The Federal Housing Administration has just announced that it will increase the maximum claim amount for Home Equity Conversion Mortgages in calendar year 2024 from $1,089,300 to $1,149,825 effective for case numbers assigned on or after January 1, 2024.This new maximum claim amount is also applicable to Freddie Mac’s special exception areas of Alaska, Hawaii, Guam and the Virgin Islands.Details were published in Mortgagee Letter 2023-22 and will be included in a future Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1) release.
6 Ways to Avoid Probate Court
Probate court is often slow and costly, and will always cause unnecessary hardship to grieving loved ones. However, with proactive estate planning you can avoid it. Here are six tips to help your loved ones avoid the cost and hassle of probate court when the time comes.
What Is Probate?
Probate is a legal process by which a deceased person’s assets are distributed, final wishes are carried out, and debts are settled. It is a court-supervised process in which the court validates the will, appoints an executor and distributes assets. This process can take time and can be expensive. There are many reasons why avoiding probate court is advisable; here are the three most common.
What can you tell me About the LIBOR Transition?
After June 30, 2023, the 1-month and 1-year LIBOR indices will no longer be published. Therefore, existing borrowers with LIBOR-based loans must be notified, prior to their next rate adjustment, that the variable portion of their interest rate will be tied to an alternate index.
What can you tell me about the LIBOR Transition?
The most popular reverse mortgage product is the federally insured Home Equity Conversion Mortgage or HECM. Most HECMs in service are variable-rate loans where the rate is adjusted periodically using an established lender margin plus a published index. Loan originators currently sell HECM ARMs tied to the Constant Maturity Treasury (CMT), but that was not always the case. Many HECMs originated prior to 2021 utilized an international index known as the London Interbank Offered Rate or LIBOR index.
Rates Rise and the HECM line of credit can too!
Although the Federal Reserve again raised the short-term interest rate yesterday May 4, 2022, the impact on a reverse mortgage loan is both positive and negative.
As interest rates increase, the amount that you qualify to receive at application from the reverse mortgage decreases. However, your current loan balance which needs to be paid off to create additional cash flow, can still be considered as before. The same rules apply including prequalification of the youngest borrowers age, having enough home equity and satisfying a financial assessment. Prequalification standards have not changed; how much you can borrow has been impacted.
Healthcare and a Reverse Mortgage ~ start 2022 financialy healthy!
Healthcare becomes an increasingly important issue as you age. As retirement approaches, planning to deal with declining health—and more specifically—the costs involved, can make or break the financial stability that most of us aim for at the end of our careers.
One tool that older homeowners have at their disposal to meet the financial demands of retirement, is a Home Equity Conversion Mortgage (HECM). Commonly called a reverse mortgage, these loans allow homeowners over the age of 62 to access the equity in their homes while still living there. Payments on these loans don’t come due until the last borrower passes away or the home is no longer their primary residence.
Great option for retirement planning…
Happy New Year 2022!
One significant change effective January 1, 2022 is the maximum claim amount or lending limit in the United States for the FHA insured HECM, Home Equity Conversion Mortgage. That new number is $970,800 This is a significant increase over the prior year and benefits those home values which appreciated above the earlier limit of $822,375
The formula remains the same to determine how much you can borrow. The youngest borrowers age, the interest rate, the amount of equity available and the home value or lending limit, which ever is less, together determine how much you can borrow. If your home value is much higher then the HECM limit, let’s explore options with proprietary reverse mortgage loans.
A HECM isn’t for Everyone YET it can be a Fabulous Tool for Unlocking Home Equity
Robert Klein, CPA is the founder and President of Retirement Income Center in Newport Beach, CA. As a writer and publisher, he brings a holistic approach to retirement planning and presents a five-point matrix to consider with respect to evaluating a reverse mortgage. This comprehensive review illustrates the following factors:
Projected Mortgage Balance
Projected Savings
Projected Net Worth
Projected Line of Credit
Projected Liquidity
Most discussions I have with my client’s financial advisor are regarding the line of credit feature particularly unique to the HECM reverse mortgage. Unused funds grow larger over time for future use, and the growth is optimized by younger homeowners closer to 62 years old. Recent communication with a client revealed that their line of credit grew significantly over the last 13 months. Its beginning balance was over $400,000 and there was no existing mortgage balance on the house when the reverse mortgage loan was created. That line grew an additional $16,000.00 in funds in the same period. No funds had been withdrawn since their closing. This is the perfect strategy for a couple wanting to increase their retirement spending, especially if they also have funds under management.
Safety Tips: 5 Ways to Prepare for a House Fire – and What to Do if One Breaks Out
House fires can break out for a wide range of reasons, and these include everything from grease fires while cooking in the kitchen to lightning striking the home.
How To Maximize Those Awkward Spaces In Your Home
In almost every home, there are awkward spaces that are difficult to utilize.
Especially in older houses, there are rooms, closets and nooks that once had a purpose that is now outdated.
So before you try to cover it up or fill it with junk, take a look at the smart solutions below to see how you can revitalize those problematic spaces and turn them into something useful.
Let us explore three ways that a reverse mortgage can help to transform retirement
It is All about Flexibility
The primary benefit that one receives with a reverse mortgage is financial flexibility. It is an excellent way to tap into the equity that has built up in your home over time without having to sell the house. After living in your home for decades, moving is often not desirable; staying in the home is the priority. Unlike a traditional home loan, the payment terms allow for the flexibility of not making monthly mortgage payments! Certainly, you can choose to pay the loan down and if you want to later sell and move, you pay back the mortgage through the sale. There is no prepayment penalty.
An Extra Source of Income
Supplemental income is one reason homeowners chose to have a reverse mortgage. Depending on the circumstances, funds can be received as a tenure payment, which is the same monthly payment for life as long as the borrower occupies the home, pays property taxes, homeowners’ insurance, and other property charges. It’s also possible to receive term payments: a certain amount of money for a certain period of months or years. One might want a line of credit where all available funds are left in the line of credit to access as needed. Every borrower’s situation is unique, as is their financial portfolio, debt, income, and savings. Therefore, each reverse mortgage use is unique to the homeowner. Note: do not compare your loan to someone else’s loan!
The funds you receive can be used however you want. You can invest in renovations for your home, take a nice vacation, invest in the stock market, or simply leave it in your bank account. It is a helpful ‘bridge’ income source that will ensure that you have no trouble taking care of life’s many expenses.
A Contingency Fund, Just ‘In Case’
Finally, a reverse mortgage can be an excellent contingency fund. If you take this out as a line of credit, the money will be available when it are needed. Many retired individuals lack a financial ‘safety net’ ending up with unexpected health or other costs. With a reverse mortgage, you can sleep soundly knowing that emergency funds are there if needed. As you can see, taking advantage of a reverse mortgage can be the catalyst that helps take your retirement to the next level.
To learn more about reverse mortgages, contact your local certified Reverse Mortgage Professional (CRMP) for guidance and expertise.
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