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Tune Into “Retire Risk Free” with Mike Bencze

Every Tuesday’s at 12:30 on KSRO

Santa Rosa, California Radio Station

The FHA Modernization Bill

has been the talk of the Reverse Mortgage industry since last fall. As we get closer to the inevitable passage of this bill, I thought I would take a moment to review some of the key provisions of the bill, and what it can mean to you. I have several clients who are watching this closely with me as the benefits of the bill very important to them and their families. The most important provisions of the bill that applies to HECM (Home Equity Conversion Mortgages, those that are insured by the FHA) Reverse Mortgages, are the changes to the lending limit, and the changes to the origination fee (please see sidebar) and how it is calculated. The highest current lending limit (called the 203(b) lending limit), which is presently applied on a county by county basis, is $362,790. This limit applies to most of the high cost areas of California. Basically, this means that only the first $362,790 of appraised value is used in determining a homeowner’s cash benefit. FHA Modernization would raise this limit to $550,440 if the bill is approved in its proposed form. I cannot overstress the importance of this increase. What does this change mean to you and your family? If you are a 70 year old homeowner, and your home is valued at $500,000, you would currently be eligible for a cash benefit of $249,962. Under the pending FHA legislation the cash benefit will be approximately $344,500! Taken by itself , this increase is amazing, but when you combine this proposed increase with the low rates (which also positively affect the benefit calculation), and the benefits of FHA insurance I think you will agree that FHA Reverse Mortgage has truly come of age, (no pun intended). If you would like more information about FHA Modernization, or would like to track the bill’s progress, simply call me(my phone numbers are listed above) and I will phone, e-mail, or contact you through the postal service at your request.

Tapping into Equity

A house is more than a roof over the head…
but a tool for financing retirement.

A growing number of retirees are tapping equity in their homes by taking out reverse mortgages. These loans never have to be repaid as long as the borrower lives in their home. Most use reverse mortgages to pay off their existing loans, wiping out their monthly mortgage payment. Others use them to draw a steady stream of cash out of their homes every month.

“It’s become more of a mainstream financial tool…becoming a household word,” said Bronwyn Belling, who manages education on reverse mortgages for AARP. “It frees up your money. It’s ridiculous to be sitting on equity and it’s not earning anything for you,” said John, who took out a reverse mortgage on his Oakmont house.

One Borrowers Return from the Edge of Foreclosure

Facing foreclosure, Anna n’ha Millee used a reverse mortgage to pull cash out of the property and pay off her lender. There was enough money left over for needed improvements on her investment property and restore lost income that led to her financial dilemma. “I was in total
panic - this meets my needs completely,” she said.

Reverse mortgages have gained popularity as retirees turn equity into cash… Paying off home loans, pulling out cash for living and health care expenses and making home repairs top the list. For the 69-year-old n’ha Millee, it’s all of the above. n’ha Millee didn’t qualify for a home equity loan. She didn’t want to sell the property, which has been in her family for more than 70 years.

“That’s why the reverse mortgage was so important for her,” said Jill Gromm, her loan agent. “She’s had two properties in her family for years and years and doesn’t want to lose them, but they’re aging.”  Petaluma officials determined (her investment property) uninhabitable. By December…lenders were set to take back the properties. Instead she was able to tap $276,000 in equity based on her age and the value of the home…she no longer has a mortgage on the primary property, leaving more money for daily needs. “I have the ability to buy the necessary food, and to meet my doctor’s bill. I can even go to the drug store and buy the prescription medicine that I need.”

–By Mike Coit, The Press Democrat

Congratulations!

Congratulations to both Jill Gromm and Mike Bencze. Jill was recently featured in the Press Democrat in an article written about reverse mortgages and Mike has just been asked  by the National Reverse Mortgage Lenders Association (NRMLA) to be a presenter / speaker at their upcoming National meeting in Las Angeles.

Excellent work!!! Thank you, Ron Kamler