There is a growing trend among the older generation of homeowners for what are called ‘reverse mortgages’. They are called reverse because it is the householder who gets the money from the bank rather than paying it to the bank as they have been doing for the majority of their house-owning lives. More irreverently, people who take up this financial product are becoming known as the SKI generation. SKI is an acronym for ‘spending the kids’ inheritance’. And why shouldn’t they? They’ve worked hard all their lives to repay the home loans and they are nearing the end of the road with a small percentage of the capital left to repay. Now it’s time to enjoy their sunset years with extra cash on hand for all their travel, pastimes and other dream fulfilling experiences.

This financial product is designed specifically for the older householder with small amounts of outstanding secured home debt. There are no other stipulations to be met before getting their hands on all that value tied up their ‘bricks and mortar’. So there are no medicals, no credit checks and no income verification. The lifetime mortgage provides a life-enhancing cash flow regardless of the homeowners’ current cash circumstances.  It’s not really about the kids’ inheritance but rather a question of peace of mind at time of life when it is deserved. The reverse mortgagees can go ahead and make those improvements to their home, their standard of living, their healthcare or simply have a ‘just in case’ lump sum available for emergencies.As long as the ‘reversers’ continue to live, in the main, in their property it means the end of repayments.

This aspect of reverse mortgages is what makes them unique among the secured loan products. The ‘skiers’ continue to hold the title deeds of the property and not the bank or building society. If the householder survives beyond the mortgage term the lender can neither take further payments nor take possession. What is more the householder is limited to borrowing up to the value of the property. The obligation to repay the loan amount is held in abeyance until the house is sold on, the homeowner passes away or they take up a different primary residence.The cash sum a homeowner can get from the reverse mortgage varies with individual circumstances but as general rule of thumb it rises in line with both age of the borrower and property value.Local taxes and all utilities remain the responsibility of the reverse mortgagee. Bundled in with the loan amount that is repaid at the end of the term are all the costs of arranging this mortgage. There is always an arrangement fee, a one off opening fee, a termination fee (for the loan, not the homeowner), the ubiquitous insurance and finally a service charge, which is normally on a per month basis.

The interest rates on reverse mortgages are variable in line with the base rate. As and when the homeowner sells the property in question, or indeed dies, then they, or the trustees of their estate, repay the outstanding promised amounts. Any remaining equity becomes part of the estate for the heirs or remains in the hands of the borrower.There is wide range of choice of method by which the householder receives the money from this inverted mortgage deal. It is up to the householder to pick the method best suited to their needs. So for example if the mortgagee wants a monthly lump sum payment then they can choose a ‘tenure’ scheme, which will do just that for as long as the property is their primary residence.Alternatively the mortgagee can choose a ‘term’ scheme where they take an agreed number of payments of a set amount each month.

More flexible is a ‘line of credit’ type contract. With this the borrower chooses how much to receive and when to receive it up until the agreed loan amount is used up.Other choices are really variations on these three themes. Thus there is the ‘modified tenure’ where a monthly amount accrues to the borrower as long as they are in residence, along with a line of credit. Or a ‘modified term’ that also mixes a line of credit with the set number of monthly amounts.Reverse mortgages are the perfect solution to financial worries of the older homeowner. They give freedom to people to do as they wish at a point in their lives where they have the time to enjoy life to the fullest.

Of Carpenters And Mortgage brokers?

If I were a carpenter and you were a lawyer, we would have a good life with steady money coming in and the phone ringing all the time for us to do stuff for all our clients. We would have a house or an apartment, three children at school, two cars, and a dog. We would pay out every month, and thank the lord for automatic transfers, for our mortgage, our car, tuition fees, social security, pension, health insurance and the list goes on and on and on. It’s absolutely vital that we keep on doing what we do best.

We do not have time to learn a whole new language and the ins and outs of something that we will do perhaps once or twice every ten years or so. Swapping a mortgage contract and or the lender is just such a thing; important that it is done, in order to save money for all the other commitments, but not urgent; difficult to understand, complex and easy to get wrong. So who are we to call? A specialist that’s who.

A mortgage refinance expert in the Rolodex under ‘M’ for must manage mortgage money!   A good broker can take the whole burden of finding and getting a new secure home loan. A good broker will save you multiples of the fees they charge but there are ways to use a broker without paying them. A good broker will search the whole financial product scene to find the most suitable mortgage for their client. A good broker specializes in doing nothing else. A good broker has innumerable contacts within the esoteric world of mortgages.  We all put our health in the hands of specialist medics and it’s scary. It can be scary to put our financial health and all our personal data in the hands of the mortgage broker.  

All specialists in the mortgage/finance sector are constrained by state laws that are there to protect the lay customer. The Federal government leaves it to the states to monitor individual mortgage specialists so before using the service check their bona fides just as you would with your doctor. There may well be a license requirement and this will be the first thing a broker will show you.Use your valuable time to find a reputable specialist mortgage broker then sit back and let them do their work in three stages. They will begin by analyzing your money status and needs. They will go on to searching the mortgage products available and linking your need to the most appropriate solution. They will then manage the implementation of your refinancing deal leaving you free to go on with your life.  There will be no need for you to learn the jargon or struggle over the standard application forms.  The specialist will do it all for you.

A good broker will interpret and translate all of the complex terms and procedures involved in this largest of finance transactions.  An alternative refinance route could be to go to an institution and liaise with a loan officer who would do the same service as a mortgage broker but who would be working more for the organisation than for the client.  So you need to refinance and get on with your life.  The best way to do this is to find and use a specialist as they will do when they want a new set of bedroom cupboards.