General: Are HUD Reverse Mortages Good for Retirement?

Here is another article about reverse mortgages. This one talks specifically about FHA insured HUD reverse mortgages and their benefits.

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Are HUD Reverse Mortgages Good for Retirement?
By Charles Kirkendall

HUD reverse mortgages can be a great tool for Seniors that are looking for additional sources of retirement funds. Through a HUD reverse mortgage, seniors can tap into the equity from their homes without having to make repayments. These funds can provide extra level of security and flexibility during their retirement.

HUD Reverse Mortgage Guidelines

The HUD reverse mortgage program spells out specific guidelines that are used to determine homeowner eligibility. Homeowners must meet the following criteria in order to be eligible for a HUD reverse mortgage:

• Homeowner must be age 62 or older.


• The home must be owned free and clear or have a mortgage balances that can be paid from proceeds of the reverse mortgage.


• The home must be a principal residence.


• The property must be a single-family home, a one-to-four unit dwelling with one unit occupied by the applicant, a manufactured home (mobile home), or a unit in condominiums or Planned Unit Developments.


• The property must meet the minimum FHA property standards.

Since reverse mortgages do not require repayments during the life of the mortgage, there are no asset or income limitations on borrowers receiving a HUD reverse mortgage.

The amount that can be borrowed on a HUD reverse mortgages is determined by the following criteria:

• The borrower's age - The older the borrower the more that can be borrowed against the value of the home


• The loan interest rate - Obviously the lower the interest rate the more that can
  be borrowed.


• The home's value - There is no hard limit for home value to qualify for a HUD
  reverse mortgage, but the amount that may be borrowed is capped by the maximum FHA mortgage limits for an area. This means that owners of a high priced home can't borrow any more than the owners of homes valued at the FHA limit.

Homeowners that qualify can receive payments in a lump sum, on a monthly basis, or on an occasional basis as a line of credit. At a later date the payment options can be restructured if circumstances change. The homeowner can use the proceeds from the HUD reverse mortgage on anything that they choose, such as, home improvements, vacations, healthcare costs or any other daily living expenses.

Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the home remains the borrowers primary residence. When the home is sold the Mortgage company recovers their principal, plus interest, and the remaining value of the home goes to the homeowner or to his or her survivors. Should the sales proceeds not cover the amount owed, HUD will pay the mortgage company for any shortfall.

The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage. Typically the mortgage company pays for this insurance and charges it to the borrower's principal balance. This FHA reverse mortgage insurance can make HUD's reverse mortgage program less expensive to borrowers than private programs without FHA insurance.

About the Author: Charles Kirkendall writes about reverse mortgages and other Senior financial issues. Visit reverse mortgage annuity for more information and resources.

Note: This article can be reprinted free of charge as long as it is reprinted in its entirety including the resource block at the bottom with all links enabled.

Dealer Group Count Takes Stock of Reverse Mortgages

The Dealer Group Count has added reverse mortgages to its recommended product list. Speaking at the groups annual conference held in New Zealand this week, chief operating officer, Marianne Perkovic, discussed why reverse mortgages were added to the recommended product list.

According to Perkovic, the aging population and changing retirement landscape were the main drivers behind adding Reverse Mortgages to its recommented product list. "Due to strong consumer interest and a changing marketplace, we have chosen a panel of lenders with quality and cost-effective products. Count advisers will initially have access to ABN AMRO, Bluestone Equity Release and Macquarie Mortgages products. All of whom hold SEQUAL membership", she said.

For more information about Count visit their website at http://www.count.com.au/

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House Passes National Reverse-Mortgage Loan Limit

Last month, the U.S. House of Representatives passed the Expanding American Homeownership Act of 2006 (H.R. 5121). This new bill would create a single national limit for the HECM (Home Equity Conversion Mortgage) program equal to the conforming Freddie Mac loan limit, which is $417,000 for 2006.

Under the current law, the location of the home dictates the maximum loan amount, which varies by county. These amounts range from $200,160 to $335,800. The new bill would set one national rate that would allow seniors to take out much larger reverse mortgage loans.

The Expanding American Homeownership Act also would provide other improvements to the FHA HECM program. The new legislation calls for a "home purchase" option that would allow people to use a reverse mortgage to purchase newer housing that better suits their needs (currently only Fannie Mae offers a reverse mortgage home purchase program.) It would also remove the current volume cap on the number of HECM loans that FHA can insure (currently at 250,000 loans.)

Reverse mortgages have already exploded in popularity over the last couple of years, but with the passage of this act, we could see even larger increases in the number of seniors utilizing this powerful program.

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