New Changes in the Reverse Mortgage Has Been a Major Improvement for Seniors
The first major change that took place is the amount charge on the origination fees, prior to the change the fee was 2% of the appraised value with no cap. Now it has been change to a maximum of $5,950 which relates to 2% of the first $200,000 and 1% of each hundred to maximum of $417,000 or $5,950.
The second change is that the elimination of have financial products sales professionals in the Reverse Mortgage industry. Meaning that no person who sells financial investment vehicles, such as annuities, insurance and other financial products…., can write this mortgage. This is an important issue because in the past there have been people who were using the mortgage to fund these products.
The third change is that the former limits that were based on county limits with and average across the board of $232,000 have been eliminated. Now the new limits have been changed to $417,000, which has allowed more seniors to access the Reverse Mortgage and not have to bring money to the closing table.
On December first the biggest and best part of the program took affect! A senior who want to purchase a home in the past, who maybe had sold their home had to use the funds from the sale to purchase a replacement home. Now they can use a Reverse Mortgage to purchase that new home. The purchase of the new home is totally based on the appraised value and not on the purchase price. Now the source of funds can come from many sources such as Retirement accounts, savings, sale proceeds or other sources including a gift. The best part of the way of purchasing is that a senior will never have to make a mortgage payment for as long as they live in the home as their primary residence.
The Reverse Mortgage is a true no doc loan for a senior over the age of 62, they do not need good credit or in today’s credit environment they need great credit for a conventional mortgage. To qualify for a purchase Reverse Mortgage all you need to be is over the age of 62 of the youngest person and a percentage of the down payment in some cases. Here is a little inside secret! If the home that you are purchasing has a high appraised value and you can purchase it for a lot less you may not have to have any down payment. The amount of money available under the Reverse Mortgage is always based on the appraised value, in today’s economic turmoil; it is not uncommon to find a home that can be purchase for 30 to 40% of the appraised value. If a senior can locate one of these deals that could literally purchase a home with zero monies down and even in some cases receive some monies at closing.
This specialist believes that you should find a real estate agent who understands that basics of the Reverse Mortgage purchase mortgage and will be willing to help a senior find that perfect purchase, before they sell there existing home. If they find that perfect home and they sell their home they can keep all of the proceeds up to $500,000 tax free.
Now this does not mean that a senior who does not have a home to sell cannot use the Reverse Mortgage to own a home and stop paying rent forever. Any senior over the age of 62 can use this program to live the rest of their life without making payments, which will increase their available income to use on other necessities.
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