Home Loan Wholesale

If you are looking to make the move from a rented apartment to a home of your own, you are not alone. The convergence of low home prices, still-low mortgage rates and appealing tax incentives makes 2009 a good time to buy a home for many people. If you are looking to buy, here is what you need to know:

Home prices are low. Home prices dropped at a record annual pace of 18.7% this past March. That means discerning buyers can find real bargains. Mortgage interest rates are still relatively low. While interest rates have risen from their historic lows earlier this year, they still are appealing. In mid-June, rates hovered around 5.70% for a 30-year fixed rate home loan.

Tax credits will help. 1^st time homebuyers can get money back from tax credits implemented as part of the 2009 American Recovery and Reinvestment Act. An $8,000 credit is available to 1st-time buyers for homes purchased before December 1, 2009. Home financing legislators are considering increasing the credit to $15,000 and expanding it to include other home buyers

Credit scores matter. While houses are widely available, home financing is limited to those with good credit. Credit scores range from 300 to 850, with the median U.S. credit score about 725. A score below 680 usually results in a higher interest rate or denial of credit. Check your credit score before you make any home buying decisions. If your score is lagging, wait a few months and work to improve the score by paying every bill on time, paying down as much debt as possible and disputing any erroneous information on your report. Note that it can pay to do your homework researching FHA mortgage rates and lenders — credit scores do not decline if multiple similar credit report requests are submitted within a close time period (usually a few weeks).

You must have savings. A down payment is essential today. Ideally, you can put down 20% of the purchase price (see #7 regarding PMI). If not, talk to your mortgage lender about your options.  Do not stretch too far. Standard underwriting guidelines call for keeping housing expenses below 35% of total income.

Understand private mortgage insurance (PMI). Home mortgages with less than 20% home equity (which means a 20% down payment for those purchasing a home) require PMI in case the owner defaults on the home loan. When the home owner pays a conventional home mortgage down to 80% or less of the home’s value, the home owner can request the home lender to cancel the PMI and then be able to stop paying the additional amount. Meanwhile, PMI is tax-deductible, at least through 2010.

Know the real costs of buying. The principal and interest on a mortgage payment are only the beginning of home-related costs. Escrow payments - the funds withdrawn to cover home insurance and taxes - and PMI can add a few hundred dollars per month to a mortgage payment. In addition, home owners must pay for repairs and maintenance. A rule of thumb is to budget 1% of the home’s purchase price per year for upkeep.

Know whether you can pay off early. If the mortgage loan has a prepayment penalty, borrowers face hefty charges if they pay it off early. This provision also can apply to future mortgage refinancing, so be forewarned. Review Truth in Lending disclosures to find out.  Read the full article online, > 10 Home Loan Tips for 1st-time Home Buyers

In a recent article, California mortgage broker, Jeff Morris, formerly with GMAC and Ditech estimated that one in ten of homeowners who visit him online are able to get approved for a conventional or FHA refinance.  Morris said, “People simply don’t qualify with the mortgage lenders tighter guidelines and lack of home equity.“ Borrowers seeking home refinancing, outside of California, Arizona and Nevada may have a better chance because fewer borrowers in the mid-west and south are under water with their mortgages being greater than their home’s value.  Even with mortgage lenders extending 97% FHA and 105% mortgage refinancing, California homeowners have little opportunities to be approved because home values have declined so significantly since they bought their properties years ago.   

The goal should be for homeowners to invest in a home that they can afford and if refinancing with a lower mortgage payment is an option, then borrowers would be foolish not to seize the savings opportunity. Morris added that “the demand for loan modifications has not waned and he sees an increase in loan workout requests for borrowers who are stuck in jumbo mortgage loans that have interest rates set to adjust.” The banks just aren’t handing out loan modification agreements to just anyone anymore.  Homeowners seeking foreclosure prevention alternatives from their mortgage lender must be able to document that they have the income to support the modified home loan payment. 

In Maui, Caleb Palmer, a broker, said “Consumers should stop whining about things they can’t control and focus the affordable home buying opportunities that have become available since the housing market crashed in 2006.” Palmer continued, “Mortgage rates were under 5% for thirty year fixed rate loans and inventories were beginning to open up in neighborhoods that haven’t been available for years.”  Palmer believes that 2010 will see more buying opportunities in Hawaii and California before the market shifts back to appreciation mode. 

In addition, if you’re older than 40, shortening your mortgage term now could help leave you mortgage-free in retirement, reducing the income you’ll need to generate from your battered 401(k).
But before you jump in, you should know that most single-family home loans today need to fall within Fannie Mae and Freddie Mac limits — up to $417,000 in most places, and up to $729,750 in certain high-cost cities such as San Francisco and New York. “Jumbo” mortgages, or those larger than those limits, are still very hard to find. Then you’ll need two crucial and tough-to-acquire bits of information: your credit score and your home’s current value. Those will determine whether you can refinance at all and how close you can get to the lowest rates available. Even then, you may find the process unusually long and unpleasant; some banks are taking up to 90 days to complete a refinancing.  If you got your current mortgage in the past few years, when less documentation was needed, you may be surprised by the financial colonoscopy that awaits you. You need pay stubs, bank statements, brokerage statements and maybe tax returns to convince the lender that you can and will repay the loan. If you’re self-employed, you may be asked for a profit-and-loss statement for this year; if you rely on bonus income, expect the lender to assume this year’s bonus will be a lot less than last year’s.

What is home equity? Having some equity in your house is essential to qualifying for a new mortgage loan. If your current mortgage is less than 80% of the value of your home or less than 75% of your condominium, you should have refinancing options as long as you don’t have late mortgage payments and bad credit scores.  Subprime refinancing and bad credit mortgage options have disappeared with the exception of VA and FHA loans.  VA home loans are only offered to military veterans and FHA mortgage guidelines require full income documentation and most bad credit home loan applicants need a stated income program.

If your mortgage is between 80% and 105% of your home value, you’re current on your payments and your loan was bought by Fannie Mae or Freddie Mac, you may be able to refinance under a two-month-old government program called “Making Home Affordable.” Some kinks are still being ironed out, and Fannie and Freddie have different requirements, so go to the program’s Web site at MakingHomeAffordable.gov or contact your mortgage servicer to see if you qualify.

Sometimes under this program, Fannie and Freddie will waive appraisals and other underwriting steps. And if you’re refinancing a Veterans Administration or Federal Housing Administration loan, a new appraisal isn’t needed. 

Mortgage brokers continue to report that FHA mortgage and VA home loans are the hottest products in the home financing sectors of the U.S.  The VA provides low mortgage rates for streamline programs to veterans who currently have a loan guaranteed by the U.S. Department of Veterans Affairs.  In addition to the VA streamline refinancing, Mortgage Related News reports that and VA loan officers are originating the Interest Rate Reduction Loan at a high volume than previous years because this VA loan has no “seasoning” requirement.

In the mortgage industry, this type of seasoning refers to borrowers who recently completed a mortgage refinance transaction.  In addition, these VA loans entail very little documentation and usually do not require an appraisal. In order to qualify, borrowers must have a VA home loan that is not delinquent. In a recent VA mortgage article, Tom Kelly highlights the opportunity that military veterans and their families have financing and refinancing with VA home mortgage loans.  He points out that one of the simplest ways for homeowners who have a VA mortgage is with the VA streamline refinance. 

 
VA mortgage lenders will assess that veteran borrowers meet basic program requirements including:

·         The new monthly mortgage loan payment must be for less than the original loan.

·         The VA mortgage rate must be for less than the original loan (unless refinancing from an adjustable interest rate).

·         The term cannot exceed thirty years or ten years more than the original mortgage term (up to a max of 360 months).

After 50 years of offering loans only to vets who served active duty, the VA changed its rules in 1992. Men and women who have completed six years in the Army, Navy, Air Force, Marine Corps or Coast Guard Reserves, or the Army National Guard or Air National Guard, are eligible for VA home loans, including programs with zero down required. >Read the complete VA home loan article online.

Record low interest rates on mortgage refinance loans have been drawing more buyers to the stalled housing market, new figures suggest. Data from the Mortgage Bankers Association reveals that total home financing applications that includes refinancing and new home purchase loans jumped by nearly 33 % last week.

Existing homeowners looking for a better mortgage payment with a home loan revision made up the most significant proportion of the mortgage applications, at 79 %. With the average mortgage rate on a fixed interest rate 30-year home loanhovering near 4.6 %, it is not difficult to see why people may be looking for a change. However, not everyone who applies for a mortgage these days can expect to be successful as mortgage lenders are seeking higher fico scores and theyr are charging more loan fees on those who do not measure up. Meanwhile, there are also signs that first-time buyers could be coming out of the woodwork as well.

In other mortgage news from the U.S. Census Bureau indicate new home sales increased by 4.7 % in February.  That was the first rise in housing sales since July 2008. FHA mortgage applications continued to rise as brokers and wholesale lenders expressed more confidence with 2009 FHA refinance guidelines in underwriting and closings.

Reuters reported a widening stress in the U.S. housing market, Moody’s Investors Service said on Thursday it may downgrade $240.7 billion of securities backed by prime-quality “jumbo” U.S. residential mortgages because defaults will be higher than expected.  Jumbo mortgage loans are typically larger than $417,000, and go to borrowers with good credit. But Moody’s said in the last six months, there have been “substantial increases in serious delinquencies and decreases in prepayment rates, levels that are unprecedented in this asset class.”  The securities under review are backed by U.S. home loans issued between 2005 and 2008. Moody’s had late last year downgraded $110 billion of securities issued in 2006 and 2007, almost all of which had originally been rated “Aaa.”

Moody’s on Thursday said it may downgrade 4,988 classes of jumbo residential mortgage loan securities with a current outstanding balance of $173.3 billion, and the original $240.7 billion balance.  It said it now expects cumulative losses of 1.7 % for 2005 securitizations, 3.55 % for 2006, 5.05 % for 2007 and 6.20 % for 2008.  Downgrades can force some investors to sell the debt, and can increase capital strains on banks and insurance companies that own it.  Bad credit mortgages have already been downgraded when the subprime mortgage market crashed a few years back.

The top fifty U.S. banks added $109 billion of mortgage-backed debt in the fourth quarter, although most was not jumbo home loans, Barclays Capital said. Falling mortgage interest rates could spur an increased supply of jumbo mortgage securities, it said.

Washington Post reporters studied federal data and discovered that FHA home mortgage loans defaults are increasing rapidly. The home loan default research shows that the number of borrowers who failed to make more than one payment before defaulting nearby tripled over the past year.

According to the article by Dina ElBoghdady and Dan Keating, “Many mortgage industry experts attribute the jump in these instant defaults to factors that include the weak economy, lax scrutiny of prospective borrowers, and most notably, foul play among unscrupulous lenders looking to make a quick buck.”

If someone defaults on their home loan because they have suddenly lost their job or face a health crisis, that’s understandable these days. But, after everything our country has faced since the subprime mortgage lending debacle began a few years ago, it is criminal to think that lenders are once again committing fraud and failing to do the work to make sure the people they are lending to can actual repay their loans. Do we have to learn this lesson again?

Even scarier is the fact these mortgages are government-backed. So, guess who pays when these borrowers default? Not the FHA lenders who wrote the paper for the bad mortgages. The FHA has make good on those home mortgages from government reserves. If the FHA reserves run out, Congress will be expected to bail out the FHA, with more taxpayer dollars.

A new report from First American Core Logic suggested that more than 8.3 million U.S. home mortgages had negative equity as of year-end, compared with 7.6 million just a few months prior.  Another 2.2 million owner-occupied properties have homes worth only about 5% more than their debt, so they are approaching negative equity as home values slide. More than 20% of all properties carrying a mortgage nationwide have negative equity, with more owed on their home loans than the homes are worth, according to a report being released today.   Borrowers are having a difficult time qualifying for a refinance loans or cash refinancing for debt consolidation.

Over 30% of homes nationally are owned outright, and they were not included in the statistics. The near-negative equity homes, combined with the underwater homes, account for a full quarter of all U.S. mortgaged properties, the research company said. The numbers are ominous because negative equity is half of the formula that usually leads to foreclosure.  “Being underwater is a necessary but not sufficient condition for home loan default and foreclosure,” said Mark Fleming, chief economist for First American in Washington, D.C. “The other necessary but insufficient condition is inability to make your mortgage payment due to job loss, divorce, a significant change in the payment because of an adjustable interest rate mortgage. The new loan modification plans are more aggressive with incentives for lenders to renegotiate the principal amount owed on the property.

Over the past year, the total value of U.S. homes has fallen $2.4 trillion, going from $21.5 trillion in December 2007 to $19.1 trillion at the end of 2008. California, where more than $1.2 trillion of housing value evaporated last year, accounted for half that decline. That’s vastly disproportionate to California’s share of the mortgage market, estimated to be 16% to 20%, Fleming said.  However, despite the steep declines, California overall is in better shape than some neighboring states because it still has a stock of mortgages taken out over two decades ago on homes that now have accumulated significant equity. On average, Californians with mortgage loans have 30% equity in their homes. By comparison, the average equity for all homes that still have mortgages in Nevada is just 3% - the worst in the nation. “Las Vegas is a city that exploded over the past 10 years,” Fleming said. Now that values have tumbled, “the last 10 years is a do-over.” 

In a recent Bloomberg article, President Barack Obama rolls out plan to use mortgage lending giants Fannie Mae and Freddie Mac to refinance as many as 5 million home mortgages may face legal challenges over whether the administration is overstepping its authority.   The proposal may violate requirements that homeowners put up at least 20% of the appraised value of a home or carry mortgage insurance, said U.S. Representative Scott Garrett of New Jersey, the ranking Republican on a panel that oversees the mortgage companies.  

Fannie and Freddie’s chief regulator, James Lockhart, has said the changes are exempted from mortgage-insurance rules written into the companies’ charters and won’t require new appraisals. Lockhart said the strategy will make it easier to help struggling homeowners to refinance and get more affordable mortgage loans with lower monthly payments.  

Loan-to-Value Ratio

Fannie and Freddie’s charters prohibit the acquisition of new loans with a loan to value ratio of more than 80% — meaning the homeowner has less than 20% equity in the property — unless mortgage insurance or some other credit backing is used.   Regulators will work around that requirement by treating the refinance loans as a loan modification programs “for charter purposes,” not as new mortgage loans, Lockhart, director of the Federal Housing Finance Agency, said in a February 20th letter to a mortgage insurance trade group.   The difference is that a mortgage modification retains the original contract, changing its terms. Mortgage refinancing requires an entirely new mortgage, which Fannie and Freddie would have to repurchase and repackage into a new security, according to analysts and the companies.   “The new home loan is treated as a new origination because the old loan is paid off,” said Amy Bonitatibus, a Fannie spokeswoman.

No Appraisals Required with New Refinance Program

The Obama mortgage rescue plan would temporarily approve Fannie Mae and Freddie Mac to provide refinance loans that they own or guarantee with loan-to-value ratios (LTV’s) of as much as 105% without appraising the property or requiring additional mortgage insurance.  

C.D. Davies discusses the difference between subprime home loans and Alt A mortgage financing.

The video talks about home mortgage industry and how mortgage lenders made bad subprime loans to risky borrowers that could not afford the mortgage payment as soon as it adjusted. Alt-A home loans were not much better because many of these loans were stated income with no income documentation required. Who could forget the ridiculous 1% teaser rate on loans that had negative amortization features that actually caused mortgage balance to rise.  Many of the foreclosures came from the no-money down home loans made from Alt-A and subprime lenders.

Irwin Financial Corp. here took a $54 million loss in the third quarter, or $1.85 per share, compared to a $107 million loss in the third quarter of 2007, and cut losses in half by implementing charges that included reduced exposure to its nationwide home equity portfolio. These charges were made possible through the securitization of $268 million of these home equity loans. Commenting on the “substantial progress” on its strategic restructuring during the third quarter, despite the economic crisis, Irwin Financial chairman and CEO Will Miller, said, “We securitized 85% of our remaining home-equity whole loans, thereby capping our credit loss exposure on those loans. With the home-equity portfolio in runoff mode, our credit exposure to the national home-equity industry is shrinking.”

The home-equity segment reported a $24 million loss, down from a $44 million loss during the second quarter. It reflects the negative effect of $27 million in loss provisions and $15 million in restructuring charges related to the exit from this market.  Thirty-day and greater delinquencies on the total portfolio increased from 6.6% at June 30 to 7.43% at Sept. 30. The allowance for loan losses totaled $155 million at Sept. 30, or 12.1% of the portfolio. This book of business continues to see “historically high levels of losses from customers who had strong credit characteristics at origination,” Irwin said, as the average FICO score of borrowers who defaulted was at 688.

Irwin has embarked in an ongoing process of liquidating second mortgage loans along with other charges associated with the company restructuring, such as provisions for credit losses in its commercial banking segment.  For example, Irwin reported $15.1 million in losses to the commercial banking segment, due to increases in loss provisions primarily for real estate related loans. “We believe that through our strategic restructuring we will return to profitability by simplifying our business,” Mr. Miller said.

Net interest income of $48 million was lower in the third quarter, “reflecting the sale of the equipment leasing portfolio, the securitization of $268 million in home equity loans and a reduced level of loans.” One of the ways to strengthen the capital base is the expansion of the company loan portfolio in the area around its headquarters in Columbus. A renewed focus in serving small businesses and customers in Irwin branch communities follows the same path that made Irwin successful for the past 137 years, he said.  “As an example of this renewed focus on our traditional branch-based business, in the third quarter we expanded our loan portfolio in our headquarters community of Columbus, Ind.,” the executive said. “We were pleased that Irwin Union Bank was the leading producer of consumer residential mortgage loans to our neighbors in the community during the third quarter producing 44% more residential loan volume than the next largest competitor locally.”

In addition, Irwin reported a consolidated total capital to risk weighted assets of 10.8% with total capital to risk weighted assets of 11.3% at Irwin Union Bank and 12.4% at Irwin Union Bank federal savings bank.  “Plans to further strengthen our capital base are moving ahead,” he said.   Irwin currently has obtained standby commitments for an additional $6 million in connection with its previously announced $50 million shareholder rights offering, “raising the total level of commitments to $37 million, or 74% of the planned offering.” Article Written By Amilda Dymi

Congressman Al Green has introduced H.R. 600, a bill that would reinstate the controversial seller-funded down payment assistance banned last October despite being credited with helping over one million families become homeowners. Scott Syphax, president and CEO of the Nehemiah Corp. of America, Sacramento, CA, a DPA pioneer and supporters applauded the home loan bill that helps broaden homeownership opportunities for borrowers who qualify for FHA loans without using government or taxpayer dollars. “With foreclosure news continuing to report home loan defaults on the rise and banks maintaining their stranglehold on credit, we commend Congressman Green for recognizing the important role down payment assistance can play in the market’s recovery,” he said in a release. FHA home loan programs can’t be expected to carry the complete load for American home financing.

“Through H.R. 600, DPA offers a simple solution that can empower thousands of worthy families to take advantage of depressed home prices therefore reducing the glut of homes on the market. Further, it does so without spending a single government or taxpayer dime, according to the Congressional Budget Office.” Mr. Syphax said DPA is a source of opportunity for responsible, sustainable homeownership in times when the housing market is crumbling. Down-payment assistance supporters hope President Obama’s Administration will help reinstate the program.

The Associated Press Mortgage financier has Freddie Mac has reported an $821 million second-quarter loss. The AP’s David Melendy reports on that and the rest of Wednesday’s business headlines. The mortgage financier has Freddie Mac has reported an $821 million second-quarter loss. The decrease of one dollar and sixty-three cents per share was more than three-times larger than Wall Street expected. The dismal results come just weeks after the government threw a financial lifeline to Freddie and its sister company Fannie Mae to ward off fears the pair could collapse and take down the U.S. mortgage market.

Connecticut is suing Countrywide Financial, alleging it misled borrowers into taking on risky home loans they could not afford. The state alleges the mortgage giant violated its consumer protection laws and charged unjustified fees to homeowners who defaulted. Many mortgage lenders believe that Countrywide wrote more bad credit mortgages because they were the top originator in the country.  People seem to forget that Countrywide also wrote more good loans than any other mortgage company for many years.

The National Association of Mortgage Brokers took the RESPA fight to a new level.  It’s bad enough that the banks and lenders have gotten away with slandering brokers for predatory lending.  HUD should be comparing home loans to home loans…The fact that HUD thinks it’s ok for mortgage lenders and banks no to disclose the yield spread premium paid by the investors, yet mortgage brokers should have be required to disclose the YSP, is nothing short of astonishing! 

NAMB’s argument is that HUD has overlooked the rights of mortgage brokers and bankers in helping the consumer at the closing table. The lawsuit against HUD states that the Final Rule is “arbitrary and capricious,” contrary to the intent of Congress, and fails to offer any rational reasons for its rejection of alternative approaches. NAMB says the Final Rule discriminates against mortgage brokers with the required broker-only disclosure of yield spread premium (YSP), placing them at a permanent disadvantage in the marketplace.  Read the complete article > NAMB Sues HUD Over RESPA

A frequent question we get from homeowners is “When is the best time to take out a second mortgage?” Obviously we respond to that question by asking more questions like, What do you need the money for?  Cash out?  Debt Consolidation?  Home improvements?  What would your home be appraised at?  What is the outstanding mortgage amount on your existing home loan?  How is your credit?  How long do you plan to live in your home?  Depending on how the loan applicant answers those questions will dictate how we advise them. 

For example, If you have bad credit and no equity, the likelihood of qualifying for a home equity loan or equity line of credit is very minimal.  Typically to get approved for a bad credit second mortgage, the borrower will need to have 25% -30% home equity available to satify the lender’s underwriter.   Read the complete article > When is the Time Right for a Second Mortgage?

The Federal Reserve made more bold moves today when he announced key interest rates that reach historic levels.  Home loan lenders reported interest rates as low as 5% for mortgage refinancing and home financing. Many mortgage brokers believe the rumors are true that the government will induce lenders to offer mortgage rates in the 4.5% range.”

Demand for government bonds surged and the yield on the benchmark ten-year Treasury note, which moves opposite its price, dropped to 2.27 % from 2.53 % late Monday. The yield on the thirty year dropped to 2.78% from 2.99% late Monday.  The yield on the three-month Treasury-bill whose yield has at times gone below zero due to crazy buying — was at 0.02, flat with late Monday.  The dollar was mostly lower against other major currencies, particularly the euro. Gold prices rose.  Read the full article > Fed Makes History by Cutting Interest Rates to the Lowest Level

Reverse mortgages have long been a way for seniors to turn the equity in their homes into extra cash in their pockets. Now, a higher lending limit is making it possible for some seniors to get more money out of a reverse mortgage than before.  The new $417,000 lending limit for reverse mortgages insured by the Federal Housing Administration was rolled out nationwide (except for parts of Hawaii, which have higher home loan limits) on Nov. 6. To qualify for the lending limit, a home has to be appraised at $417,000 or higher. The actual amount of the reverse mortgage would be a percentage of the $417,000 lending limit or appraised value of the home, whichever is lower.

The higher limit made it possible for Oakland resident Michael Goldsmith to receive a reverse mortgage that was $50,000 larger than he would have under the old loan limit of $362,790 that applied in the Bay Area and other high-cost regions.  “It made a difference of about $50,000 … It’s pretty significant,” said Goldsmith, the 74-year-old owner of a transportation management business.  Goldsmith and his wife, Dorothy, took out a reverse mortgage with Bank of America so they would have funds available to remodel their Oakland condo.  The Goldsmiths were able to qualify for a reverse mortgage loan of about $275,000 on their $450,000 condo. After using most of the proceeds to pay off an existing $180,000 home equity line of credit, they were left with a $95,000 line of credit to draw from when they choose to use the money. “We’ll still have some money left over in case we need it sometime in the future,” Michael Goldsmith said. “I don’t have to use it all but it’s sitting there anytime I want it.”

Seniors who are 62 years or older and have a good portion of equity in their home or have paid off their mortgage can apply for a reverse mortgage, which amounts to a home loan made by a mortgage lender to the homeowner that has to be paid back eventually along with interest payments and other fees that are tacked on.   The homeowner retains title to the house while the loan is active. Interest rates on federally-insured reverse mortgages are adjustable and linked to an index based on one-year yields derived from a basket of various Treasuries. And while the adjustable-rate interest has a built-in cap, the product does not provide the certainty of a fixed-rate loan. The actual cost of repaying the loan will vary depending on whether the proceeds are taken out as monthly payments, a lump sum, or a line of credit. Also, the homeowner has to keep on paying homeowner’s insurance and property taxes.

Since the higher loan limit was announced in October, Bank of America has seen a 40 percent increase in reverse mortgage loan applications compared to October 2007, said Steve Boland, a Bank of America reverse mortgage executive based in Thousand Oaks.   “We really see this as an instant ability to help people who need the additional access to equity,” Boland said. “A number of people see their retirement assets declining and they are finding they are less prepared to meet their cost of living in retirement. A reverse mortgage can really play a big role in supplementing that.”  Even Seniors with homes appraised below the $417,000 mortgage limit can benefit from the reduced loan origination fees, he said. For example, a borrower with a $335,000 home would get $1,350 more in net proceeds due to being charged $1,350 less for the loan origination fee.

While a reverse mortgage loan may offer tax-free income for some seniors, it is not always the best solution. Reverse mortgage loans can be complicated and may not meet the needs of all seniors seeking cash out from their home equity.  There are substantial costs for home financing and mortgage insurance that can run into thousands of dollars that have to be paid on top of principal and interest. Also, the interest that’s due on the loan can erode the equity in a home. Taking out the