Reverse Mortgage an Investment Tool for Homeowners
By DAVID LLOYD JONES
Contributing Editor
Reverse mortgages are a tremendous tool to help elderly homeowners who don’t want to be forced to sell their houses, says Cindy Thomason, but they are not the only tool.
Thomason, the vice president in charge of mortgage lending for First Pryority Bank, 10632 S. Memorial Dr., says people anxious to keep their homes have other options at their command.
“We are one of 100 test banks that Countrywide uses for reverse mortgages. This year they will be coming out with their own plan and I hope the visibility of that plan will help us increase the awareness of our reverse mortgage business.”
A reverse mortgage allows a homeowner to take money out of a house and never have to make a monthly payment. Neither the homeowner or his heir will ever owe more than the home’s appraised market value at the maturity of the loan, which is either when the homeowner dies or sells the property.
“But people have to realize,” she says, “that doesn’t mean a $200,000 house will bring in an instant $200,000 cash. Typically a person who gets a reverse mortgage at the minimum age of 62 can borrow up to about 50 percent of the appraised value of their house with that amount increasing as they get older.
“People who seek a reverse mortgage will have to attend a counseling session to help them set up a budget. There are some fees involved with getting a reverse mortgage so a person considering them needs to do some research to see if such a mortgage is their best option.’
“Other plans, such as standard mortgages, might be more advantageous for an individual’s personal situation,” she says.
“Cash out refinancing helps a person get some cash in hand so necessary repairs can be made or living expenses met until the house sells.
“For people struggling with their bills there are services that offer assistance in such areas as medical and utility costs. Often people don’t know where to start looking for help, but if they call me at 369-2424 I can either help them directly or, in many cases, tell them where they can get help.”
With interest rates still low, Thomason suggests people on adjustable-rate or interest-only loans should consider refinancing to a fixed-rate loan.
“Often people get an adjustable rate loan to help them get a low rate for a property they couldn’t otherwise afford. When the initial period runs out and the rate is adjusted it sometimes causes a hardship.”
She also notes that First Pryority Bank is a “one-stop” bank for people looking to build a house. “We can do a construction loan and then, when construction is completed do a permanent loan. This can lead to some cost savings. For example, one abstract can cover both transactions at a saving to the buyer.”
Whatever you decide to do Thomason says, she’ll be more than happy to guide your steps.
“I want you to feel good when you sign those papers.”
Updated 01-23-2007
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