DATELINE: NORWELL and PLYMOUTH, MA…
With investments down and a continuing consumer credit crunch, more and more seniors are taking a second look at reverse mortgages as an attractive way to tap into the equity in their home. Even though home values have fallen, many senior homeowners retain a sizeable amount of equity in their homes.
“Tapping into a home’s equity is a very viable option for senior homeowners who are cash poor and house rich,” explains Brian Comer, President of Norwell and Plymouth based Advanced Mortgage Services. “Reverse mortgages continue to offer seniors the ability to be able to stay in their homes and maintain their quality of life as they age without having to worry about the limitations of a restricted income.”
A reverse mortgage is essentially the opposite of a traditional mortgage. Unlike traditional mortgages where borrowers make monthly payments, in a reverse mortgage the cash flow is reversed, and the lender makes payments to the borrower, enabling borrowers to use the tax free cash they receive in any way that they wish. Seniors commonly use the money to supplement their retirement income, pay for medical expenses, pay off an existing mortgage or debt, fund home repairs, or for travel or vacations. Payment may be received in a lump sum, as a line of credit, or in monthly installments.
To qualify senior homeowners must have positive equity in their homes and all homeowners listed on the title must be at least 62 years of age. There are no minimum income, asset, or credit qualifications to meet and no effect on Social Security or Medicare benefits sine the IRS currently treats mortgage proceeds as a loan advance rather than taxable income. The property must be the primary residence of the borrower and properly insured and maintained, with real estate taxes kept current. As long as the borrower continues to live in the property the loan can never be called.
Unlike a traditional mortgage where the balance starts high and the borrower’s monthly payments reduce the loan balance, the balance of a reverse mortgage loan starts low and continues to increase as more cash is drawn and the deferred interest charges are added to the balance. Repayment is required if the home is sold, or when the last borrower permanently leaves the property, or passes away. At that time, the heirs can sell or refinance the property to pay off the loan.
The only reverse mortgage insured by the U.S. Federal Government is called a Home Equity Conversion Mortgage or HECM, and is only available through an FHA approved lender. According to the National Reverse Mortgage Lender’s Association, HECMs, which are insured by the Federal Housing Administration (FHA), a branch of the U.S. Department of Housing and Urban Development (HUD), account for nearly all reverse mortgages made today in the U.S.
The number of HECM loans made during the current recession have remained steady despite decreasing home values. HUD data, which is reported by federal fiscal year (each federal fiscal year begins October 1 and runs through September 30 of the following year) shows that 114,692 HECM loans were made during FY 2009, and 112,154 HECM loans during FY 2008.
For additional information please call the Reverse Mortgage Division of Advanced Mortgage Services at 888-665-6345 for a free personalized consultation.
Advanced Mortgage Services LLC
Advanced Mortgage Services LLC was founded as a mortgage lending company in 2005 by Brian Thomas Comer, a financial services professional with more than 13 years experience in the South Shore real estate market. Advanced Mortgage Services is a full service mortgage company that values and nurtures long-term customer relationships, providing options and solutions with maximum benefit and genuine concern for their customer’s interests.
Advanced Mortgage Services team of loan officers maintains rigorous licensing requirements set by the Massachusetts Division of Banks and is committed to upholding the highest standards in the mortgage industry while offering customers the best possible solution for any mortgage-related needs.
Advanced Mortgage Services, which is an active participant in many community events and organizations throughout the South Shore, is located at 335 Washington Street in Norwell, MA 02061 and has an additional office at 25 Main Street in Plymouth, MA 02360.
For additional information on services offered by Advanced Mortgage Services please call 781-659-6555, 508-747-9520, or 888-665-6345, or visit www.ams-loan.com. A Fair Housing and Equal Opportunity Lender, Advanced Mortgage Services is a fully insured and licensed Massachusetts Mortgage Lender and Mortgage Broker (license #MC3702.)