Reverse Mortgage Appraisal Values in a Tough Economy

One of the major factors affecting Reverse Mortgages in today’s violent and insecure market is the value of appraisals. This is one of the largest hurdles to face in the Mortgage Crisis that is affecting the Economy in the United States and the world economy as well. In this article we will discuss the impact of appraisal values on Reverse Mortgages, the best way to ensure that you are making the correct decision when getting a Reverse Mortgage in these turbulent economic times, and the steps to take when evaluating what to expect from your Reverse Mortgage appraisal.

Even in a time of economic crisis, the evaluation of how to judge an appraisal value’s best effectiveness will always vary. Said another way, if appraisal values are high or low, each specific situation will dictate how to view the usefulness of high or low appraisal values. For example, a person has little to no current mortgage on her home. Getting a Reverse Mortgage now will benefit her more than when appraisal values are high, and this due to several factors. Right now, interest rates for Reverse Mortgages are the lowest in history. If you do a Reverse Mortgage today, the interest charge on your loan will be thousands of dollars less than a year or two ago. Concordantly, because appraisal values are more than likely to come in low now but down the road a few years increase, the appreciation that you will enjoy can be significant and will allow you to take more money safely out your home in the future.

So we come to how best to decide whether a Reverse Mortgage is right for you at this time and in this economic aversion to high appraisal values. To know when the time is right will depend on several factors. One, what is your current financial situation and do you need a Reverse Mortgage? A Reverse Mortgage is a federally sponsored, senior loan that is designed to allow a senior to safely extract equity from their home without having to impact investments or diminishing monthly income by adding another costly loan payment. The Reverse Mortgage is a tool to provide investment capital, pay off costly debts, or secure funds for the increased enjoyment of your retirement. So if you want to fund a future mutual fund or a life insurance policy, want to a pay off your Master Card or American Express, or if you want to finally go on a trip around the world, this may be a good time to look into a Reverse Mortgage.

Of course that is the case in any economic time but this time especially, with the economy at the point that it is now, a Reverse Mortgage can be more useful that ever in securing these things that you want or need. For one, interest rates are as low as they will ever be, and soon they will begin to go back up. However, the good thing about this is that any rising in the interest rate will be accompanied by an increase in the appreciation rate. If you choose to move forward now, while appraisal values are so low, when they go back up your home value will increase. When your home value increases, the actual cost of your Reverse Mortgage goes down. It, in effect, becomes less expensive. When looking at these factors, this could be a fantastic time to do a Reverse Mortgage. The problem that you will run into when looking at a Reverse Mortgage in this economic situation will be the amount of your current mortgage. It will still be necessary to have a mortgage balance that is around 60% of the home value. The fact is that appraisals are coming in so low; it may preclude you from being able to complete the transaction.

If you are evaluating what to expect from an appraisal in today’s turbulent market, you will have to get a handle of what kind of affect the mortgage crisis is having your area. In some of the most affected areas, appraisal values are down as much as 50% from one year ago. For these areas, with the way that mortgage were structured in the recent past (e.g. 5 year ARM loans with balloon payments), many people are finding that that home value is now lower than the amount they owe on their home! This is not uncommon. To get the best idea of what your area is doing in regards to appraisals, and to get a good idea of what your home will appraise for, you must look at recent sales. In particular, look at foreclosure sales, because they will be used in your future appraisal for your Reverse Mortgage.