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A reverse mortgage, has good features and bad features which ever way you go, understandably has its fair share of both praise singers and nay sayers. A reverse mortgage is a tool to help seniors, stay in their home, pay for home improvements and improve their life stye, the downside of reverse mortgages for seniors is that the fees and expenses can be high. As an Orlando mortgage broker, I recently met with a family who asked me to go over some of the reverse mortgage ups and downs and to help them speak with their elderly parent about moving. The senior and her adult children related their concerns to me about why they felt it was a good time for her to move. The mom Beth understood she needed some help with fixing her meals and housekeeping, but really wanted to stay at home. The problem was finding the money and the services to help Beth live in her home for as long as possible, and to live in the standard she was use to and give her family comfort, knowing that she would be safe. This gave us the opportunity to talk about the growing number of reverse mortgage opportunities.

To be eligible, you must first be over sixty-two years of age, own your home, and be living in it as your primary residence. The amount you are eligible for depends on your age, interest rates and the value of your home. Most reverse mortgages for seniors are set up so the home owner can receive monthly payments, but lump sum payments can also be arranged.

The Upside Good News

• Reverse mortgages for seniors can be set up as a monthly payment, line of credit or a lump sum—whatever works best.
• How ever the reverse mortgage is set up, the home owner does not make any monthly payments.
• No monthly payment is due from the home owner unless he or she dies, moves or sells the home. At that time, the loan is due in full, plus interest and fees.
• The home owner can receive monthly income from a reverse mortgage as long as he or she lives in the home as a primary residence. A home owner could potentially continue to receive monthly payments even after the loan balance is higher than the amount that the house is worth.
• Neither the home owner nor his or her heirs will ever owe more than the home is worth, no matter how many payments are received or how high the interest rates become.
• It is easy to qualify for this loan since credit scores and income are not part of the qualification process.

Downside Bad News

• Reverse mortgages for seniors have higher than average closing costs. The senior must pay origination fees that are about double what they are for conventional mortgages and mortgage insurance. The interest rates are adjustable.
• For seniors who depend on Medicaid or other state or federal programs, it’s important to consider if reverse mortgage payments will affect their eligibility.

The senior must attend counseling by an independent HUD counselor prior to receiving a reverse mortgage. These are complex loans and this is a consumer protection requirement. This should be emphsized to all parties to build confidence in the product and process.

As the Florida’s real estate market is showing some inklings of life, industry observers fear another key wave of foreclosures is poised to inundate the state, according to an article by the News Service of Florida. With unemployment rising to 11 percent, home prices on the decline, and adjustable rate mortgages issued during the 2006 housing bubble set to move upward, the stage is set for more late payments, creating an excellent opportunity for first time home buyers. With the help of an Orlando mortgage broker who can establish a potential home buyers credit worthiness, first time Orlando home buyers can get some real home buying deals.

“We think there are a lot of foreclosures that are just starting to make their way into the pipeline here,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research. “They really haven’t hit yet.” A new report by the independent LPS Mortgage Monitor shows that 10 percent of Florida mortgages were in foreclosure in August – the highest rate in the country and almost three times the national average. A steadily rising number of delinquent loans also have not yet plunged into foreclosure nationally, the report showed – hinting that plenty more homes could be headed that way in coming months. LPS termed these troubled loans the “shadow foreclosure inventory,” and pointed out that it is double the number of actual of foreclosure starts. In Florida, one-in-five mortgages are in foreclosure or delinquency – almost twice the national average and the highest level in the U.S. “Housing sales are rising,” said Tim Becker, director of the University of Florida’s Bergstrom Center for Real Estate Studies. “But foreclosures just put more homes back into the inventory of unsold homes. You’re not going to get Florida’s economy going again until you cut down this inventory.”

You've worked hard to save up an adequate amount of money for a down payment on a house, and you're finally ready to close on your first home. You've found the right house, and it looks like you can manage the monthly payments. Then you receive a copy of the Good Faith Estimate (GFE).

A Good Faith Estimate of settlement or closing costs lists the expenses you're likely to have to pay at closing. Because these fees and expenses can add up to a significant percentage of the purchase price, it's important to consider the fees related to closing when choosing a lender. An experienced Orlando mortgage broker will tell you to not focus on interest rate alone.

Federal law requires that a potential lender provide a Good Faith Estimate to you within three days of applying for a mortgage. Regrettably, there's often a large inconsistency between the estimate and what you actually end up paying. Recent changes in Federal regulations seek to correct this, but the jury is out on the effectiveness of these changes.

Some unprincipled lenders deliberately under estimate costs in order to get your loan, knowing that by the time you see the actual amounts, you'll be so involved in the process that you won't walk away from purchase and look for another lender. The US government is working on making changes to the law to force lenders to be more accurate on the good faith estimates and now requires lenders to provide borrowers with a closing statement three days prior to the closing. In addition, borrowers must be notified at the beginning of the loan process that they are not required to close on the loan if they do not want to.

Typically, closing costs run between 3% and 5% of your loan amount, so if you're borrowing $100,000 you can expect closing costs of $3,000 to $5,000. If you're borrowing $200,000 you can expect closing costs of $6,000 to $10,000.

The wise thing to do is to obtain good faith estimates from several lenders and compare the costs. Then be prepared to ask the lender you choose to meet the best offer. Here are some of the items you will find on a Good Faith Estimate:

Loan application fee ($75 to $400)

Loan origination fee (1% of the amount borrowed, or $100 for every $10,000 borrowed)

Points (to "buy down" the interest rate: between $100 and $300 for every $10,000 borrowed)

Appraisal fee

Credit Report

Mortgage broker commission or fee

Lender's inspection fee

Tax service fee

Processing fee

Underwriting fee

Wire Transfer fee

Interest from the day of settlement to the date of the first mortgage payment

Private mortgage insurance premiums to protect your lender ($750 to $1750)

Hazard insurance premiums

Property taxes from the day of settlement to the end of the tax year

Settlement or closing/escrow fee

Document preparation fee

Notary fee

Title search and title insurance to protect your lender ($400 to $600)

Title insurance to protect you

Recording fees

Tax stamps

Pest inspection

Lender's attorney fees

Buyer's attorney fees

Property taxes placed in an escrow account are one of the biggest expenses at closing. The amount depends on the value of the house you buy and the tax rate in the town or county where the house is located. Often lenders require you to include a monthly estimate with your mortgage payments equal to 1/12th of your annual property taxes and homeowners insurance. For most people, this is easier than coming up with a large lump sum each year when taxes are due.

Educate yourself about the ins and outs of home buying before you start looking for your first home. Don't be taken advantage of at closing, and don't go to closing unprepared.

The reason a prospective home buyer needs a home inspection is to tell the buyer what the current condition of the home is. The purchase contract the buyer and seller signed is dependent on the result of the home inspection. A buyer will generally have the option based upon the inspection to; walk away from the sale, require that repairs be made or receive a credit towards repairs or negotiate an adjustment in the purchase price.

It seems obvious that the importance of a good, thorough home inspection by an experienced home inspector is required. Unfortunately, many home buyers do not satisfactorily delve into the profession before hiring an inspector. The majority of people simply ask the price of the home inspection and accessibility of the home inspector when calling to engage an inspector. This has proved to be a very meager technique in which to choose a home inspector. When buying a car or furniture do most people simply go to the car lot or store and buy the cheapest priced quickest available product? If you use this method you will most likely end up with a product that you soon find to be inadequate and unsatisfying.

Hiring an experienced expert home inspector is no different. As mentioned, a low priced, rapidly accessible inspector often means the same thing; poor quality. So what should a home buyer be looking for in a home inspector?

Training: Has the inspector had formal training from a recognized training institution?

Experience: Years of experience are not as important as the total number of home inspections preformed. Many home inspectors are working at other jobs or are semi-retired individuals. Always ask how many inspections the inspector completes a year, less than 200 a year is a red flag. It is still very important to ask total years of experience and total number of homes inspected

Licensing: Most states require home inspector licensing while others do not. In states that do require licensing ask for the inspectors’ license number and make note of it. This includes any letter type distinctions in front or in back of the number. This will tell you if he is a licensed home inspector or a trainee.

Insurance: Does the home inspector carry Errors & Omissions and or liability insurance and have him provide proof of insurance and call the insurance company to verify. Some states require insurance while others do not. Inquire as to the state insurance requirements and be sure the inspectors has the proper type and amount.

Private mortgage insurance, often called PMI, is something you need to be familiar with when you buy a home. If you’re making a down payment that is less than twenty percent, the bank or mortgage lender will almost always require it. When you’re calculating what your monthly mortgage payment will be, it is important to figure in the cost of this insurance as well as property taxes and homeowner’s insurance.

The point is to insure the bank or mortgage lender that they will get their money if you fail to pay on your loan. Particularly, your PMI insurance helps the lender with costs in the event he forecloses on your home. The insurance must be maintained until you have build at least twenty percent equity or at least twenty percent of the loan is paid off.

The cost of PMI can be different from lender to lender. It costs approximately $55 per month for every $100,000 borrowed. When you’re shopping for a mortgage, ask pointed questions about each lenders PMI policy and rate. Otherwise you could be shocked at the time of closing when it’s added to your monthly mortgage payment.

PMI is usually calculated based on the amount of your loan divided by the value of your home. Look at it this way; if you borrow $90,000 to buy a $100,000 home, you have a 90% LTV (loan to value) ratio. The loan to value ratio needs to drop below 80% before you can terminate the insurance.

In recent years, tax law changes made the cost of private mortgage insurance tax deductible, so it is more financially beneficial, pay the insurance, and take a tax deduction. The law currently in effect is up for revision or renewal in January 2010.

Once you have paid off a minimum of twenty percent of your home’s value, you may be able to discontinue PMI some lenders require that you must pay off twenty percent of the mortgage, and some require that you must own twenty percent equity in your property, so read your contract and see how it is written.

Besides reducing the size of the mortgage balance, you also have to establish a sound payment history. Most lenders require that you have not paid your mortgage thirty days late in the past year, or sixty days late for at least two years. They can also require you to show proof that your property value has not declined. If your home value had dropped the lender may require an additional down payment.

In the past homeowners were unaware when they were eligible to suspend their PMI and sometimes continued paying it needlessly for years. Today’s laws require the lender to let you know when you reach 78% of the necessary level of equity or loan satisfaction. If there is undue delay in canceling your PMI, the lender is required repay your premiums to you, and he may be subject to other penalties.

When you take out a mortgage loan, the lender is required to inform you of the approximate date when you will become eligible to discontinue the PMI. If you have an adjustable rate mortgage, this must be calculated based on the rate in effect at the time of the loan origination., You are well advised, however to keep an eye on these things so that you know when you are eligible to discontinue it, and take the initiative to contact your Bank or Mortgage lender.