He has a mortgage balance of $50,000 on a house worth $110, 000, and is obliged to pay $540 a month until the balance is paid off, which won’t happen for 7 years. But John can use a reverse mortgage to pay off the balance now. This makes the best of a bad situation by replacing debt that John must repay in monthly installments with debt that doesn’t have to be repaid until he dies or moves out of the house permanently. Being relieved of the burden of paying $540 a month is the equivalent of having that much additional monthly income.
Read the rest here: Using a Reverse Mortgage to Avoid Impoverishment
Rules for Reverse Mortgages May Become More Restrictive
“Fixed mortgage rates fell as Federal Reserve (Fed) Chairman Bernanke helped ease market concerns about the Fed reducing its bond purchases. During a question and answer session following a speech on July 10th, Chairman Bernanke indicated that a highly accommodative monetary policy is whats needed in the U.S. economy,” said Frank Nothaft, vice president and chief economist for Freddie Mac. He added, “Indications of a slowing in the economic recovery also placed downward pressure on mortgage rates. Consumer sentiment fell to a three-month low in July while retail sales in June grew by only 0.4%, which was half of the market consensus forecast. In addition, housing starts fell in June to the slowest pace since August 2012.” Bankrate data also show mortgage rates dropping.
Read the rest here: Mortgage rates reverse course, slide back down again
Mortgage rates reverse course, slide back down again
The agency also said it would like to cap the amount borrowers would be able to pull out at 60 percent of the maximum sum they were eligible for, or the amount needed to pay off their current mortgage, whichever was greater. (Reverse mortgage borrowers need to pay off their regular mortgage to obtain the reverse mortgage). The hardest part of formulating the assessment will be striking the right balance and one that doesnt squeeze out the people who need the program the most. The problem is that almost by definition the people who take out reverse mortgages are in financial distress, Anthony Webb, a research economist at the Center for Retirement Research at Boston College, said. We want to avoid lending to people who arent likely Hud Reverse Mortgage to pay their taxes and insurance and end up in foreclosure. But if you impose a very rigorous factor of affordability, you will end up withdrawing the product from the people who are most likely to use it in the first place.
Read the rest here: Rules for Reverse Mortgages May Become More Restrictive