Reverse Mortgages : Pros And Cons

Despite several big-name banks pulling the product from their respective home loan offerings, reverse mortgages remain a popular mortgage choice among homeowners aged 62 or over.

A reverse mortgage is exactly what it sounds like -- a mortgage in reverse. Rather than borrow a fixed amount of money then pay that loan balance down to zero as with a "forward" mortgage, a reverse mortgage starts at a given loan balance and works its way up as scheduled payments are added to the existing loan balance.

This 4-minute piece from NBC's The Today Show highlights a few pros and cons of reverse mortgages, and the reasons why you may want to consider one, including :

• No mortgage payments are ever due on your home
• There is no credit check required for a reverse mortgage
• There is no income requirement to qualify for a reverse mortgage

There are some basic qualification standards for the reverse mortgage program including a requirement that all borrowers on title must be 62 years of age or older; and that the subject property be a primary residence.

Loan fees can also be higher than with a conventional-type mortgage.

If you meet the qualification standards, though, with a reverse mortgage, you have flexibility in how your home equity is distributed to you. You can receive a lump-sum payment, elect for monthly installments over time, create a line of credit, or a combination of all three.

Like all mortgages, reverse mortgages are complex instruments. That's one reason why all reverse mortgage borrowers are required to attend counseling -- the government wants you to be certain that you understand the nuances of the reverse mortgage program.

Your lender will want you to understand the program, too.

It's not for everybody, unfortunately it may be a last resort for those who are having a hard time paying their bills. Counseling is a must. Fortunately the product is there for those who need it.

Till next time

THE NEW YORK REAL ESTATE NURSE^sm  

Will Home Values Rise This Year?

Noooooooooooooooooo!!! Home sales based on median price will show a decline in 2012. This will be the national trend, there will be a location here and there that will see upside off their lows.

ALL MARKETS HAVE THE OPPORTUNITY TO COME OFF THEIR LOWS.

My crystal ball tells me their are to many headwinds in the countries macroeconomics to boost prices. Their are to many distressed properties on the market that nobody wants. When they are bought they will bring down comparable's with them.  The looming shadow inventory will have to be released at some point. Absorption of the units will take time.

Without the help of  government intervention, and the private sector having little incentive to get involved, at best we will see housing numbers remain the same this year. Still a good time to buy.

Will your home gain value over the next 12 months? Nobody can know for sure, but should recent housing trends continue undulating along the bottom, prices will be flat.

The housing economy has suffered since 2007, knocking home values down nearly 20% nationwide. And while some areas have fared better as compared to others but, in general, home values are down.

Mortgage rates are down, too, and that's good news for buyers in New York. The combination of low rates and low prices has led home affordability to an all-time high. As you'll hear in this 4-minute interview with NBC's The Today Show, carrying a mortgage costs 25% less per month as compared to just 3 years ago.

Some other notes from the interview include :

• There are more buyers out looking for homes today, which leads to more sales
• The housing market is expected to get gradually better, month-by-month, in 2012
• Foreclosures will continue to be a big part of the housing market

With housing supplies shrinking, buyers throughout New York may find their best "deals" today -- before the Spring Buying Season begins in February.

However, we can't forget that housing markets are local -- not national. Each town and neighborhood has its own market drivers and prices where you live may have already started to climb.

For accurate, up-to-date data on the housing market, talk with a local real estate agent.

My phone is ringing of the hook. Anybody remember those old phones?

Till next time

The New York Real Estate Nurse