Is My Home Eligible for a Reverse Mortgage?

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A reverse mortgage, also called HECM or a Home Equity Conversion Mortgages, is not the same as traditional mortgages or equity loans. Instead they were designed to help those who are retiring or have retired and are in need additional funds. Reverse mortgages are based on your home and the amount of equity available to you from your home.

These types of mortgages are not always necessary so before deciding to apply for one it is good to have a basic understanding about them. The best way to do this is to contact a mortgage company certified by the United States Department of Housing and Urban Development, or HUD. Only they can give you specific reverse mortgage information that is specific to you and your home.

Your home is the main factor in whether or not you will qualify. The factor of your house is based on the HUD mortgage standards which all mortgage companies are required to follow. In order to receive a reverse mortgage your home must have equity in it. Equity is the result of subtracting what you currently owe on your home from the current sellable value of your home.

In order for your home to be eligible for a reverse mortgage you must either own it out right or be in the process of paying a mortgage on it. It is better if you already own your home because you will ultimately have more equity available to you. If you are still making mortgage payments on your home then that is okay. What you receive from the this type of loan it is first used to pay for the remaining loan on the home eliminating the original mortgage. Because most borrowers owe substantially less than the value of their home they are still able to receive monetary payments from the reverse mortgage. This is important to many home owners because they no longer have to worry about a mortgage payment.

Another factor to consider when determining if you home will qualify for a reverse mortgage is the age of all the person's listed on the deed of the home. The age requirement is a minimum of 62 years of age. Therefore if anyone else listed on the deed who will be named on the reverse mortgage is younger than 62 then you will not get the loan

Your home must be in sellable and habitable condition in order to be considered for a reverse mortgage. This doesn't mean that the mortgage company is going to sell your home. What it does is increase the overall value of your home therefore maximizing your home equity.

When deciding whether or not you want to apply for a this type of loan you should discuss it with your family. There are many advantages and disadvantages to having this type of loan and so therefore you want to make sure that you aren't rushing into a decision. Your family can also help you make your house appealing to improve your house's ability to qualify for a this type of loan with HUD.

If you want to know if your home is eligible for reverse mortgage, you should consider talking to Jeff Entratter, Senior Mortgage Advisor with Perl Mortgage. He has over thirty seven years of lending experience.

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What Is a Loan Modification and Who Can Be Eligible for It

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In February 2009 the U.S. government adopted the so called Making Home Affordible Program, aimed to overcome the continuing crisis in the housing market. One of the main parts of this program was the loan modification plan.
According to this plan, a loan modification also called a mortgage modification or loan restructuring means a considerable change of the terms of a borrower's loan in case a borrower faces financial hardships and becomes unable to make his mortgage payments on time. In other words, the loan modification plan is designed to restructure troubled mortgages in such a way that house owners could stay afloat. The other goal of loan modification was to stop the decline in real estate market.

For this purpose, according to the loan modification plan, lenders should reduce monthly payments on distressed loans to such a level that they would amount no more than 38 percent of the gross family income. Next, the servicer should conduct the loan modification further, so that this ratio should not exceed 31 percent. In order to achieve such a result, the creditor first of all should lower the interest rate down to 2 percent. If this reduction is not enough, the loan term should be extended, it can be increased up to 40 years. If monthly payments still account for more than 31 per cent of the borrower's gross income, the lender may service the loan principal at no interest. However, it is important to note that for all these concessions, the actual amount of principal while carrying out the modification can not be reduced.

Now let's consider the basic provisions of the equity modification, you necessary need to know if you are the owner of a distressed mortgage.

The borrower is eligible for a loan modification if the following conditions take place:

1) A mortgaged house must be owner-occupied, or in other words, an owner must live in a mortgaged house. The loan modification program is designed to rescue house owners from foreclosure, but it doesn't distribute to the speculators who bought homes for resale or investment. The owner will need to prove this fact by official documents, for instance such as credit reports.

2) Modification concerns only those loans that were received before January 1, 2009. The other condition claims that unpaid loan amount shall not exceed 729 750 dollars.

3) The inability to pay the mortgage payments should be reasoned by actual or potential deterioration of a borrower's financial situation. Such reasons as the reduction of earned income, considerable extra expenditures (due to illness, divorce or other), growing bills and so on, can be mentioned. Financial difficulties should also be documentary verified. It is important to note that the loan modification program does not apply for those who can not pay the mortgage because of job loss or other reasons that led to the fact that you can not arrange monthly payments at all. Loan payments can be reviewed and reduced, but not canceled or postponed.

4) In accordance with the equity modification program, the minimum payment on the loan should be reduced to 31% of the borrower's before-tax income. This means that if the amount of monthly payments is currently less than this value, you can hardly claim to participate in the loan modification program.

To find out whether your loan meets these requirements, you can contact your lender with the application for participation in the program of the loan modification. Next, you will be required to describe in detail your financial situation and prove it by official documents. While the modification you should be ready to do a considerable paper work and prepare a great number of written documents. The lender will inspect the description of all your assets, information on all sources of the household income (before taxes), the last tax returns, the information about the second mortgage on the house, balances on all your credit cards and debts, the application for the loan modification describing all the reasons that led to your financial hardships and proving the necessity of the equity modification.

Also please find more details on my website about lbps loan modification and lbps mortgage.

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