SAN DIEGO, Sept. 6, 2013 /PRNewswire-iReach/ -- LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. Loan Love understands the predicament many loan consumers face, and they continue to provide professional advice in one of their guide videos titled "How Do Reverse Mortgages Work? (Nuts And Bolts)." The video demonstrates what to look for when working with reverse mortgage lenders and how reverse mortgages can provide senior home owners with many benefits.
A recent overhaul in the way reverse mortgages are being handled is now being taken into effect thanks to a new bill signed by Obama and approved by congress. Called the Reverse Mortgage Stabilization Act, the new law seeks to correct many of the flaws reverse mortgage lending was being handled while protecting the mortgage rights of both lenders and borrowers. An article linked from the video sums up the new reverse mortgage reform: "Recently, President Obama signed a new, bipartisan bill into law that offers more protections for both lenders and borrowers. For instance, instead of just being required to participate in an informational session about the loans, today's borrowers must have – again, free of cost – financial counseling to make sure the loan they get is the best one for their needs."
Although changes have been made with how the reverse mortgages lending process works, senior homeowners may still be doubtful on its reliability considering the reverse mortgage pros and cons. A Home Equity Conversion Mortgage (HECM), or by its better known name a reverse mortgage, has always been tricky for senior homeowners in the past who overlook the benefits or are perhaps worried from the chance loan lenders may use underhanded maneuvers in signing off loan deals. The Loan Love video states that with reverse mortgage reform in effect, homeowners taking a reverse mortgage loan can now benefit from their home's equity and prevent financial ruin with two distinct advantages:
The first way a reverse mortgage can help loan borrowers is by advising to take the loan as a line of credit rather than a lump sum. That way, money can be drawn at moments when you need, rather than by how much you would want to withdraw. As the Loan Love video warns, depending too much on the stock mark can put a senior homeowner in financial risk.
"See, traditionally, retirees who depend on stock market returns to maintain their standards of living have really been at the mercy of the stock market. That's a risk that really came to light in recent years when the market tanked, and then tanked again. A lot of seniors found that the values of their portfolios had plummeted, and that left a lot of retirees scrambling for ways to make ends meet. Many were forced to sell off a big share of their portfolios, and that meant that when the market recovered, the retirees had much smaller portfolios to provide an income stream. When stock prices bottomed out a few years ago, some retirees had to liquidate their entire portfolios just to stay afloat. Having a reverse mortgage line of credit would have allowed many seniors to weather that down market without having to dump their stocks" says the hostess of the video.
The second tip the video explains to how a HECM product can help senior homeowners is the opportunity for lower tax bills. This attainable because instead of withdrawing money from their own financial reserves, a homeowner can pay off an ongoing mortgage loan by drawing out funds from their home's equity. This can be a much better option than withdrawing from a 401K or any other similar investments for example. Because with a 401K savings plan, the funds that go into a 401K is considered taxable and will put a higher bump on a retiree's tax bill.
For more information on reverse mortgage pros and cons, please visit LoanLove.com for the full video.