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 Reverse Mortgage for Seniors    
 A new Federal Housing Administration, or FHA, reverse mortgage program can help senior homeowners relocate or downsize to a new home without giving up all their savings -- and save them thousands of dollars in the process.
They don't even have to sell their existing home first.  

The program comes at a time when many financially strapped seniors are trying to boost their monthly incomes after being hit especially hard by the economic downturn: stock portfolio values plummeted, interest on investments shrank, and costs for health care and home repairs skyrocketed.

But help is now available through a new, but little known, FHA reverse mortgage program, known as the Home Equity Conversion Mortgage, or HECM, for Purchase program which gives seniors new ways to use equity in their homes. HECM loans have been available for several years.

The FHA developed the program because it noticed seniors were selling their homes, buying smaller, more affordable homes and then taking out reverse mortgages on the new properties. That meant they were paying closing costs twice -- first on the real estate closing, and a mortgage if they needed one to make the purchase, and then again when they switched to a reverse mortgage.

Program Combines Costs

The new HECM for Purchase program allows seniors to buy a home directly with a reverse mortgage -- paying closing costs only once, says Bill Glavin, special assistant to the commissioner of the FHA. A sale of an existing home is not necessary and is not part of this transaction.

The new HECM program allows using a reverse mortgage to buy a single-family home, a condo or a small multifamily residence, and allows them to convert some of the equity in their existing home to cash. They never have to make a single payment. Instead, they would collect monthly payments out of the equity on a tax-free basis as long as the home serves as their principal residence. If they did not sell their previous home, they could get additional income out of renting that property.

Under the plan, you can choose to take the money either in monthly payments, as a lump sum, a combination of both.

 Higher amounts this year only
What's more, this year, seniors can access up to $625,500 -- up from $417,000 last year.
In 2010, the amount reverts to $417,000.

Eligible homes can be one- to four-units, a condo approved by the U.S. Department of Housing and Urban Development, or HUD, or a manufactured home that meets FHA requirements. You must agree to pay your taxes and make any necessary home repairs. No credit check or income verification is required -- despite the current tight credit market.

To qualify for the program's reverse mortgage, a senior, age 62 or older, must:

          A.  Agree to live in the house as a primary residence.

          B. Own the home outright or have enough equity to pay off any existing mortgages and equity lines with the proceeds from the reverse mortgage. Those with more equity may be able to access even more cash.

          C. Not be delinquent on any federal debt.

      D. Participate in a consumer information session given by an HUD-approved counseling agency or HECM counselor.

Most reverse mortgages range from 35 percent to 55 percent of the home's equity. You can, however, take out a reverse mortgage as low as $10,000, though it is not recommended because of the costs involved, says Eric Bachman, CEO of Golden Gateway Financial, a firm specializing in matching lenders with borrowers. "Many times, seniors are just looking to pay off their forward mortgage and cover closing costs (usually less than $10,000) with a reverse mortgage, to get out from under monthly mortgage payments," Bachman says.

Regardless of your income, the reverse mortgage pays you. The amount you can borrow depends on your age, current interest rates, and the appraised value of your home or FHA mortgage limits for your area, whichever is less.

You can read more and see some examples of how this could help you or someone you know by clicking this link
HECM loans are available only through an FHA-approved lender.

There are numerous calculators on such sites as AARP and Golden Gateway Financial that can help you determine which reverse mortgage is best for you.

Further information, including a list of FHA-approved lenders, is available free from the FHA.


Beware of of Foreclosure Rescue Plans
HELP IS FREE!!
  • There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor. 
  • Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay - walk away!
  • Beware of anyone who says they can "save" your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
  • Never submit your mortgage payments to anyone other than your mortgage company without their approval.

The Obama Administration has launched a coordinated effort across federal and state government and the private sector to target mortgage loan modification fraud and foreclosure rescue scams that threaten to hurt American homeowners and prevent them from getting the help they need during these challenging times.

Changes Provide Broader Availability for Borrowers, More Flexibility for Closing Costs

In a move aimed at furthering the success of President Obama´s Making Home Affordable Program, Freddie Mac (NYSE: FRE) today announced several changes to its refinance offering under the program. Freddie Mac´s Relief Refinance Mortgage is designed to assist borrowers who are current on their mortgage payments but who would benefit from refinancing into mortgages with terms that better position them for long-term homeownership.

Once these changes are available, borrowers will be able to refinance a Freddie Mac-owned or guaranteed mortgage with any lender affiliated with Freddie Mac. Previously, borrowers had to work with the lender who currently services their mortgage. In addition, to help reach more borrowers, Freddie Mac is increasing the amount of closing costs that can be rolled into the new refinance mortgage.

"We are responding to consumers´ desires to have more refinancing options," said Freddie Mac Executive Vice President Don Bisenius. "As an added benefit, we are expanding the program and providing greater flexibility in financing closing costs. Freddie Mac is committed to doing everything we can to bring the benefits of the Administration´s Making Home Affordable program to as many borrowers as possible."

Borrowers can continue to work with their existing servicer to refinance their mortgage. In the vast majority of these cases, the current servicer will not have to re-underwrite the borrower. If the borrower chooses to work with another Freddie Mac-affiliated lender, the mortgage will need to be re-underwritten.

Freddie Mac will allow the lesser of 4 percent of the new refinance mortgage amount or $5,000 of closing costs, financing costs and prepaid/escrows to be rolled into the new refinance mortgage.

Freddie Mac´s standard post settlement delivery fees, up to a maximum of 2 percent, will apply to the Relief Refinance Program.

Borrowers should visit https://www.freddiemac.com/corporate/ and complete the online form to determine if Freddie Mac owns their mortgage.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Federal Tax Credits for Energy Efficiency Extended in 2009 

On October 3rd 2008, President Bush signed into law the "Emergency Economic Stabilization Act of 2008"  which included an extension of the residential tax credits for energy efficient home improvements.  The previous tax credit expired at the end of 2007. The extension is for home improvements made January 1-December 31, 2009.     Improvements made in 2008 are not eligible for a tax credit.

SELECTED TAX CREDITS

· $300* Central air conditioner or heat

· $150* Furnace or boiler

· Up to $200* Windows

· Up to $500* Insulation and sealing

· Up to $2000* Ground source heat pump

*Maximum of $500 total for home improvements

What is the difference between a tax credit and tax deduction?  A tax credit reduces the tax you pay, dollar-for-dollar.  Tax deductions - such as those for home mortgages and charitable giving-lower your  taxable income.  If you are in the highest 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the value of a tax deduction. But a tax credit reduces your federal income tax by 100 percent of the amount of the credit.

What do I need to do to get the tax credit? File IRS Form 5695 with your taxes. In addition, you will need to keep receipts proving that you purchased the improvements and a copy of the manufactures certification (or the ENERGY STAR label for windows).

Visit the IRS website at www.irs.gov.com for full information.

Move or Remodel????

 

In order to sell a home in many places throughout the country, sellers need their homes to outshine the competition.  They must be very negotiable on price and be prepared for possible months-long stretch on the market. Some sellers may sit this season out, and wait for conditions to improve.

 

But some homeowners will take it one step further, figuring that if they can't sell their home they might as well make it more comfortable during the time they're living in it.

"There is a lot of attractiveness to thinking about staying put and making changes to the current home," says a senior research fellow at Harvard University's Joint Center for Housing Studies.

Overall, the center is expecting remodeling dollars spent this year to decline, considering the home-price decreases in many markets. But there is likely a substantial group of homeowners that will put some dollars into their homes anyway -- granted they have the money to spend.

Those who are following through with remodeling plans are saying "based on everything out there, I'm going to hunker down and make the best of my current living conditions,".

 

Keeping it small

In general, people are keeping their remodeling projects modest these days.

In the boom times, three years ago, when there was more of an abundance of appreciation and consumer confidence ... you might have expanded your dining room, made it a little bigger. Today, maybe you're putting in crown molding, recessed lights or putting in a bay window.

Many companies are noticing an increase in feasibility studies and design contracts and while actual construction contracts are slightly down, consumers are "testing the waters," planning their future projects, attending home-improvement seminars and reading books about remodeling topics.

A lot of people are saying "let me think about it". If all of a sudden we move into the spring and there's an up tick in consumer confidence, they will flip the switch and go.

Market conditions are definitely playing into consumers' remodeling reluctance. According to the spring 2008 remodeling sentiment report soon to be released by RemodelEstimates.com, 92% of the 5,000 homeowners surveyed said that falling home prices were affecting their remodeling plans. The cost of remodeling is their greatest concern. 

To save on money, 64% said they'd do some of the remodeling work themselves and 33% said they wouldn't hire a general contractor, according to the survey.

 

Not all bad

While there is a lot of uncertainty in housing markets right now, that doesn't mean a homeowner has to sit on the sidelines, believes Dan Fritschen, founder of RemodelEstimates.com and RemodelOrMove.com two very useful and interesting sites to visit.

It's not a better or worse time to move. Your home may be able to fetch a lower price right now, but the house you want to buy has depreciated too. Seems simple enough, but homeowners often have trouble accepting that their homes could sell for less these days.

So it´s not a bad time to remodel.  There is an available labor pool to do the work, given the slowdown in new home construction, and, some people, frustrated with the volatility in the stock market, might decide an investment in their home is a better way to go.

 

So what do you do?

Trying to decide whether to remodel or move? Homeowners should consider both the financial and the emotional aspects of the decision -- regardless of market conditions.

Financially, calculate the cost of moving expenses, real-estate agent commissions and difference in property taxes -- everything that goes along with moving. Then weigh those expenses against remodeling estimates.

Also think about the nonfinancial benefits of moving or staying, including quality of school districts if you have children or commute time from work. Factor in the inconveniences of both options, whether it is boxing up everything you own or living in a dusty home while it's being remodeled.

If your choice is to remodel, also think about what the project will do for the home at resale. It's especially important to pay attention to how it stacks up against others in the neighborhood.

 

Be aware of how much the home will appreciate -- or depreciate -- based on the remodel. You may want a huge gourmet kitchen, but if that isn't the standard for the area, the improvement could be a waste of money.


A calculator that walks consumers through the remodel-or-move decision can also be found at RemodelOrMove.com. Visit the site.


STOP IDENTITY THEFT COLD

ID theft-related fraud fell by 12 percent in 2007 and 300,000 fewer adults were victims, according to the latest from Javelin Strategy & Research, the longest-running ID theft study in the nation.

At the top of the list of reasons for the decline is "greater consumer vigilance and awareness," according to the report.

When someone steals your identity, you don't wander around aimlessly like some John or Jane Doe. Someone pilfers enough of your personal identifying information -- name, address, Social Security Number, driver´s license, credit and financial account numbers and the like -- then masquerades as you to make purchases, withdraw cash or otherwise undermine your financial assets and your name.

ID theft can cost you time and money (averaging $691, according to the report) to correct the misdeed and it can ruin your credit enough to prevent you from making major purchases including buying a home.

Companies that manage personal information have improved their ID theft protection measures, but consumers who protect their own personal information is the first line of defense.

Here's what Javelin suggests.

  • Move your financial transactions online by turning off paper invoices, statements and checks, including paychecks, and replacing them with electronic versions where offered by employers, banks, utilities or merchants. Avoid mailing checks to pay bills or deposit funds in your banking account. Instead, pay bills online and use remote deposit check imaging services on online banking sites.

This effort rubs out the paper trail. Crooks are more likely to steal information on paper, from personal belongings and through telephone calls, rather than online.

  • Monitor your accounts regularly online at bank and credit card websites. Americans who monitor their accounts online are most likely to uncover suspicious or unauthorized activity early.
  • Likewise, review your credit information frequently. You can do so three times a year for free at the federally-sanctioned AnnualCreditReport.com by getting one report, from each of the three major credit reporting agencies -- Equifax, Experian and Transunion -- in turn, every four months.
  • Reduce unnecessary access to your personal information wherever possible. For example, don't carry Social Security cards, unused credit cards or checks, and don't leave sensitive documents out in the open.
  • Never provide sensitive financial information over the phone or Internet, including Social Security numbers, passwords, PINs or account numbers, unless you placed the call directly to a verified and trusted location, such as the number on back of a credit card or statement.
  • Add your name to the federal Do Not Call registry and direct marketing opt-out lists to reduce solicitations that could be bogus.

Even as overall ID theft has fallen, "vishing," criminals using telecommunications, voice over Internet protocol (VoIP) and like methods, is on the rise. That's because, as more consumers shift more transactions to secure online services, thieves are becoming more creative on the telephone claiming to represent non-profit and charitable operations.

In the same vein, wireless phone accounts have become the most frequent types of new accounts opened fraudulently by criminals using stolen data. The trend exceeds that of fraudulent new credit cards, loans, checking or savings accounts.

  • Install and regularly update firewall, browser, anti-spyware, and anti-virus security software on your personal computer, and keep operating systems updated. Updates typically come with spyware, virus and other protections.
  • Consider placing a credit freeze on your credit report or your child's credit report if you know you won't be using credit for some time. Child ID theft is on the rise because thieves know you and your kid aren't likely to check the child's credit report for some time due to a lack of credit use. Check your state's "credit freeze" law. The cost may be nominal or free. The three credit reporting agencies offer the service for a fee.
  • If you are an ID theft victim, report it to the police, affected accounts, and call any one of the three credit bureaus to have a fraud alert placed on your account to prevent future infractions as you sort out the mess. Contact one bureau to place a fraud alert on your credit report and that company is required to notify the other two so that they too can place an alert on their versions of your report.