1. Using a Reverse Mortgage for a Short Term Fix.

The cost of a reverse mortgage would normally make it a mistake to use for a short term fix. While there are definitely times to use it short term, think of a reverse mortgage as something you are going to use for the next 10+ years. In the event that you are in some serious financial dire straights, like possible foreclosure or in need of repairs to make your home habitable, it may make sense to do a short term reverse Mortgage Loan. Being aware of the fees associated with the loan will help you determine whether or not you are making the smart choice. Of course, a trusted loan officer will be able to guide you, but ultimately, you need to be the one making the decision.

2. A Reverse Mortgage Can Affect Your Government Benefits.

Not really because of getting a Reverse Mortgage, but because of the impact it can have on your finances. The program we are specifically speaking of is Medicaid. If you have too much money in reserve, you can be disqualified. The way this can happen is by taking a lump sum of money that is needed for something like home repairs, but you put in your bank account first. If you don’t spend it when the new month rolls around, you could cost your Medicaid eligibility. Another way is if you take a monthly allotment and don’t spend it all each month. This will be a savings that long term could equal enough money in your bank account to disqualify you.

3. Doing Your Reverse Mortgage Loan Through a New or Inexperienced Loan Officer.

Can you believe that a loan officer at a bank doesn’t need to be licensed? There is no state licensing or education required on the proper way to handle loans. Just about anyone can qualify to be a loan officer in a bank. If you just walk in and say, “I would like to be a loan officer”, you will probably get a desk and a name badge. Call it biased if you like, but I prefer the idea of talking to a trained professional and would like to see a license showing that they can be held responsible. Because the commission is usually pretty good, a loan officer new to the business will sometimes try to make as much money as possible on your loan. Since the terms are all pretty much the same wherever you go, you should really interview your loan officer and test their knowledge. Make sure that you are comfortable with them, as you are trusting your future finances to them.

4. Not Doing a Reverse Loan For Fear of Them.

It seems very common to find people that are afraid of a reverse mortgage just because they can’t find someone that they can trust to explain it in a way they can understand. When it sounds too good to be true, they tend to shy away. Let me start by saying there are always “experts” on topics that they know nothing about. Even for someone who knows the truth, it is almost overwhelming the amount of disinformation being spread. Some financial planners will tell you that you could lose your home. Others will say you are going to leave more debt to your heirs. In an attempt to soothe your concerns, here is a little advice. First, find a loan officer you trust. If you are uncomfortable with your current loan officer, find another one. You are not obligated to anyone just because you talked to them first. Second, don’t listen to everyone’s advice that throws it at you. You can read the article “Bad Advice From Good People about Reverse Mortgages” and get an in depth look at who to listen to. To summarize it, you should look to get advice from the professional in the field. Your financial planner may be great with your investments, but has probably never originated a loan. It is always recommended to get advice from your loved ones, but make sure they know what they are talking about. Maybe invite them to listen in on your next meeting with your loan officer. Also, please don’t disqualify yourself because you think you may not qualify. Just to reiterate, get the advice from a professional in the mortgage industry that specializes in reverse mortgages.

5. Rushing Into the Reverse Mortgage Loan Process.

It only takes about 10 minutes to teach you everything you need to know on a reverse Mortgage Loan. But you will probably have questions that will make you more comfortable when you get the answers. Sometimes these questions take a little time to formulate, so don’t let your loan officer rush you into making a decision. Don’t mistake doing your loan quickly with pushing you to make up your mind in a hurry. Once you have determined you want a reverse mortgage, the process should be fairly quick. It will take about a month to a month and a half to get your loan closed.

6. Thinking That Being Older Will Get You More Money.

Here is a bonus mistake. Remember your age and the value of your home combined with the interest rate determines how much money is available to you. While being a few years older can net you a few thousand dollars more, an interest rate change of 0.5% higher can make tens of thousands of dollars less available to you. So while it is true that you get more money when you are older, you have to consider that the interest rate will probably go up. Then any age benefit you were getting will be lost.

Read more about reverse mortgages at Redwood Reverse Mortgage. David Prulhiere owns Redwood Financial Services and specializes in reverse mortgage education and loans.

Banks and financial institutions are going to meet their deserved fate all the rest of this year, as the president’s consumer-friendly laws begin to clamp down on all the financial service companies. But why did Bank of America give in and give in willingly in an area every bank cherishes as a way of dipping into your account – overdraft fees. The bank recently announced that it was doing away with it. At one time, if you didn’t have enough money in your bank checking account and you used your debit card shopping, and you didn’t have enough cash in your bank checking account, they would let you buy it anyway, and then penalize your with fees for the overdraft.

At this time, if you try to buy something without enough money in your account, you’ll just be turned down, that’s all. This must not be good news for the Bank of America since overdraft fees account from debit cards rake in 60% of the fees. And that bank is the nation’s biggest debit card issuer. This is going to shave millions of dollars off its bottom line, and it’s to do the same for other banks too that will have to match these terms to stay competitive.

You can still have an overdraft facility on your bank checking account if you choose; but it will be opt-in. If you happen to be at an ATM or a store checkout, and you’re being billed for more than you have, the machine will tell you that you can proceed, but at penalty of $35 in overdraft fees. And you can still have your overdraft facility for checks or bills for a fee. Banks charge $35 dollars and more for penalty fees, if you went over even two dollars more than you had.

For the banks, it’s a windfall – if they put out money on a formal loan, they wouldn’t make $35 off $2, now would they? The banking industry last year alone made something like $25 billion on overdraft fees at ATMs and checkouts. This new practice is certainly going to effect their bottom line when it comes into effect on July 1. You know it hurts them, because they’re advertising so hard to get you to opt in for their overdraft services.

Are the banks the bad guys? We want to give you the story. Some time ago I worked for a bank and felt bad because of the practices the bank foisted on its customers that I had to go along with. For instance, let’s say that a customer has $100 in her bank checking account. She first uses her debit card to spend $10 at Burger King, she then spends $50 to pay her cell phone bill, and then she spends $102 on gas for her car. That means that with the first two purchases, she was completely within her limits, and she should be charged a penalty only for the last purchase. What they’ll do at the bank though, is, they will charge her the $102 for gas first, so that it wipes out her account, they’ll charge her penalty for it, and then they’ll record the other two smaller expenses. In effect, they are able to charge three times that onerous $35 dollar fee instead of just once, if they did it the right way.

But in their defense, the banks argue that they’ve been pushed to such unfair extremes in their industry. Banks have been made to comply over the years to consumer protection laws hurting their bottom line. They say they’ve been regulated and taxed big time for decades, and they have no choice but to do what they can to work their way back into profitability.

One other top source of fees for banks is the extra markups on bank checks given when customers order designerchecks. Banks do markup these designer checks by fifty percent or even more since they buy them from a 3rd party source. By ordering direct and using designer checks coupon one can save even more plus one gets a larger choice of motifs and scenes.

Many of these practices are not good; but they say that most of their rules are only to apply to people who overdraw. The simple way to avoid most of their unfair practices, they argue, is to simply live within your means.

When you’re running low on checks, or prior to depletion, reorder designer checks online and save over 50% from the fee that the banks would charge. Purchasing straight from the manufacturer and even using a designer checks coupon, you save money and have more dollars left to spend elsewhere

Many people across the country are hurting. Most of that pain comes from the real estate market and the bursting of the speculative bubble. This real estate bust will never be forgotten. We have been going through a major market correction for the last 5 years. Our current recession was caused by the collapse of the housing market.

However, like everything, real estate operates in cycles. Sometimes things are good, sometimes things are bad. Talk to any old timer and they have been through several economic downturns however this is probably the worst they have ever seen except for the depression in the 1920’s. In regards to real estate the country has been in a downturn for the last five years. Many experts claim that the housing markets moving in five to seven year cycles. It is quite possible that we are at the end of this downturn and near a bottom.

How can you profit from this?

Large amounts of money can be made and lost in real estate. Lately, most people have just been losing money. However, that may end. Investors have either been flippers, developers, home builders or simply just bought and held for the long road. The great thing about buying and holding is that you don’t need to time the market perfectly. If you buy right you can ride out the waves.

The benefit of buying and holding is that you do not have to perfectly time the market. Right now, if you are flipping a property you have to buy it cheap, fix it up fast and sell it quickly before prices fall any farther. With flipping you also have to continue to find houses to buy cheap. Which can be difficult.

If you are a long term investor you don’t need to worry as much about timing the market. You can buy a property right and sit back and let the market do the work for you. To oversimplify things many investors use the formula of buying good properties at reasonable prices in good locations. Hopefully, you can do that and get a break even cash flow. It has been very difficult to find these properties but as prices have moved south they are getting easier to find.

Time Value of Money

Money will grow over time with appreciation. Real estate will eventually start increasing in value again. Imagine if you purchased near the bottom of this real estate market and held on for 20 years. The house you buy will not only increase in value but your tenant will help pay off your mortgage.

Let’s assume that you bought a nice rental property for $75,000 and obtained a 15 year mortgage. In 15 years when the home was paid off the value of the home would be:

* 2% appreciation a year – $100,940

* 3% appreciation a year – $116,847

* 4% appreciation a year – $135,070

* 5% appreciation a year – $155,919

What if you bought several rental properties? Within 20 years using the tortoise approach and assuming increased home prices you could be worth millions. Not only that but you would have a portfolio of homes providing a nice monthly income. 20 paid off homes generating $1,500 a month each is a nice way to retire. Don’t you think?

Marc Rasmussen specializes in Homes for sale in Sarasota, Florida