Over Half of Households Risk Being Able to Maintain Standard of Living in Retirement in Los Angeles, California

The National Retirement Risk Index (NRRI) showed that 51% of households are at risk of not being able to maintain their standard of living in retirement.  According to the Center for Retirement Research at Boston College report, the NRRI jumped from 7% from last year due to:

* the bursting of the housing bubble;
* the stock market crash; and
* the ongoing rise in Social Security’s Full Retirement Age

The Index results from comparing households’ projected replacement rates – retirement income as a percent of pre-retirement income – with target rates that would allow them to maintain their living standard.

Even if half of today’s household work until they turn 65, the NRRI shows that in 2009, half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living.

As the study says, ensuring retirement security for an aging population is one of the most compelling challenges facing the nation.

The National Retirement Risk Index: After the Crash

Visit us at www.allwestmortgage.com if you need help in the Los Angeles, CA area.

Reverse Mortgages – The Positives You Need to Know in Los Angeles, California

There is some intense debate relating to issues surrounding reverse mortgages for senior citizens.  Many times postings will dissect the pitfalls of the method while never touching on the many benefits of reverse mortgages.  This is completely unfair as there are many important benefits that cannot be neglected.  Like any product or service out there, you should do your research thoroughly enough that you gain an understanding of both the pros and the cons.  This will be a focus on the pros of this kind of mortgage.

You may not be aware of this, but reverse mortgages are the safest kinds of mortgages available today.  In addition, they are among some of the most beneficial senior financial products ever produced.  What makes this true?  It was not always the case, but since it was highlighted by the federal government, they were able to spot the dangers for senior citizens and put a stop to the possibility of them being taken advantage of.  The hazards initially present in this kind of mortgage were removed, and now the FHA and HUD have closing costs, interest rates and fees with set limits.  On top of these steps to properly regulate reverse mortgages, the qualifications that banks must meet to provide them are set so high that only a few lenders have taken the necessary measures in order to offer reverse mortgages.  This means that your reverse mortgage will remain in force and be secure for your entire lifetime if you take the correct steps to establish it.

Another great advantage is that reverse mortgages allow you to make use of the appreciation in your home’s value.  The standard way to utilize the equity that has been building on your home is to sell it and move.  What if you do not want to move?  Reverse mortgages, which have been designed specifically for senior citizens, give you a way to access the equity on your home without the risk of making monthly payments.  This is great for avoiding a financial predicament in your later years of life.

With reverse mortgages, you can remove 50 to 60 percent of the appraised value of your home without making monthly payments.  There are multiple ways you can extract the cash, including as a lump sum, a direct line of credit or as a monthly payment.  Effectively, the money your home appreciates can serve as a form of income for you and your household.  What a perfect solution to your depleting retirement fund!

Reverse Mortgages: Frequently Asked Questions in Los Angeles, California

Part Two of Two

How is interest calculated on a reverse mortgage?

Interest on a reverse mortgage is calculated based on the money paid out to you. In general, reverse mortgages have variable rates, though fixed rate reverse mortgages are becoming more popular. Variable rate reverse mortgages are based on certain indexes. Interest is not covered by the proceeds you get from a reverse mortgage – it builds up over the course of the entire loan until it’s repaid.

Does a reverse mortgage affect tax liability?

Reverse mortgages are not counted as standard income, but they may still be partially taxable. The IRS sometimes provide tax breaks for interest paid toward loans, but no interest is paid on reverse mortgages until the loan ends. Thus, this is not a concern until then. The insurance premium that is required to take out a reverse mortgage can be deducted from your taxes for that year.

How do reverse mortgages work with existing mortgages?

Reverse mortgages must be the primary liens on a property, which means that all other debts must be paid off when the loan is taken out. You can use the proceeds from the reverse mortgage to pay off your regular mortgage or other debts so that the reverse mortgage becomes the primary lien. This frees you from making monthly payments which can make it easier to make ends meet.

Reverse Mortgages: Frequently Asked Questions in Los Angeles, California

Part One of Two

What is a reverse mortgage?

A reverse mortgage is a special type of mortgage that’s only available to people ages 62 and older.  In a normal mortgage, a bank or other financial institution provides a loan to help a person or family buy a home, and the borrower pays back money each month. With a reverse mortgage, money is taken out against a home and paid to the borrower in one lump sum or in monthly payments.

How is a reverse mortgage paid back?

All payments on a reverse mortgage are deferred until the borrower dies, leaves their home or sells their home. Then, many different things can happen. If the home is sold, then the proceeds from the sale can be applied against the reverse mortgage. If the proceeds aren’t enough to cover the cost of the loan, then the lending institution pays the rest. If the proceeds exceed the amount of loan, then the extra moneys goes to the borrower. In the case of the borrower’s death, the borrower’s heirs can either refinance the house or sell it under the same conditions outlined above.

What can the money from a reverse mortgage be used for?

Money from a reverse mortgage can be used for anything at all. Most often, people take out reverse mortgages to supplement a dwindling retirement account. However, one might also take out a reverse mortgage to pursue a lifelong dream or spend some time traveling before settling down for good. Reverse mortgage funds might also be used for home repairs or even to prevent a bank from foreclosing on a home.

How do I qualify for a reverse mortgage?

Most standard types of homes qualify for reverse mortgages. Single family homes, properties with 2-4 units, condos, townhomes, and manufactured homes can all work for reverse mortgages. In some cases, you may even be able to take out a reverse mortgage on a home that still has a traditional mortgage. There are no special requirements for borrowers in terms of medical health or personal income.

How much money can you get from a reverse mortgage?

The amount of money that can be received from a reverse mortgage is dependent on the age of the homeowners, the value of the home, and the current interest rates. The general rule is that the more one’s home is worth and the older they are, the more money they can get. The money can be paid in any number of ways, including monthly payments, a single lump sum, and a flexible line of credit.

Visit us at www.allwestmortgage.com if you have questions, or need help with a reverse mortgage in the Los Angeles, CA area.

A Great Reason to Understand More About Alternative Funding Sources Like Reverse Mortgages in Los Angeles, California

Waves of new fund cuts imperil US nursing homes

With fund cuts looming, it is important to find alternative sources for funding long term care for an aging loved one.  Reverse Mortgages are a great way to procure the necessary monies to secure the future of our seniors.  Visit me at www.allwestmortgage.com for help with a Reverse Mortgage in the area.

Continue reading HERE.

The History of Reverse Mortgages and Why They Are So Popular Today in Los Angeles, California

Reverse mortgages have been around since 1961. The first person to receive a reverse mortgage was Nellie Young through the Deering Savings and Loan Bank of Maine. At that time, the reverse mortgage was issued through the bank itself and any bank could choose whether or not they would do a reverse mortgage. Not a lot of people took advantage of reverse mortgages because there was nothing to guarantee that a bank wouldn’t take advantage of them. Banks also found some risk in doing reverse mortgages because there was nothing to guarantee that the borrowers fully understood what they were doing when taking out this reverse mortgage. The whole system still had a few issues to be worked out.

In 1988 the federal government stepped in and worked out a new law with the AARP to help increase the use of reverse mortgages under government supervision. The law was the Federal Housing Authority Insurance Program where 50 different lenders were chosen across the country to participate in giving out reverse mortgages. It wasn’t until 1989 that the first government supervised reverse mortgage was given out.

As people learned about reverse mortgages, they became more popular. In 1998 the pilot program became an official program that all lenders could participate in. The reason reverse mortgages became so popular is because they allow senior citizens who own a home and have retired to access the equity of their home without any real risks to them. When they are no longer living in the home for whatever reason, the house is then either sold or the family can choose to refinance the mortgage. If the house doesn’t sell for the amount that the reverse mortgage was for, there is no obligation to pay back the difference.

Saving Seniors Homes from Foreclosure in Los Angeles, California Using a Reverse Mortgage

With the economy in the state it’s in today, more and more people are being faced with the possibility of foreclosure. Many people are finding their mortgage payments harder to make each month, and this is especially true for seniors. Many seniors rely on their retirement funds or Social Security benefits to help pay their mortgages, and those accounts sometimes just aren’t enough to keep up. There’s nothing more disheartening than having a home that you’ve worked for years to pay off pulled out from under you.

Fortunately, there are several ways to fend off foreclosure on a home. One of these options that is specific to seniors is a reverse mortgage. It may sound like it wouldn’t be much help since “mortgage” is right in the name and that’s what you’re trying to get rid of – but it really may be the answer to your foreclosure problem.

Reverse mortgages are only available for people of age 62 or higher. A reverse mortgage is somewhat like a home equity loan in that you’re taking out money against your home’s equity. That might not sound terribly useful to someone who still owes money on their home, but a reverse mortgage can actually be taken out on a home that is still being mortgaged. In most cases, a reverse mortgage provides enough of a loan to pay off a primary mortgage and still have money left over.

It is important to note that you can only use a reverse mortgage in this way if the loan will provide enough money to pay off the primary mortgage. In other words, the reverse mortgage has to be the primary lien. Fortunately, unless the home has seen a drastic drop in value or you’ve just taken out a mortgage, this is not a difficult condition to meet. In most cases, you’ll even have access to some extra money that you can put toward home renovations or just save for an emergency.

A reverse mortgage does not come due  until the borrower moves out of their home, sells it, or passes away. If the home is sold, the proceeds from the sale are applied against the reverse mortgage. One thing that’s nice is that if proceeds from the sale aren’t enough, then there’s no personal liability for the borrower or their heirs. If the loan ends because the borrower passed, the heirs also have the opportunity to refinance the home.

Reverse mortgages can provide a powerful solution to your foreclosure woes. Now that you have the basic idea, be sure to do some research so that you fully understand the these loans.

Advantages of a Reverse Mortgage in Los Angeles, California

Advantages of a Reverse Mortgage

By Dennis Estrada

Using reverse mortgage, any sixty-two years old or over can convert the home equity into cash. The mortgage lenders give the cash by lump sum payment, several payments, credit line, or combination. Here are the common advantages of reverse mortgage.

Read more HERE.   Visit us at www.allwestmortgage.com or call 800-409-0999 for help with a reverse mortgage in the Los Angeles CA area.

Saving Seniors from Bankruptcy Using a Reverse Mortgage in Los Angeles, California

It seems you can’t turn on the television or surf the Internet without hearing about how bad the economy is. A lot of people don’t have to hear about it because they’re experiencing it every day. No one is hit harder by the economic downturn than seniors. Their retirement accounts and social security benefits are dwindling and it seems like there’s no hope in sight. Many unfortunate seniors are being faced with the possibilities of foreclosure and even bankruptcy. Retirement is supposed to be a time to enjoy life, not stress about money!

The good news is that there are ways for seniors to dig themselves out of their immediate debts and avoid declaring bankruptcy. One of these methods is known as a reverse mortgage. While “mortgage” usually implies having to pay something, a reverse mortgage is just the opposite. Essentially, it is a loan taken out against the equity on your home, though it’s slightly different from a standard home equity loan.

Reverse mortgages are available specifically to seniors – anyone of age 62 or more who owns a house or at least most of one. Even if you’re still paying off a mortgage on a home, a reverse mortgage is an option. If you have full ownership of your home then you’re entitled to more money than if you are still paying off a home, but either way you can get a nice windfall to help stave off bankruptcy.

You can choose the size of your reverse mortgage, though it is somewhat limited by your exact age, and is of course based on the value of your home. However, the proceeds gained from a reverse mortgage can be used on absolutely anything. You can pay off all of your outstanding bills and probably still have some money left over to save for future expenses or just to do something fun.

Reverse mortgages are relatively worry free. They do not need to be paid back until you either sell your home or pass away. If you sell your home, then the proceeds from the sale will go toward paying off the principal (note that interest is accrued and not paid until the loan ends). If the proceeds from the sale can’t cover the loans total amount, then the institution that issued the reverse mortgage simply soaks up the difference. If the proceeds exceed the cost of the loan, then any additional money is yours.

In the event that the loan ends due to your passing, then it is up to your heirs to decide what to do. They can choose to refinance the home if they want to keep it, or they can simply sell it. If they sell it, then the same rules apply – they have no personal responsibility, and if there is extra money after the sale it is theirs.

Reverse mortgages can be a useful tool in avoiding bankruptcy. However, the details are fairly complicated so it’s important to understand all you can about them. In every case, you need to take a counseling course that will explain all the finer points of reverse mortgages so you’ll know exactly what you’re doing.

Visit us at www.allwestmortgage.com for help with a reverse mortgage in the Los Angeles, CA area.

How Seniors Use Reverse Mortgages to Increase Cash Flow or to Pay Off an Existing Mortgage in Los Angeles, California

Money is tight for most people with the way that the economy is today, and this can be especially true for seniors. Social security doesn’t tend to be enough to get by and when there are so many bills to pay for such as medical bills and a family to provide for, there isn’t any money left over to enjoy retirement. Things can be especially tough when there is still a mortgage to pay because the interest rates and monthly payments just seem to get higher and higher. Fortunately there is a way for seniors to increase the amount of money they receive monthly and even pay off their mortgage without having to leave behind large debts for their children.

Reverse mortgages have been around since the 1980’s and have come a long way since the first one. They are now supervised by the government and there are laws that lenders and borrowers have to follow in order to complete the reverse mortgage transaction. The way that a reverse mortgage works is different than any other kind of loan because instead of needing money to purchase an item, the person has an item and needs money. In this case, the item would be the home that a person lives in.

A person must be over the age of 62 to qualify for a reverse mortgage. The older the borrower is, the more money they will get from their reverse mortgage.

Some home may not qualify for the reverse mortgage, and other types of homes such as mobile homes have to meet certain restrictions in order to be considered. Any borrower who chooses to get a reverse mortgage must go through counseling to be sure that they understand the loan and that they can afford the fees that go along with it.

Once a senior has been approved for the loan, they can do whatever they want with their money. The most common option is receiving their cash flow in monthly payments that will continue for as long as the borrower is alive, no matter how long they live. Since the borrower is taking out money against the house, when they no longer are no longer in the home, the estate will sell the home to repay the loan, or the family can choose to refinance. If the sale of the house doesn’t make enough money to cover the loan, the borrower doesn’t have to make up the difference, because all reverse mortgages are insured by the federal government.

Visit us at www.allwestmortgage.com for help with a reverse mortgage in the Los Angeles, CA area.