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Improve Financial Security for Seniors with the New Law of Reverse Mortgage Loans |
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Now, age doesn't need to affect your take on mortgage loans. The American Homeownership and Economic Opportunity Act signed by the President grants a much more vast range of financial security options for seniors. Among the key provisions in this sweeping banking and housing legislation are those increasing the benefits of the Federal Reserve mortgage loans, the FHA Home Equity Conversion mortgage loans, and unique mortgage loans available to senior homeowners. The new legislation takes into account that Americans use the value of their homes as a resource for needed care and financial support for their retirement. In reverse mortgage loans, seniors can remain in their homes without using up all their personal savings by converting their home equity into tax-free cash flow, allowing maximum flexibility to attend to specific financial needs. Senior housewives are also granted various incentives to take advantage of reverse mortgage loans. The American Homeownership and Economic Opportunity Act of 2000 is specific about: Long Term Care Incentive: The upfront insurance premium that FHA charges on reverse mortgage loans is relaxed for seniors whose intention for the money from the loan is for purchasing qualified long-term care insurance plan. Streamlined mortgage refinancing: Senior homeowners considering refinance for their existing reverse mortgage loans can enjoy savings on the upfront mortgage insurance fee charged by HUD. The origination fee amount for their original loan is used for the origination fee for the refinanced reverse mortgage loans. What's more, mandatory counseling may not be applicable for homeowners receiving counseling in the last five years. Guidelines are also set by HUD to assist homeowners in estimating the advantages of refinancing. Current higher loan limits and lower interest rates results in enabling many homeowners already having reverse mortgage loans to refinance and get additional money. Limit on Origination Fees: The upper limit on the origination fee is $2000 or 2% of the maximum loan amount. Also, the origination fee can be entirely paid from loan proceeds sparing the borrower of any out-of-pocket expense. Being residents of co-operatives as primary residence makes seniors eligible for applying for reverse mortgage loans. The qualification for reverse mortgage loans requires the dwelling to be the principle residence. But units including 4-plex, pods and condos are also permitted. The original mortgage, or second mortgage, needs to be over or the balances minimal enough to be paid off from the reverse mortgage proceeds. Others eligible for reverse mortgage loans include individuals over 62 with their own homes. It is up to the borrower to decide on reverse mortgage funds in a lump sum, monthly income (either for a fixed term or the duration of occupying their home), line of credit or all three combined. Mortgage payments are not required during the life of the loan. Borrowers can choose to use the funds however they want, whether for home repairs and improvements, medical costs, in-home care, education and supplemental retirement income. No monthly payments are necessary for reverse mortgage loans for the duration of its term. Only when the borrower permanently moves out or sells the home will the loan become repayable. The repayment amount will not be more than the value of the home. The homeowner or his/her heirs can claim any equity that remains in the home. Private lenders are mainly responsible for the origin of reverse mortgage loans. Home equity conversion mortgage (HECM) insured by the Federal Housing Administration, a branch of the US Department of Housing and Urban Development (HUD), is the most popular. Since 1989, HECMs exceed 40,000. Other variations of reverse mortgage loans include the home keeper loan and two jumbo reverse mortgage products from Financial Freedom Senior Funding Corporation, Irvine, CA. HECM and Home Keeper mortgage loans are available in all states. Thus this legislation ensures that most reverse mortgage loans for long-time care goes to long-term care insurance. Even a small loan is capable of premium payments to leverage a large long-term care insurance benefit. Reverse mortgage loans provide the funds for the financial security that seniors seek to live an enjoyable retirement. |
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