse mortgage. One type is called the site condominium. This is a single family detached dwelling that is under a condo agreement. It does not need the approval by the Condominium Project, but it will need to have Attachment D added to the Condominium Rider.
Another condominium form that is approved is the manufactured housing condominium projects (MHCP's). These are not affected by the new rules and neither can they be considered to be site condominiums. They will have to receive approval under HRAP.
There are also many rules given in the letter that may prevent many condos from being accepted and qualified for a reverse mortage. In a new condo project, the rules stipulate that at least 50% of the project be owned and occupied before it can be approved. One rule concerning investors includes one that states that there cannot be a single investor that owns more than 10% of the condo project. A condo owner cannot own more than one condo unit in the condo project is another rule.
As you can see from the issues discussed here about getting a reverse mortgage on a condominium, you will certainly need to learn much more about it before you buy your condo. You can start by learning more by downloading the actual Mortagee Letter 2009-19.y tried to get approval for a reverse mortgage, too.
Previous Pre-approvals for Reverse Mortgages Are Canceled
If you currently own a condominium and had applied recently for the reverse mortgage program, then you will need to apply again. Literally, everything that had been pre-approved by the FHA prior to September 2009, under what was called the "FHA Spot Condo Affidavit," has now been erased.
New Approvals Are Only Temporary
When a condominium project owner applies for approval now, the approval only lasts for two years. That means that there will need to be a new approval given. HUD wants to ensure that the property and mortgage insurance is maintained, which is required under a reverse mortgage loan.
Two Ways for a Property to Be Approved
In place of the Spot Condo Affidavit, two processes have been established for approval.
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1. The HUD Review and Approval Process (HRAP)
This will be the regular process for getting a condominium project approved.
2. The Direct Endorsement Lender Review and Approval Process (DELRAP)
This is for lenders that are already approved by HUD to make this kind of approval.
There are two exceptions that will not fall under this need for a two year approval. The first one is a new condominium project - which will be given a 10-year approval. The second one is a condominium that is in the process of being built and it is too late for HUD to require any changes in the plans.
Condominium Rules for Reverse Mortgage Approval Are Specific
Getting approval on a condominium can be rather tricky, and the owner will need to determine whether or not their condo is even qualified before they apply. The letter provides details as to what kind of condos are qualified - and which ones are not.
The document declares that certain types of condos are not qualified for a reverse mortgage. This includes houseboats, condominium projects or spaces that have more than 25% of it used for commercial purposes, multi-dwelling units, and buildings known as condominium hotels.
Condos That Can Qualify for a Reverse Mortgage
The rules in the letter are specific about what types of condominium structures qualify for a reverse mortgage. One type is called the site condominium. This is a single family detached dwelling that is under a condo agreement. It does not need the approval by the Condominium Project, but it will need to have Attachment D added to the Condominium Rider.
Another condominium form that is approved is the manufactured housing condominium projects (MHCP's). These are not affected by the new rules and neither can they be considered to be site condominiums. They will have to receive approval under HRAP.
There are also many rules given in the letter that may prevent many condos from being accepted and qualified for a reverse mortage. In a new condo project, the rules stipulate that at least 50% of the project be owned and occupied before it can be approved. One rule concerning investors includes one that states that there cannot be a single investor that owns more than 10% of the condo project. A condo owner cannot own more than one condo unit in the condo project is another rule.
As you can see from the issues discussed here about getting a reverse mortgage on a condominium, you will certainly need to learn much more about it before you buy your condo. You can start by learning more by downloading the actual Mortagee Letter 2009-19.
Previous Pre-approvals for Reverse Mortgages Are Canceled
If you currently own a condominium and had applied recently for the reverse mortgage program, then you will need to apply again. Literally, everything that had been pre-approved by the FHA prior to September 2009, under what was called the "FHA Spot Condo Affidavit," has now been erased.
New Approvals Are Only Temporary
When a condominium project owner applies for approval now, the approval only lasts for two years. That means that there will need to be a new approval given. HUD wants to ensure that the property and mortgage insurance is maintained, which is required under a reverse mortgage loan.
Two Ways for a Property to Be Approved
In place of the Spot Condo Affidavit, two processes have been established for approval.
1. The HUD Review and Approval Process (HRAP)
This will be the regular process for getting a condominium project approved.
2. The Direct Endorsement Lender Review and Approval Process (DELRAP)
This is for lenders that are already approved by HUD to make this kind of approval.
There are two exceptions that will not fall under this need for a two year approval. The first one is a new condominium project - which will be given a 10-year approval. The second one is a condominium that is in the process of being built and it is too late for HUD to require any changes in the plans.
Condominium Rules for Reverse Mortgage Approval Are Specific
Getting approval on a condominium can be rather tricky, and the owner will need to determine whether or not their condo is even qualified before they apply. The letter provides details as to what kind of condos are qualified - and which ones are not.
The document declares that certain types of condos are not qualified for a reverse mortgage. This includes houseboats, condominium projects or spaces that have more than 25% of it used for commercial purposes, multi-dwelling units, and buildings known as condominium hotels.
Condos That Can Qualify for a Reverse Mortgage
The rules in the letter are specific about what types of condominium structures qualify for a reverse mortgage. One type is called the site condominium. This is a single family detached dwelling that is under a condo agreement. It does not need the approval by the Condominium Project, but it will need to have Attachment D added to the Condominium Rider.
Another condominium form that is approved is the manufactured housing condominium projects (MHCP's). These are not affected by the new rules and neither can they be considered to be site condominiums. They will have to receive approval under HRAP.
There are also many rules given in the letter that may prevent many condos from being accepted and qualified for a reverse mortage. In a new condo project, the rules stipulate that at least 50% of the project be owned and occupied before it can be approved. One rule concerning investors includes one that states that there cannot be a single investor that owns more than 10% of the condo project. A condo owner cannot own more than one condo unit in the condo project is another rule.
As you can see from the issues discussed here about getting a reverse mortgage on a condominium, you will certainly need to learn much more about it before you buy your condo. You can start by learning more by downloading the actual Mortagee Letter 2009-19.y tried to get approval for a reverse mortgage, too.
Previous Pre-approvals for Reverse Mortgages Are Canceled
If you currently own a condominium and had applied recently for the reverse mortgage program, then you will need to apply again. Literally, everything that had been pre-approved by the FHA prior to September 2009, under what was called the "FHA Spot Condo Affidavit," has now been erased.
New Approvals Are Only Temporary
When a condominium project owner applies for approval now, the approval only lasts for two years. That means that there will need to be a new approval given. HUD wants to ensure that the property and mortgage insurance is maintained, which is required under a reverse mortgage loan.
Two Ways for a Property to Be Approved
In place of the Spot Condo Affidavit, two processes have been established for approval.
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1. The HUD Review and Approval Process (HRAP)
This will be the regular process for getting a condominium project approved.
2. The Direct Endorsement Lender Review and Approval Process (DELRAP)
This is for lenders that are already approved by HUD to make this kind of approval.
There are two exceptions that will not fall under this need for a two year approval. The first one is a new condominium project - which will be given a 10-year approval. The second one is a condominium that is in the process of being built and it is too late for HUD to require any changes in the plans.
Condominium Rules for Reverse Mortgage Approval Are Specific
Getting approval on a condominium can be rather tricky, and the owner will need to determine whether or not their condo is even qualified before they apply. The letter provides details as to what kind of condos are qualified - and which ones are not.
The document declares that certain types of condos are not qualified for a reverse mortgage. This includes houseboats, condominium projects or spaces that have more than 25% of it used for commercial purposes, multi-dwelling units, and buildings known as condominium hotels.
Condos That Can Qualify for a Reverse Mortgage
The rules in the letter are specific about what types of condominium structures qualify for a reverse mortgage. One type is called the site condominium. This is a single family detached dwelling that is under a condo agreement. It does not need the approval by the Condominium Project, but it will need to have Attachment D added to the Condominium Rider.
Another condominium form that is approved is the manufactured housing condominium projects (MHCP's). These are not affected by the new rules and neither can they be considered to be site condominiums. They will have to receive approval under HRAP.
There are also many rules given in the letter that may prevent many condos from being accepted and qualified for a reverse mortage. In a new condo project, the rules stipulate that at least 50% of the project be owned and occupied before it can be approved. One rule concerning investors includes one that states that there cannot be a single investor that owns more than 10% of the condo project. A condo owner cannot own more than one condo unit in the condo project is another rule.
As you can see from the issues discussed here about getting a reverse mortgage on a condominium, you will certainly need to learn much more about it before you buy your condo. You can start by learning more by downloading the actual Mortagee Letter 2009-19.
Mortgage Loans - Mortgage Brokers Help You Prequalify!
First time home buyers might be surprised how fast a deal moves in a busy real estate market and mortgage loans can take a little time to organize. An experienced realtor will advise you to use a mortgage broker to prequalify for a mortgage loan so that you can move quickly when buying a house.
Even when the real estate market is experiencing a downturn, the most desirable and/or well priced properties, located in the right neighborhoods, sell quickly. If you aren't prequalified for a mortgage it could mean a delay of a day or two, which could result in someone else scooping the home that you wanted.
Why would you let that happen when it's relatively easy to prepare so that you can move quickly when the perfect property comes on the market? If you are prequalified for a mortgage loan you can rest assured that you will be ready to secure the home of your dreams, instead of agonizing as someone else who is better prepared beats you to it.
Prequalifying for a mortgage loan will also help you figure out how much house you can afford. It would be heartbreaking to fall in love with a home that is beyond your means!
A mortgage broker will help you prequalify and can shop your portfolio around to all the lending institutions and banks to get you the best terms on a mortgage loan. Brokers are familiar with a variety of financial institutions and know where to secure the right financing options for your particular situation.They will almost certainly negotiate a better deal for you than you could get on your own!
Even a minor difference of half a percentage point makes a major difference in how much you pay over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.
People who are resisting hiring a mortgage broker should really sit down and do the math...that broker could easily save you many more times the cash that you invest in hiring them! That's why many experienced real estate investors always use a mortgage broker to get the best terms when they finance a purchase. They understand that hiring a professional for this job will pay off in the long run.
Mortgage brokers will work on your behalf and on your schedule (over weekends and evenings if necessary), and unlike bank staff, are not limited to any one financial institution. This is why you can rest assured that they will offer true unbiased advice with your best interests in mind. They will do all the legwork saving you time and money, after all this is how they make their living!
So make sure you're ready to act quickly when you find that perfect first home! Ask your realtor for a referral to an independent mortgage broker who can help you prequalify for a mortgage loan, with the terms that will work for you and your family.
Geoff McLean is a realtor in Victoria BC who approaches his real estate vocation with honesty, integrity and straightforwardness. Geoff is also the primary author of a blog about his home city. Living in Victoria is a valuable source of information about the Greater Victoria area for those who are interested in moving to this beautiful city.
Even when the real estate market is experiencing a downturn, the most desirable and/or well priced properties, located in the right neighborhoods, sell quickly. If you aren't prequalified for a mortgage it could mean a delay of a day or two, which could result in someone else scooping the home that you wanted.
Why would you let that happen when it's relatively easy to prepare so that you can move quickly when the perfect property comes on the market? If you are prequalified for a mortgage loan you can rest assured that you will be ready to secure the home of your dreams, instead of agonizing as someone else who is better prepared beats you to it.
Prequalifying for a mortgage loan will also help you figure out how much house you can afford. It would be heartbreaking to fall in love with a home that is beyond your means!
A mortgage broker will help you prequalify and can shop your portfolio around to all the lending institutions and banks to get you the best terms on a mortgage loan. Brokers are familiar with a variety of financial institutions and know where to secure the right financing options for your particular situation.They will almost certainly negotiate a better deal for you than you could get on your own!
Even a minor difference of half a percentage point makes a major difference in how much you pay over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.
People who are resisting hiring a mortgage broker should really sit down and do the math...that broker could easily save you many more times the cash that you invest in hiring them! That's why many experienced real estate investors always use a mortgage broker to get the best terms when they finance a purchase. They understand that hiring a professional for this job will pay off in the long run.
Mortgage brokers will work on your behalf and on your schedule (over weekends and evenings if necessary), and unlike bank staff, are not limited to any one financial institution. This is why you can rest assured that they will offer true unbiased advice with your best interests in mind. They will do all the legwork saving you time and money, after all this is how they make their living!
So make sure you're ready to act quickly when you find that perfect first home! Ask your realtor for a referral to an independent mortgage broker who can help you prequalify for a mortgage loan, with the terms that will work for you and your family.
Geoff McLean is a realtor in Victoria BC who approaches his real estate vocation with honesty, integrity and straightforwardness. Geoff is also the primary author of a blog about his home city. Living in Victoria is a valuable source of information about the Greater Victoria area for those who are interested in moving to this beautiful city.
Mortgage Services and Mortgage Brokers
Whether you are acquiring your first property or adding to an extensive portfolio it is always advisable to speak to a professional mortgage service company to help choose the best mortgage for your situation.
A wide range of mortgages are available for a large number of financial situations, and what was right for you the last time round may not be the best option for your new purchase. Fluctuations in the market, mortgage trends and financial stability of your current situation all play a part in deciding the best mortgage for you, and you need a professional mortgage services company to give you the best and most up to date information available.
Otherwise known as mortgage brokers, these professionals have access to a range of mortgages based on deposit, term, financial situation, and any offers the mortgage company may be offering that would not be available to you as an individual. A broker may have an agreement with one or more mortgage companies giving them a better rate than you may find elsewhere.
There are various types of mortgage broker available to you, often at no charge. A broker who can offer free mortgage and financial advice by charging their fee to the company you decide to go with, however each broker is different and you will need to check their terms and conditions before committing to your mortgage. Tied mortgage services are companies who's advice is limited to the products of a single company. Banks and building societies are an example of a tied mortgage broker. Multi-tied mortgage services are companies who are tied to a small number of mortgage companies. Many estate agents operate a multi-tied system. Whole of market, or independent mortgage brokers are those who are not tied to any specific mortgage company, and can offer you the full range of products available. It is advisable for all mortgage applicants to visit an independent mortgage broker before committing to a new mortgage to ensure you are getting the best deal available at the time.
Your mortgage services provider should explain and advise you throughout the process, and every step should be confirmed in writing. They will keep you informed of progress throughout the process from start to finish, and offer to review your financial situation as regularly as you wish. If you are looking to expand your portfolio of properties it may be worth speaking to your mortgage services company about your long term plans and goals, to help them find the best mortgage solution for you. Running a number of properties for rent is very different to purchasing your own home, and different mortgages are available.
Your mortgage broker will be able to guide you every step of the way from initial enquiry to completion. Their services should cover every aspect of your mortgage application and any queries you may have regarding the application. It is a lengthy and at times complicated process, so be sure to listen to your mortgage broker and respond quickly to their requests to make sure you get settled into your new home as quickly as possible, and with the least hassle.
Philip Loughran writes on a number of subjects from travel to law, automotive to education. For mortgage services Southampton and mortgage broker Southampton he recommends Choice Financial Solutions.
A wide range of mortgages are available for a large number of financial situations, and what was right for you the last time round may not be the best option for your new purchase. Fluctuations in the market, mortgage trends and financial stability of your current situation all play a part in deciding the best mortgage for you, and you need a professional mortgage services company to give you the best and most up to date information available.
Otherwise known as mortgage brokers, these professionals have access to a range of mortgages based on deposit, term, financial situation, and any offers the mortgage company may be offering that would not be available to you as an individual. A broker may have an agreement with one or more mortgage companies giving them a better rate than you may find elsewhere.
There are various types of mortgage broker available to you, often at no charge. A broker who can offer free mortgage and financial advice by charging their fee to the company you decide to go with, however each broker is different and you will need to check their terms and conditions before committing to your mortgage. Tied mortgage services are companies who's advice is limited to the products of a single company. Banks and building societies are an example of a tied mortgage broker. Multi-tied mortgage services are companies who are tied to a small number of mortgage companies. Many estate agents operate a multi-tied system. Whole of market, or independent mortgage brokers are those who are not tied to any specific mortgage company, and can offer you the full range of products available. It is advisable for all mortgage applicants to visit an independent mortgage broker before committing to a new mortgage to ensure you are getting the best deal available at the time.
Your mortgage services provider should explain and advise you throughout the process, and every step should be confirmed in writing. They will keep you informed of progress throughout the process from start to finish, and offer to review your financial situation as regularly as you wish. If you are looking to expand your portfolio of properties it may be worth speaking to your mortgage services company about your long term plans and goals, to help them find the best mortgage solution for you. Running a number of properties for rent is very different to purchasing your own home, and different mortgages are available.
Your mortgage broker will be able to guide you every step of the way from initial enquiry to completion. Their services should cover every aspect of your mortgage application and any queries you may have regarding the application. It is a lengthy and at times complicated process, so be sure to listen to your mortgage broker and respond quickly to their requests to make sure you get settled into your new home as quickly as possible, and with the least hassle.
Philip Loughran writes on a number of subjects from travel to law, automotive to education. For mortgage services Southampton and mortgage broker Southampton he recommends Choice Financial Solutions.