Archive for August, 2011

Debt to Income Ratio to Be Implemented by HUD

Posted on August 19, 2011. Filed under: Uncategorized |

The FHA is looking out for seniors who are seeking to get a Reverse Mortgage. Yes, you may not currently have a mortgage to pay every month, but if you obtain a Reverse Mortgage you may choose to set it up so you have a monthly check coming in — instead of going out. You will still, however, have monthly expenses associated with your home (insurance, taxes, utilities, upkeep, and other expenses).

In the mortgage world and with obtaining other credit, there is what is known as Debt to Income Ratio. Your DTI, Debt to Income Ratio, is a financial picture of your income vs your expenses. The definition of DTI according to HUD is a comparison or ratio of gross income compared to housing and non-housing expenses.

We’re seniors and in doing a reverse mortgage we get very excited that our house is now going to pay us. However some of us (because of emotions, basically) don’t always look at the whole financial picture which encompasses expenses vs income.

To protect potential Reverse Mortgage borrowers the FHA is going to implement what they call a “financial assessment” for seniors who are doing a Reverse Mortgage. According to an article in Reverse Mortgage Daily the FHA informed them this should be effective in about 45 to 60 days.

According to the article, Vicki Bott, Deputy Assistant Secretary for single family housing with the FHA (Federal Housing Adminisration), said, “We are focusing our efforts on the ability [of borrowers] to repay recurring costs”. Ms. Bott says the new rule is a “financial assessment” rather than a credit requirement.

“We don’t want to make [the rule] overburdening, but robust enough that lenders can evaluate seniors. It’s striking a balance between those two: efficient but effective,” she said. Bott says the rule is well on its way to being written, and the FHA hopes to have it released in the near future upon which a comment period will follow.

“The goal will be to ensure that any senior with a reverse mortgage does have the ability to pay the property charges so they will not be put in a position to default,” she said. “The focus will be on debt and income.”

The guidance is designed to establish a clear framework that protects both the homeowner and the lender who participate in HUD’s reverse mortgage program, according to the department.” (http://reversemortgagedaily.com/2011/03/02/fha-to-implement-financial-assessment-for-hecm-borrowers/

So if you are looking for a reverse mortgage, you can expect that HUD will do their best to be sure that borrowers are able to pay their taxes and insurance and maintain the lifestyle they are used to. Please call me with any questions you may have; I am always here to help. And remember, you took care of your home, now let your home take care of you!

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Advisors Mortgage Group, LLC — an A+ Better Business Bureau rated company and a Multi-State Mortgage Banker with Headquarters located in Central New Jersey with offices throughout the US. Headquarters are located at 5114 Route 33, Wall, NJ 07727. New York Mortgage Broker License: 206697. Licensed by the N.J. Department of Banking and Insurance. Licensed Lender and Secondary Mortgage Lender no. 631155. All loans arranged through third party providers (FHA License #1548300002).