New Changes in Reverse Mortgage are totally for seniors that can add thousands to the pockets

Jan. 7, 2009 - PRLog -- In 2008 saw major changes in the Reverse Mortgage industry that will have a major impact on senior who received a RM in the past or who are considering one now.
As of November 6, 2008 the long awaited major change and excluded a lot of senior from receiving the funds they needed finally was in acted. So people can understand how dramatic these changes are we need to go back to the start. The original way the amount of money was calculated was on the appraisal up to the limits of the county they live in. In many case or the national average was around $232,000, some higher and some lower but this was the average. Now today the limit is $417,000 all over the country except in area that require higher amount. This new limit has open the way for more seniors who had higher values on their homes based on appraisals, but had to either bring money to the closing table or receive less and leave valuable assets on the table.
The second major change that took place was the change in the origination fees! This is a big one the old way the fee was calculated was very straight forward, it was 2% of the appraised value with no cap. This was the biggest fee on the closing statement until now! The new way that the origination fee is determined is easy to understand and has a cap on the amount that can be charged. It is now 2% of the first $200,000 and then 1% of each hundred thousand to a maximum of $5,950.00. This change is really the one that is most of a direct benefit to seniors it places more money in their pockets, couple this with the higher limits that this is worth thousands of dollars to them.

The other change that is important to mention, that really received bad press in the past is the change in who can actually offer Reverse Mortgages. In the past we had people from other industries offer them to seniors and then trying to sell them other products as part of their services. These products included; Annuities, Insurance products, and other financial programs. This has been stop once and for all! The new law says that no person who sells financial products or insurance, not to mention real estate can offer Reverse Mortgage to seniors. This was put into law to protect seniors from being placed into programs that did not benefit them or help them achieve financial security. Now that does not mean that seniors cannot go out on their own and obtain any of these products or services, but they cannot be offered as part of the program. Seniors are still in control of the monies they receive, No one can tell them what to do with the money they receive!

Now saving the best for last! The newest change that has taken place in the Reverse Mortgage arena took place on January 1, 2009. The availability to purchase a home with a RM. That correct you read it right a senior can now purchase a home and have no mortgage payments for the remaining years of their lives. Lets look at this because it is an important issue. A senior who has a home that they a lived in for years and raised their family in and now realizes that the home does not meet their lifestyle or is very costly to maintain, i.e. taxes, insurance, utilities and over all maintenance is draining them and they want to move to another home. In the past they would have had to take out a Reverse Mortgage on the current house then place it on the market to sell. They then would take the proceeds that purchase a new home, and then take out a RM after they had paid all of the fees. In most cases they had two or more closing and fees added up to an enormous amount of money. In some cases they even had to take out a mortgage to get the new home just to get into the home. In a year past that was not hard to do since the mortgage industry was giving money to just about anyone who asks. Enough of that it is an issue for another article!

So under the new rules of the RM for purchasing a home, they can now sell their home and either uses a small portion of the proceeds as the down payment and uses the Reverse Mortgage for the financing. In these troubled times in the forward mortgage industry in most cases a senior would find it very hard to qualify for a mortgage. Under the RM the criteria is very basic, the senior must be over the age of 62. The purchase and the amount of the down payment are based on the current interest rate and the appraised value of the home. In today's Real Estate markets many seniors who are willing to do a little work and find a home that is selling below the actual appraised value could possibly purchase a home with no money out of pocket and live for the rest of their live with no mortgage payments, and keep all of the proceeds from the sale of their home for income. Also remember this important fact, under the tax codes, if a couple sells their home and has a gain of up to $500,000 that money is tax free. In addition; seniors who are renting and are seeing their income going out for rent increases due to the economy can eliminate payments forever and own their own home, condo or even an income producing property up to four units building.

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As a company we only work to help seniors and their families who are over the age of 62 to achieve some sort of financial stability in these tough economic times. All we do is Reverse Mortgages. One stop education source with our Reverse Mortgage Guide it is our goal to assist all seniors in need and provide the best service in the industry. We offer education, concern and compassion couple with outstanding service. If you are looking for more information visit http://www.BestMortgageplans.com