Main Line Homes Blog

I asked Eric May and Donald Geragi of Prosperity Mortgage who recently spoke to us at Long & Foster in Devon to share some information about reverse mortgages, how they work and who can use them. This is a great way for seniors to provide income for themselves or to help a grandchild purchase their first home using the equity they have built up in their own homes.

Reverse Mortgage loans are managed, controlled and backed by the federal government, offering total safety and security to senior homeowners. 

The home must be designated as the primary residence as the benefits of a reverse mortgage are extended to the homeowner for as long as they continue to live in the home.  Also, included is an outline of the requirements and steps needed to apply for any of these programs. 

Reverse Mortgage loans, including the most popular, HECM (Home Equity Conversion Mortgage) offered by HUD and FHA insured, as well as the HomeKeeper® Reverse Mortgage - secured and backed by Fannie Mae, offer a variety of attractive financial solutions to consumers who currently own or have  substantial equity in their homes.  All of these products offer homeowners the ability to have access to a portion of the equity in their primary residence ... Tax Free!  Distribution of these funds can be taken in virtually any manner the homeowner chooses, including:

•·         Lump Sum Cash

•·         Credit Line

•·         Term - monthly payments

•·         Tenure monthly payments

•·         Or any combination of these

Payment plans to Reverse Mortgage holders can be changed at any time by the homeowner. *(Actual benefit amounts will be determined when application is signed and dated by the homeowner(s) and accepted by HUD)

There are no qualifying requirements for these programs related to credit, employment, income or assets. The amount of funds available to the homeowner is based on:

•·         The lower of the ages of all the owners on the deed of the property (all   must be 62 years of age at closing),

•·         The lower of either the appraised value of the home, or the county in which the property is located (established by the lending cap of the loan that is selected; HUD HECM or Fannie Mae HomeKeeper®), and

•·         Outstanding balances of existing mortgages or liens on the property.  After paying off any existing mortgage / liens from the available equity, all remaining funds can be used for any purpose the homeowner chooses! 

The loan amount required to be paid back (the amount of funds used over the life of the loan with any accumulated interest) only becomes due when and if the last owner on the deed, decides to move, sell the property, or the home passes into an estate.  The property may then be sold by the estate to settle the loan or it may be acquired with alternative funds.  Any and all remaining equity or property appreciation after the loan debt is settled goes back to the homeowner or to the heirs of the estate.

 Once the reverse mortgage loan is in place the homeowner:

•·         will never have to make a monthly mortgage payment

•·         will never have to move from their home

•·         will never have to give up title to their home

•·         and the homeowner, or the heirs to their estate, can never owe more on the loan than the home's value (reverse mortgages are non-recourse loans)

Another important benefit of a Reverse Mortgage Loan is that the proceeds do not affect * Social Security or Medicare benefits.  * (Need based programs such as Medicaid could be affected and one is urged to contact Medicaid directly with your individual circumstances, if you currently received these types of benefits)

All fees and closing costs can be financed with the proceeds of a Reverse Mortgage. Other inspections may be required and are the responsibility of the homeowner if applicable, including well, septic, termite, flat roof certification, etc.

A required step in the application process is for the homeowner to attend a reverse mortgage counseling session delivered by an approved and certified HUD agency and the AARP. The session generally takes about 1/2 hour or less. Reverse Mortgage Consultants can provide a list of counseling agencies that borrowers can visit or call to make an appointment with.

At the conclusion of this session borrowers receive a certificate (letter) that is required to be processed with the loan application when it is forwarded to HUD for the loan's approval.

 For further help please contact Eric May at PROSPERITY M O R T G A G E,  MAC # M7478-011, 92 Lancaster Avenue, Devon, PA 19333, 610.225.7456  Office, 484.716.4299 Mobile, Eric.May@Prosperitymortgage.com.  Or go to his website at www.ericmaymortgage.com

In every market there are ways to save and make money. Even during the Dreat Depression there were people were making lots of money. So here we are in a market continually described as the worst housing market for several decades. If you have funds is there opportunity? Absolutely, you can look for foreclosure properties but to be honest buying foreclosure properties is a lot of work.

Another option if you are buying for yourself is to buy land and then build, this will save you substanial amounts for several reasons. first you save on transfer tax, you will pay this on the land price not the price of the house, consider that most new construction is three times the price of the land, for example if you pay $600,000 for a piece of land on the main line the house will generally be priced at $1.8 million or more. So you pay transfer tax on the $600,000 not the $1.8 million.

Secondly, builders have generally cut back and so they have workmen who need work, so you may be able to negotiate a good price for the building part of the contract as well.

Thirdly, you can incorporate green elements into the design of the home and working with an architect will also allow you to have the house you want without settling for a standard design.

So consider if there are lots available where you want to live, and whether this a an option for you in this current market.

To me, childhood dreams, fantasies and treehouses are directly linked.

As a child I always dreamed of owning a tree house, a big one, one where elves could live nearby, high up so that it is all hidden in the leafy branches away from our parents spying eyes.  My brother did for a while have a little platform high up in a tree. You had to climb up it with a rope and it was very hard to do, on top of which girls were not allowed. I didn't care though it was to tricky to get up to that tiny little platform.

When I married and had 3 boys, my husband built a treehouse for our 3 sons. It was made of old lumber from our neighbor who built a very nice family room extension on his house. Our boys always played with the girls next door (they grew up like brothers and sisters) and so in this treehouse girls were allowed. Lots of friends also came around and enjoyed that treehouse and a marvelous place to arrange a water fight from, just so long as you had water. When you ran out of water and had to hoist more up with a bucket you stood the chance of getting absolutely drenched by the ground attack.

Longwood Gardens built 3 treehouses to inspire and conjure up our childhood fantasies and hopefully inspire us to build a treehouse for our kids and grandkids...........  

This past Friday our office took part in our company's community service, offering our time to a local organization that I hold in high esteem Surrey Services for Seniors. Of course I forgot my camera and we did not take any photos, but we helped prepare lunch, took care of some yard work for various clients of Surrey, ferried one lady to a hair appointment, put in some screens for another lady, and made a group of visits bringing home made cookies, plus changed light bulbs and planted a bunch of plants.

It is such a delight to help those within your community and when I organize these events I am always amazed how touched the Realtors are by all these elderly seniors who are striving to remain in their homes as long as they can. You gain so much more than you give. Why not see what lives you can touch locally and take some friends with you.