Saving Ourselves in This Economy

We can’t sit by and wait for the magic law or “bailout” that will miraculously get us out of this mess, we need to take charge of our futures and this is what I am doing right now. I understand that people are scared to make major decisions or spend money but if you think about it that is what brings the change we need in this country. We need to start moving our money and helping each other to save ourselves despite the government and banking industry. This country runs because of the people as you’ve seen when we stop our lives so does the growth and economy of this nation. Yes there are hurdles but it is the “little guy” that finds victory in the wake of turmoil, it is the average people that rise above to help each other when things get tough in America that has been shown all through history. We band together and help each other to dig out of the many problems that are thrown at us by no fault of our own and that is what we need to do now. There are resources out there so we need to utilize them and aid each other in what we need despite what the news reports tell us or the data that comes from Wall Street and the government. I am a fierce advocate for the underdog and help whenever possible so I am hoping there are others out there reading this and feel the same because right now I am the underdog in need of help.

With that being said I am asking for help, hoping that between the people that read this and their possible contacts I will get an advocate to help me. I don’t want to bore you with a long sad story so I will summarize my situation the best I can.

I have had my home here in Florida for sale for 3 years but the market has kept me from selling it. I have had 3 different realtors list it and I have been posting it everywhere and yet nothing. My home is perfect for the retired couple or young couple starting out, or the second home/ winter getaway. For the retiree’s Florida is the go to place and my home fits the profile perfectly, great location, property taxes of $273.61 per year, and just the right size for ease of care. I am trying to sell so I can move back up north to be near my family I have been away from them too long and miss them dearly. I lost my sister to cancer in 2007 and couldn’t even attend her funeral, I have a daughter, grandchild and brother left up there and want desperately to be with them. I have posted useful information in this article to show what a value this could be for someone as far as financing. Here is an address to my flyer and the realtor who has it listed so please look and help me get back to my family.

http://charsbewitched.vflyer.com/home/flyer/home/1745208

http://dglpub.ezlistmls.com/listing2.cfm?siteid=43655&propid=410150&pw=H4CLS9

Did you know if you are 62 or older you can use a reverse mortgage to buy a home?

The stimulus bill raised HUD reverse mortgage lending limits to $625,500 as of January 2009.

Who qualifies?

· Borrowers must be 62 or older

· Occupy the home as principal residence

· No credit, income or health requirements

· Social Security and Medicare are not affected

A reverse mortgage can provide a source of financing for a smaller home resulting in easier care and less property taxes. “For many seniors, a reverse mortgage is the answer to a prayer. It allows you to withdraw money from your home equity, tax free, with no requirement that it be repaid until you die or move out of the home. There is no way you can be forced out of your home as long as you keep paying your property taxes and insurance and maintain the property” (Sun Times 2009). With money tight and retirements lost this is a great way to provide an income for the retiree and downsizing their home and home expenses.

Here's an example of how a reverse mortgage can work:

“A 65-year-old homeowner with a home appraised at $500,000 could receive either a lump sum of $238,139, net of all fees, or a line of credit for that amount. Or that 65-year-old homeowner could receive a monthly check of $1,546 for as long as he lives in the home. A 75-year-old could receive a lump sum of $295,607or a $2,135 monthly check. You can do anything you want with the money” (Sun Times 2009).

Here is an excellent booklet from Fannie Mae that answers questions about reverse mortgages:

http://www.reversemortgagetimes.org/guides/homekeeper.pdf

So as you can see this can be very beneficial for retired people to move to the warm climate and ease of life they yearn for.

Here are the top ten things to know if you are interested in a reverse mortgage: (Info from website HUD 2009)

“Reverse mortgages are becoming popular in America. HUD's Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. You can receive free information about reverse mortgages in general by calling AARP toll free at (800) 209-8085. Since your home is probably your largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you!”

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA's HECM provides these benefits. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

2. Can I qualify for FHA's HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are further required to receive consumer information from an approved HECM counselor prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on (800) 569-4287 for the name and telephone number of a HUD-approved counseling agency and a list of FHA-approved lenders within your area.

3. Can I apply if I didn't buy my present house with FHA mortgage insurance?

Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new FHA HECM will be FHA-insured.

4. What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 1-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

5. What's the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

6. Can the lender take my home away if I outlive the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.

7. Will I still have an estate that I can leave to my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

8. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You can use an online calculator like the one on the AARP website to get an idea of what you may be able to borrow.

9. Should I use an estate planning service to find a reverse mortgage?

FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HUD-approved housing counseling agencies are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.

10. How do I receive my payments?

You have five options:

• Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
• Term - equal monthly payments for a fixed period of months selected.
• Line of Credit - unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
• Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.
• Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower. (HUD 2009)

There is also the “First Time Home Buyers Tax Credit” which expires December 1, 2009 this tax credit is for $8000 for qualified buyers and includes people who may have owned a home before but not within the past 3 years. Take advantage of this before it expires as this will be a nice chunk out of the price of my home which leaves a small mortgage with affordable payments.

Here is a link to answer questions about this credit: http://www.federalhousingtaxcredit.com/2009/faq.php#1