Juhani Tontti asked:




The reverse mortgage loan is a long term solution. Many seniors seem to think, that when they postpone the financial decisions, the time will handle the issue. Unfortunately,. The time just worsens the things and the only wise thing is to make the decision now. And, the reverse mortgage loan is just one option.

1. It Is Important To Act Quickly.

The limit is 3 months. If a senior is 3 months, or more, behind with his mortgage payments, it is important to act quickly. The first thing is to contact the lender and to tell him honestly, what is your situation and whether he has some tips, what to do. You can also ask, whether the reverse mortgage loan would be useful in your situation.

Most obviously a senior needs more disposable money to be able to handle all the monthly costs. When he has an old mortgage left, which he has to pay monthly, the reverse mortgage loan can handle two things. A senior can pay away the old mortgage with the reverse loan, which gives him more disposable money. Exactly, what he needs. The reverse loan has no monthly payments.

2. The Importance Of The Good Credit Score.

The credit score is like a good health. When it is okay, you will not even notice it, but when you have lost it, it causes many troubles. The bad credit score makes the borrowing more expensive or even impossible. If a senior meets the foreclosure, his credit score will drop by 250 – 300 points for 10 years. And he will lose the home.

3. How The Reverse Home Mortgage Will Help A Senior?

The best feature of this loan type is, that the lender will pay to the senior. A senior has to have a home, where he has an equity left, which is his permanent home. The age must be 62 or over.

By taking the reverse loan, he transfers a part of the home equity into cash money. This means extra disposable money every month. On the top of this, he can pay away the traditional mortgage with the reverse one, which further adds his disposable monthly cash. The new loan capital, interests and all costs will be paid, when the loan will be closed. This happens, when the borrower will move away, sell the home or die.

4. How The Loan Amount Is Calculated?

There is a maximum limit of $ 625.000. The age of the borrower, the interest rate level and the appraised value of the home are the 3 factors, which influence on the loan amount. The thumb rule is, that the older the borrower is, the higher the appraised home value and the lower the interest rates, the more a senior can borrow.

5. This Is A Must: A Senior Has To Meet The Counselor.

Before a senior can sign the reverse mortgage loan contract he has to meet the counselor, says the law. This is very good, because the counselors are free to guide also concerning other options and they are not salespeople. A senior makes it wise, if he will prepare well for this meeting, because it can be honestly useful.

Leslie

C.L. Haehl asked:




Even when you already have a first and second mortgage on your home, you may want to secure a third mortgage. You may use the cash for some value-adding feature to your home, like a swimming pool or a new kitchen may be the reason. However, securing a third mortgage is not very easy.

A third mortgage loan stands subordinate to the first and second mortgage liens that exist. For this reason, it is very difficult to find lenders offering third mortgage home loans. The risk is much greater for the lender in case of a foreclosure. If the loan does get approved, which is difficult, it would be at a much higher rate of interest as compared to the earlier mortgages.

A third mortgage is a hard equity loan. The approval usually depends on the LTV or Loan to Value and SSR or Superior mortgage to Subordinate mortgage ratio.
LTV is expressed as a percentage of the present appraised value of the house, as against the total outstanding mortgage debt(s). Lenders expect the LTV for hard equity loans in the case of first mortgages to be sixty five percent and between fifty to sixty five percent, in the case of second mortgages. For third mortgages, it is anything between fifty to sixty percent.

The SSR is calculated by dividing the amount of the superior mortgage loan amount by the amount of the subordinate mortgage and expressed as a ratio between the two. For example, if the superior mortgage were for $100000 and the subordinate mortgage for $25000, the SSR would be 4:1. For hard equity lending, the SSR is usually in the range of 1:1 – 7:1. With a low LTV and SSR, a third mortgage loan may possible.

In a foreclosure proceeding, the first mortgagee is given preference over the subordinate/subsequent mortgagees as a general rule. This means that the entire debt of the first mortgagee is first satisfied, after which any remaining amount is applied towards the debt satisfaction of the second mortgagee. If anything is left after that, only then is the third mortgage paid off.

Bill

Loan Modification Attorney asked:


A Home Loan Modification can help you stop foreclosure and stay in your home. But if you’re like most homeowners, you’re probably wondering how it will affect your credit, and whether in a good or bad way. Unfortunately, there’s no single answer—it all depends on how far behind you are and the kind of mortgage loan modification you’ll be granted.

Best-case scenarios



Technically, since you’re not borrowing any money, a home loan modification won’t hurt your credit score. If you’re paying less in interest, you have a smaller debt burden. And since most lenders prefer an interest rate reduction, there’s a pretty good chance that a Home loan modification will improve your credit score.

The implications are even better if your lender forgives part of the principal, although this is less common. If they write off $50,000 from your loan amount, it will show up on your report as a smaller loan, which can increase your credit score.



The lender factor

Unfortunately, it doesn’t always happen that way. It also depends on how your lender reports the home loan modification to the credit bureaus. Many of them will consider it paid for less than the original amount owed, which will count against your score. If you’re already in foreclosure, the impact on your credit can be substantial. Of course, compared to a short sale or a foreclosure, a Mortgage Loan Modification is still the best way to maintain your credit standing.

Tax implications



One of the early problems with Loan modification is that the amount forgiven is usually taxable. That means if your debt is reduced by $50,000, the IRS views it as income and imposes the corresponding tax. This can catch homeowners off guard during tax season, as many of them don’t know the tax implications at the time of the modification.

To avoid such incidents, the IRS announced in 2007 that Loan modification would no longer be classified as “prohibited transactions.” This applied to all loans originated from January 2004 to July 2007, the peak of the sub-prime boom, and those due to adjust from January 2009 to July 2012. If your mortgage falls under these categories, you won’t have to file a 1099 declaring the change as taxable.

A loan modification is much like going to court: you can save your money and get a court-appointed lawyer, or you can invest in professional representation and get the best mortgage assistance. Your loss mitigation won’t happen overnight, but if with a capable Loan Modification Attorney, you can be sure you’re in good hands.



AUBREY