New York, NY (PRWEB) July 27, 2013
With the publication of the Mark Miller’s Reuters story from July 24th “Government may crack down harder on reserve mortgages” MoneyMermaid.com is advising any potential consumers of reverse mortgages to carefully read and understand the terms they are agreeing to. Due to the financial nature of reverse mortgages and the variability of housing markets across the country, the federal government is looking to make such transactions safer for the consumer going forward.
The United States Department of Housing and Urban Development (HUD) eliminated one type of reverse mortgages - the upfront lump-sum loans paid at fixed interest rates - that it felt was too risky for consumers. HUD is now looking to eliminate a similar type of settlement, upfront lumps sums at variable rates.
Additionally HUD is asking Congress for the authority to require that homeowners looking to take part in reverse mortgages first undergo a financial assessment to determine long-term personal finance risk and health.
Reverse mortgages can be very beneficial if basic fundamental financial concepts are followed. However, there are times when instead of using the assets gained by a reverse mortgage towards debt restructuring or balancing the family’s budget, the consumer spends the lump sum payouts early on in the loan. The homeowner may think that with “getting paid” to live in their home they are free from other expenses associated with homeownership and this is not the case. Because of this, consumers can forget that property taxes are still owned, and in some areas hazard insurance is required on top of the traditional homeowners policy.
MoneyMermaid.com applauds the government’s steps to ensure that reverse mortgages do not become a detriment or hindrance to homeowners. By reviewing a consumer’s income stream, credit scores and financial obligations - including those associated with the home in question such as property taxes, utility bills, insurance requirements and association dues - the HUD can determine the best loan terms for each consumer.
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