Braintree, MA, April 07, 2007 --(PR.com
)-- The staggering rise in foreclosures nationwide has also had an adverse impact on senior homeowners who may have refinanced an existing mortgage, lured by the low “teaser” rates of adjustable rate mortgages. The prospect of lower interest rates and lower monthly payments in many cases has now burgeoned into dramatically higher monthly mortgage payments after the initial 2 or 3-year period of low interest rates has passed.
Can a reverse mortgage help senior homeowners avoid foreclosure?
George Downey, the Founder of Harbor Mortgage Solutions, Inc. in Braintree, MA, offers an outline of some basic criteria of a reverse mortgage that might help a senior homeowner avoid foreclosure. Downey, an expert on reverse mortgages, is also a past Board Chairman of the Massachusetts Mortgage Association.
It’s easier than it might seem for a senior homeowner to fall behind in their mortgage payments. A variety of unforeseen events can wreak havoc on a senior homeowner’s ability to keep up mortgage payments, particularly when they rely on a limited fixed income. Unexpected medical expenses, death, divorce, loss of a job, increased taxes— all of theses factors can upset the fragile budget-balancing act required to make it through the end of the month and pay bills on time.
If a homeowner does fall behind in their existing mortgage payments for any reason, the best course of action is to contact their lender before foreclosure is imminent to see if a repayment schedule can be worked out. If a senior homeowner (or the youngest spouse in the case of couples) is over the age of 62 and has a mortgage that is relatively low in relation to the appraised value of the property (meaning that you have a significant amount of equity to tap into), it may be feasible to investigate the use of a reverse mortgage to avoid foreclosure, particularly if no other resources are available. Unlike a home equity loan, there are no monthly payment obligations with a reverse mortgage.
There have been many cases where a reverse mortgage has literally saved the day, rescuing a senior’s home from foreclosure. Since the terms of a reverse mortgage require that any preexisting mortgages be paid off before the proceeds of the reverse mortgage become available, the lender that is threatening foreclosure is paid first. Any subsequent liens or debts can also be settled from the proceeds of the reverse mortgage, with no stipulations on the use of the remaining cash. Even if there is a minimal amount of cash left after paying off the primary lender, foreclosure is avoided, no monthly payments are required, and as long as the senior borrower continues to live in the property, the loan can never be called.
With no financial or credit qualifications to meet, no monthly payments obligations, and no restrictions on the use of the cash, reverse mortgages are rapidly becoming a new and vital source of cash for today’s seniors. Consultation with family members, a trusted financial advisor or elder law attorney, and a competent reverse mortgage consultant are a must for senior homeowners to educate themselves about the various options available and to determine if a reverse mortgage would be suitable solution for their particular needs and circumstance.
The Reverse of Traditional Thinking
A reverse mortgage, essentially the opposite of a traditional or “forward” mortgage, can enable seniors to tap into accumulated equity without having to face ongoing payments. Unlike traditional mortgages where borrowers make monthly payments, in a reverse mortgage the cash flow is reversed, and the lender makes payments to the borrower, enabling borrowers to use the tax free cash they receive in any way that they wish.
There are no minimum income, asset, or credit qualifications to meet and no effect on Social Security or Medicare benefits. The property must be the primary residence of the borrower and properly insured and maintained, with real estate taxes kept current. As long as the borrower continues to live in the property the loan can never be called. Repayment is required if the home is sold, or when the last borrower permanently leaves the property, or passes away. At that time, the heirs can sell, or refinance, the property to pay off the loan.
Once the province of a few small banks and private lenders, the great majority of reverse mortgages today are provided through government-sponsored programs, namely the HUD/FHA Home Equity Conversion Mortgage (HECM) and the Fannie Mae Home Keeper (HK) programs.
Customized Harbor Mortgage Solutions
Specializing in conventional residential and reverse mortgages, Harbor Mortgage Solutions, Inc. is located at 100 Grandview Road, Suite 105 in Braintree, MA. George A. Downey, who is now joined by his son Christopher Downey, founded family owned and operated Harbor Mortgage Solutions in 1978.
Assisted by a staff of experienced mortgage professionals, Harbor Mortgage Solutions is dedicated to providing customized service, obtaining the best possible solution for each individual client every time. An equal opportunity lender licensed in Massachusetts (license #MC0041) and Rhode Island (license #20041821LB), Harbor Mortgage Solutions is a member of the Massachusetts Mortgage Association, the National Association of Mortgage Brokers, and the National Reverse Mortgage Lenders Association, strictly subscribing to their rigid code of ethics. Harbor Mortgage Solutions is also an Educational Subscriber of the Massachusetts Chapter of the National Association of Elder Law Attorneys.
For additional information on services offered by Harbor Mortgage Solutions please call 781-843-5553 or 800-599-8700, or visit www.HarborMortgage.com.