Senior citizens interested in the possibility of obtaining a reverse mortgage for their homes may be very happy about a new law which lowers the fees on reverse mortgages, while raising the amount that homeowners can borrow against.  These new provisions took effect on November 1st and a large increase in applications is anticipated.

Mostly available to people 62 and older, reverse mortgages allow homeowners to convert the equity they have in their home into cash.  Rather than making mortgage payments to the bank each month, the reverse is taking place.  The bank sends money to the homeowner.  There is a choice of a lump sum, a line of credit, or monthly payments.  When the homeowner dies, moves, or sells the home, the loan is due and payable.  If in some cases the sales price is less than the balance, the homeowner is not required to supply the difference. 

Limits in the past have ranged from $200,000 to $362,790, but the new law has increased the limit to $417,000.  The age of the homeowner is a factor in how much can be borrowed.

In the past, an origination fee of 2% was charged.  Under the new law, however, origination fees will be calculated at 2% of the first $200,000 and 1% on the rest up to a cap of $6,000.  There are additional fees involved in obtaining this type of mortgage and costs can run as high as 10% of the home’s value.  If a person is planning to move within a short period of time, a reverse mortgage would not be right for them.  However, if a homeowner is committed to remaining in their home forever, this could be an excellent opportunity for them to live more comfortably. 

Whenever we read articles on the grieving process, especially after the loss of a spouse, one of the main teachings is that you should not make any life-changing decisions within the first year after the death. This is also the accepted philosophy when marriage problems cause a permanent separation. Counselors believe that your emotions are roar after such a loss and you will often make the wrong decisions for the wrong reasons. Heeding this advice has worked well for a number of people I know who decided to wait for this period of time before making major changes in their lives. Laws, however, made it financially beneficial for a widow or widower to sell their homes in the same year their spouse passed away. If they waited until the next year, the tax exclusion on their home’s profits was cut in half. This would mean a great deal to the average person.

The Mortgage Forgiveness Debt Relief Act signed into law last December has changed this law. The surviving spouse is now able to take two years after the spouse’s death to sell the jointly owned home and keep profits up to $500,000 tax-free.

This change in the law can be extremely beneficial to people when they need time and compassion most in their lives. The new law allows the proper amount of time to grieve the loss and plan for your future.

Over the years, banks and finance companies have been doing everything possible to persuade people to access the equity they have in their homes. They have provided teaser rates, expensive gifts; even trips have been made available to anyone willing to further mortgage their homes. They have spent years convincing the general public that this is money they should be spending on something else. Homeowners have been enticed into raising their standard of living by using these funds. Suddenly, they were able to afford that fancy new car, big screen television, or luxury vacation. Then the bubble burst.

Today everyone is searching for ways to economize. Most people are rapidly looking for areas to lower their expenses so that they can still afford the necessities. Luxuries are being eliminated from most family budgets in these times. Gas mileage is being tracked constantly and economical meals are being served frequently. Everyone is discussing the price of gas and food. Times have changed rapidly for the average family.

If you took a home equity loan with a fixed rate and a lump sum payment, you now, of course, have the items you borrowed the money to purchase. If, however, you took a home equity line of credit (HELOC) at a variable rate, you may well find that your account has been frozen by the bank and there are no more funds available to you. This has been extremely frustrating to those people who agreed to borrow this money and had made plans based on the availability of these funds. The banks are closing these accounts without even having the property appraised. They are just assuming that the value has declined and in some cases that is not true. Financial institutions are also not taking a borrowers’ credit history into account when making these decisions. This is being done solely for the benefit of the banks and loan companies who know that all of this money is at risk. A home equity loan is a second mortgage. With values declining, many homeowners are finding themselves “upside down”, which means they have borrowed more than the current value of their property. If foreclosure should become necessary, all of the funds from the property would go to the first mortgage holder and the second mortgage holder would receive little or nothing. The law protects the first mortgage holder in this situation.

When the average person begins to start looking for a home to buy, they generally do not know anything about mortgages. They often depend on the people they meet to provide them with accurate and helpful information. This is not always the case, however, which is why potential homeowners need to first educate themselves regarding obtaining a mortgage, and then they should begin the search for their new home.

The wise buyer will attend a free mortgage seminar to learn about how to submit mortgage applications, what information will be required of them, what type of closing costs should they expect, etc. so that they can allocate their money accordingly. There are many things to be learned in a class such as this and it is the smart buyer who takes the time to educate himself. This is most likely the largest investment you will ever make, therefore, it is extremely important that you understand all aspects of a mortgage.

This is also a good time to check your credit reports and fico score. If you have any sort of incorrect negative information on your report, you will want to have this corrected before applying for a mortgage. In today’s market, banks and finance companies are carefully scrutinizing these reports before offering financing. Negative issues on your report can cause you to be eligible for a higher rate. This, in turn, will increase your payments for the duration of the mortgage.

Keeping yourself informed as to current interest rates is also very important. Armed with the knowledge that you have a good credit history, you should be able to recognize when a rate is too high to be acceptable. A good source of current rate information is the internet, where there are several sites that compare rates and provide calculators to assist you in determining how large a mortgage you can afford.

It is extremely important to be certain that you are dealing with a reputable lender who will treat you fairly, and not fall victim to the promotional items that lenders sometimes offer to gain your business. Predatory loans are generally those with higher rates and detrimental conditions. Anytime someone suggests falsifying information or hands you an application with many blank spaces, it is time to leave. This is not someone with whom you want to do business.

Be certain to make arrangements to receive your final settlement statement before the actual closing takes place. This allows you time to review the charges and ask questions if needed. If these figures seem exceptionally higher than the good faith estimate you originally received, consider contacting a professional to review them before closing.

There are more foreclosures in today’s real estate market than ever before.  Unfortunately, many people are facing this devastating reality and trying to deal with it as best they can.  Unemployment is high, health insurance costs rising, gasoline prices, the economy as a whole is strained. If you live in Virginia, a solution may be available.  Gov. Timothy Kaine, in an effort to help our citizens avoid home foreclosures, formed the Virginia Foreclosure Prevention Task Force, whose purpose is to protect and preserve homeownership in Virginia.  June has been designated as National Homeownership Month in Virginia so the timing of the task force is right on target.

Anyone who has concerns about the health of their mortgage should consider attending this free clinic being presented by the Commonwealth of Virginia.  General foreclosure-prevention information will be presented, along with individual foreclosure counseling sessions manned by certified housing counselors trained to give loss mitigation and foreclosure prevention advice.

This clinic will stress the importance of contacting your lender early to inform them of upcoming problems.  It is imperative that people heading towards foreclosure know their prevention options, prioritize spending plans, and avoid many of the current scams. There are many suggestions this clinic can supply and, if serious attention is paid to their solutions, it is possible that you and your family can avoid the tragic experience of losing your home.  Everyone wants to pay their bills and act responsibly, but times are extremely difficult right now with inflation rising and job losses increasing.  We are all facing hard financial times and, for some, this means the possible loss of their home.  If it is possible to avoid this tragedy, attend a short clinic and see if their advice can help you retain your homeownership.

This clinic will teach you what to say when you call your lender and provide additional information that will benefit you in eventually saving your home from foreclosure.  This could be extremely beneficial to anyone facing this problem and might be the solution they are looking for.  Attendance at a free clinic could help resolve all of your family’s problems and should be considered as a real possible solution to your current dilemma.

Today’s economy is presenting some unique situations for residents.  Many people who believed they would never be homeowners now see an opportunity to make this dream a reality.  Foreclosure properties are available and prices are very low.  Some people who have the availability of a small down payment are now realizing that buying a home is within their grasp.  A few problems usually do still exist.

Having a small down payment is a plus, but some of these very same people also have credit ratings that are less than stellar.  Late payments are spread across their credit reports and total scores are not in the prime area that would gain the attention of normal mortgage lenders.  There is also the problem of finding the right foreclosure home at a price they can afford.  There are many companies who are actively seeking people in these positions in the hope of servicing them for a substantial fee.  These organizations are offering combined services to help this target audience become homeowners, but it is imperative that people are aware of the limitations of these companies.

A company that provides a link to home foreclosures available in your area of interest, claims to be able to repair your credit report even if the information is accurate, and can introduce you to providing low down-payment mortgage financing is the answer to your prayers, but requires serious investigation.  Any organization that requires upfront fees should be immediately suspect.  Legitimate organizations are legally prohibited from requiring upfront fees or monthly payments while processing is taking place.

The federal Credit Repair Organization Act prohibits companies from requiring payment in advance of actually performing credit services.  Applicants are also protected by mandatory disclosures of the rights of consumers to cancel contracts without penalty within three business days of signing.  Remember, however, if items on your credit report are accurate and true, no agency is going to be able to change or remove them.  The only time agencies are capable of improving your credit score is when the items are erroneous and proof can be obtained.

Once you have repaired your credit report and arranged for financing, it is time to search for the right home for you and your family. Budget constraints must be considered along with the location and availability of services.  After weighing all of these requirements, it is time to locate the house that will fit all of your requirements.

Be sure to find legitimate organizations that can assist you in your search for the home you have always wanted for your family.  It is possible to attain this dream, but you must be cautious and thoroughly investigate any company you are considering hiring to assist in this purchase.