Mortgage Direct

Mortgage Direct Mortgage Direct Inc. is regional mortgage broker specializing in residential home and commercial loans. You can trust that Mortgage Direct Inc.

has access to many wholesale institutions which provides us with a wide variety of mortgage products, rates and terms. It is our priority to make sure each borrower understands all of their available options and feels comfortable before making any decisions. Our Loan Officers, Processors, Underwriters and Closers are dedicated to building strong relationships with clients through various forms of

open communications. will help you manage your mortgage process quickly and efficiently from start to finish and beyond. Copyright © 2015 Mortgage Direct Inc. NMLS # 248266

Registered Mortgage Broker-NYS Department of Financial Services Mortgage Direct Inc. is not a banker, Mortgage Direct Inc. is a Mortgage Broker and Arranges Mortgage Loans with third-party wholesale Providers. (3NYCRR 38.2C) Mortgage brokers do not make loans (BKN-12D 595 A2 D). Connecticut General Statutes Sec. 36a-497. "MORTGAGE BROKER ONLY, NOT A MORTGAGE LENDER OR MORTGAGE CORRESPONDENT LENDER"

01/08/2016

Financial Planning: How a Reverse Mortgage Can Help

Since its inception in the early 1960s, reverse mortgages have sometimes been misrepresented as a loan meant only for retirees with financial hardship. In actuality they are versatile financial planning tools for borrowers to use in a strategic way. Simply defined, reverse mortgages are loans designed for senior homeowners ages 62 and older to help convert a portion of their home equity into cash that they can use for whatever they desire. If you are searching for methods of strengthening your future retirement resources, this loan option may be a solution for you.

Uses in Financial Planning

There are a few tactical methods in which a reverse mortgage can be used to enhance your retirement years. With your loan funds, you may want to strategize your financial planning in any of the following ways:

Delay Payouts from your Social Security and Pension

One popular way to use reverse mortgage funds is to hold off early withdrawal of social security benefits or pensions in order to maximize your future payouts. According to the official Social Security website, seniors may choose to retire as early as the age of 62, but doing so may result in a reduction of benefits of as much as 30%. Postponing your retirement can result in an increase of up to 8% for each year that payouts are delayed. Using funds from a reverse mortgage instead of drawing upon social security until reaching the maximum age of 70 can help you maximize your lifetime benefits.

Protect your Portfolio in a Down Market

In a similar fashion, reverse mortgage funds can also help you avoid withdrawing from a portfolio that has recently lost value. In the event of a down market, pulling funds from your reverse mortgage, or supplementing your portfolio with these proceeds can provide a better chance that it will recover from the loss and protect the longevity of your accounts.

Eliminate your Monthly Mortgage Payments

With a reverse mortgage, one requirement is that the loan must be the only lien on your home and that any existing mortgage must be paid off with the funds. While this requirement may decrease some of the funds you expected at closing, the benefit is that reverse mortgages do not require monthly payments. This is a great opportunity to eliminate your monthly mortgage payments and free cash that used to be tied to that expense. It is important to note that borrowers are still required to continue paying the taxes and insurance on the property, as well as keeping the home properly maintained.

Establish a low-cost, growing line of credit

One of the many reverse mortgage disbursement options you can choose is the line of credit, which allows you to access funds as needed and repay the balance when convenient. An additional benefit is that the interest is only charged on the portion used, and the unused portion has the potential to grow. This means that you may utilize a reverse mortgage line of credit strictly for emergencies or unexpected expenses, and as a more flexible alternative to high interest credit cards.

Other Questions

Why Should a Reverse Mortgage Counselor be involved?

Before applying, the Federal Housing Administration (FHA) requires that all borrowers meet with a reverse mortgage counselor approved by the US Department of Housing and Urban Development (HUD). This safeguard ensures that you are informed of all benefits and risks of the loan, and are aware of all other options as well. It is for your benefit that a reverse mortgage counselor is involved to clarify whether a reverse mortgage will truly help you achieve your goals.

What Type of Reverse Mortgage will best fit me?

There are a few types of reverse mortgages. The best fitting reverse mortgage will depend upon your specific situation:

The Standard Home Equity Conversion Mortgage (HECM) - As the most popular type of reverse mortgage, this government-insured loan provides you with a number of consumer protections. For example, if your loan balance surpasses the value of your home when it is sold, the government insurance will cover the difference.
The HECM for Purchase - If you are interested in downsizing or moving to a new location, then this loan option is available for you. Meant for borrowers who would rather get a new home than remain in their current one, this loan type combines two transactions into one: you can buy a new home that better fits your needs and get a reverse mortgage on it simultaneously.
The Reverse Mortgage Refinance - If you already have a reverse mortgage but have found that it would be beneficial to refinance, it is possible to do so. Borrowers may refinance their reverse mortgage and take advantage of a lower interest rate, or access more cash if their equity has increased.
Proprietary or Jumbo Reverse Mortgage - One limitation of a HECM reverse mortgage is that there is a maximum lending limit of $625,500. If your home value is higher than that, this reverse mortgage type allows you to convert more cash from your equity on a high-valued home. Though you may be able to access more loan proceeds with this option, these reverse mortgages are not government insured, so they do not come with many of the consumer safeguards that HECM reverse mortgages do.

As a financial planning tool, there are quite a few ways you can use a reverse mortgage loan to benefit your life. For a consumer considering your options, fully researching the versatility of this loan may give you indispensable information to improve your financial future. Contact Mortgage Direct (NMLS #248226) at 516-252-0475 to understand the loan details and find out how it can help you in your specific situation. If you do, you may just discover one of the most helpful financial planning tools in your retirement.

12/13/2015

Using a reverse mortgage to buy a home

Many older people know about using a reverse mortgage to tap their home equity and use the money to stay in a longtime home. But it's also possible to use a reverse mortgage to buy a home. This can be helpful to people who want to relocate and can't afford mortgage payments in retirement or are unable to qualify for a conventional mortgage. It may also be a useful financial tool for delaying Social Security or conserving cash.

With a reverse mortgage, the bank actually pays you, up to a predetermined percentage of your home value. That money can come in a lump sum, monthly payments or a line of credit. To qualify for a reverse mortgage, you must be 62 or older, and the home you're buying must be your principal residence.

The advantage to a reverse mortgage is you don't have to make payments. You can buy a home with a reverse mortgage, however you have to have enough money to make a substantial down payment. If you get a Home Equity Conversion Mortgage, which is backed by the Federal Housing Administration, the maximum home value you can borrow against is $625,000.

As an example, if you are 62 and want to buy a house valued at $600,000, you would need to put up at least $265,000 as a down payment. The exact numbers depend upon your age, the interest rate and how you are taking the proceeds. The transaction proceeds much as a regular mortgage would, except that the borrower doesn't have to qualify financially for the loan. When you die or leave the home, the mortgage becomes due. Your heirs get any equity that hasn't been eaten up by interest and fees.

While buying a home with a reverse mortgage isn't for everyone, it can be a good move for some. The key is to evaluate the decision as part of a total financial plan. For example, income from a reverse mortgage may allow someone to delay drawing Social Security. While reverse mortgages have been marketed to low-income people, who have no savings except the equity in their homes, they may be a better fit for people who have some assets and are just going into retirement. Strategically using home equity and reverse mortgages early in retirement, not at the end, can be beneficial. Historically, there have been a lot of "bad apples" in the reverse mortgage industry, partly because the loan officers who sell them can make more on each transaction than they can on a conventional mortgage. While new regulations have cut down on abuses, it's still important to reserach your options. The U.S. Department of Housing and Urban Development also requires borrowers to receive counseling from a HUD-approved agency and undergo a financial review before they receive a reverse mortgage.

Here are six questions to ask if you're considering buying a retirement home with a reverse mortgage:

Do you have enough cash? While you can finance a home purchase with a reverse mortgage, you need to be able to put a substantial amount down.

It is worth the cost? Upfront fees can be $12,000 or more, and there are also annual fees, including mortgage insurance. For less expensive homes, a reverse mortgage may not be worth the costs.

Can you afford upkeep? Holders of reverse mortgages are required to pay for property taxes, insurance, homeowners association fees and repairs.

How does the reverse mortgage fit into your estate plan? If you live a long time, you may eat up all the equity in your home.

How long do you plan to stay in the home? Because the initial costs of a reverse mortgage are high, it usually isn't a good a short-term solution. The break-even point is not the same for everyone but, in general, if you're not going to be in the house at least five years, buying with a reverse mortgage is too costly.

How will you take your payments? You can opt for a lump sum, a line of credit or monthly payments, and some lenders offer a combination of options. The payments and line of credit options are an adjustable rate, typically tied to LIBOR. The amount available in the line of credit rises every year, though if you take out more than that, it could dry up. You can choose a specified term of fixed payments or fixed payments that continue until you die or leave the house.

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