What to Expect from a Reverse Mortgage
What’s the deal with a reverse mortgage?
A recent article stated that while this may be a helpful financial tool for Americans 62 and older, it isn’t a way to keep you out of foreclosure. To accomplish this aim, you’ll need different help.
Details of a Florida reverse mortgage
In order to obtain one of these resources, you need to be at least 62. Also, you must have substantial equity in your home, meaning your mortgage must be fairly close to being paid off or the value of your property far exceeds the balance on your Florida home loan.
If you meet these two criteria, get on the phone right now and find a lender in your area that writes reverse mortgages.
However, a better way to save your home might be to call your lender’s workout department. If your company has specialists on staff, these are the professionals to speak to, not the collection-department workers who have been calling you demanding payment.
Many lenders are bending over backwards to keep borrowers in their homes. If you are eligible - that is, if there is any possibility that you can get back on track within a reasonable amount of time - they have several tools at their disposal to help people who have lost their jobs, suffered from a major medical problem, dissolved their marriages and so on.
Here are some of the options lenders can make available to those nearing delinquency:
- Forbearance: An agreement that temporarily allows borrowers to pay less than a full payment, or no payment at all, for a set period. Forbearance is an option when you can show that funds from a bonus, tax refund or other source will let you bring the mortgage current at a specific time in the future.
- Reinstatement: Sometimes combined with forbearance, this allows the borrower to pay the total amount they are behind in one lump sum by a specific date.
- Repayment plan: An agreement that gives you a fixed amount of time, say six months, to repay what you owe by combining a portion of what is past due with your regular monthly payment. At the end of the repayment plan, you will have gradually paid back the amount that was delinquent.
- Loan modification: An agreement that permanently changes one or more terms of your original mortgage so your payment is more affordable. You and the lender may agree to add the missed payments to your loan balance, for example. You might turn an adjustable-rate loan into a fixed-rate mortgage. Or you could extend the number of years you have to repay.
This is a relatively new cosmos in the lending arena called loss mitigation. Investors — and the companies that service the loans for investors — won’t do anything to help deadbeats who can pay but won’t. If you have a legitimate reason for not being able to meet your obligation, though they want to help.
“Where it is economically feasible, we do whatever we can to get ‘nonperforming’ loans re-performing,” says Bill Merrill, director of nonperforming loans at Freddie Mac, a secondary-market company which helps keep the mortgage money flowing from Wall Street to Main Street.
Like most investors in mortgages - or conduits for investors - Freddie Mac works hard to keep borrowers in their homes. In fact, it demands it of the companies which collect monthly payments on its behalf, all in the name of what Merrill calls “homeownership preservation.”
“We require, we measure and we incent,” says Merrill. As a result, most companies which administer mortgages have what are variously known as workout departments or portfolio-retention sections. The goal of these professionals is to keep those who want to remain in their homes in their homes.
Your Florida home loan lender might even be able to help, even if you do not or cannot keep your home. Indeed, there are several different ways to avoid foreclosure and reduce the negative impact on your credit report, depending on your particular financial circumstances.
Taking care of your outstanding debt
Here are three quick ways to avoid foreclosure and move closer to fiscal freedom:
- A qualified buyer could be allowed to take over your debt, even if the loan is considered nonassumable.
- If you can sell, but only for less than what you owe, the lender might agree to a “short payoff” in which the company writes off the portion of your mortgage that exceeds the net proceeds from the sale.
- You can voluntarily transfer title of your home to the lender in exchange for canceling your entire debt.
In conclusion, reverse mortgages are popular as versions of Florida home loans because the state welcomes many senior citizens. Before you decide on this as an option, however, pursue all possibilities.
