I am now convinced that for many, it is better to take a Reverse Mortgage now than wait until later

By
Mortgage and Lending with First Meridian Mortgage

The math is simple, if your home is in a high-cost area and it is worth more than $450,000, and you are thinking about taking a HECM (an FHA insured Reverse Mortgage), you will pay more in closing costs after the new law goes into effect. Unless, you are looking for more cash than the current HECM can get you, you should not wait.

The new law is capping the origination fee at $6,000, BUT the limits are going as high as $625,000 in some areas. SO, even though you will save about $1,200 in origination, the 2% fee to HUD is based on the appraised value or the HUD limit in the area, the current limits are at $362,790, making the maximum fee to HUD $7,255. If your home is worth $500,000, yor fee to HUD will be $10,000, so you end up paying more in closing costs under the new law. On the other hand, you will be getting more money than you would have before.

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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Sadly, with the dramatic reduction in real estate values, many formally qualified home owners now are living in homes with no equity, hence, no reverse mortgage.

 

Aug 08, 2008 12:17 AM #1
Rainer
84,417
Michael Pinter
First Meridian Mortgage - Brooklyn, NY

Lenn,

You are correct, no equity means no Reverse or Forward mortgage. RM's only work for people with a significant amount of equity. There are millions of seniors out there who have that equity. In  fact surveys show that many of them have no mortgage whatsoever on their property. If tehy have a finncial need, a RM may be the thing that ever happened to them

Aug 08, 2008 12:22 AM #2
Rainmaker
210,296
James Wexler
wexzilla.com - Scottsdale, AZ

you are absolutley correct. You need to take the money while you can get it. Its a great product. That is getting more expensive and less valuable as home values slide.

Aug 09, 2008 06:18 PM #4
Rainer
84,417
Michael Pinter
First Meridian Mortgage - Brooklyn, NY

Marisa,

 

Great question. The issue that I find most common is that people don't understand that they can use a Reverse for a purchase at all and that it can only pay for between 40 and 60 percent (usually, based on age and location) of the purchase price. Just the concept is typically a problem. Once it is properly explained, there shoudl not be any problem at all.

Aug 10, 2008 09:01 AM #5
Rainer
84,417
Michael Pinter
First Meridian Mortgage - Brooklyn, NY

James,

Great comment, I couldn't agree more.

Aug 10, 2008 09:02 AM #6
Rainer
47,758
Andrew Lietzow
IaREIA | Iowa Landlord Association - Des Moines, IA
MBA-Exec Dir Iowa Real Estate Investors Association -

Hey Michael.  Good content.  You might want to take some time to go over some blog entries and clean up the typos.   This will increase their "believability" and your professionalism.  I know you're working to cover a lot of ground quickly, but once you slow down the quantity you'll want to increase the quality, which enhances readability. 

Just a thought!

Aug 15, 2008 12:48 AM #7
Rainer
84,417
Michael Pinter
First Meridian Mortgage - Brooklyn, NY

Andrew,

Thanks for the comment. You are absolutley correct. I am a great speller, but I am a terrible typist. I will go back and spell check. Thanks for the advice.

Aug 15, 2008 03:07 AM #8
Rainmaker
1,990,604
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Fast forward to 12 years later where rates are below 3%  !!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Jan 04, 2021 05:17 AM #9
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