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The Nine Most Common Mistakes to Avoid When Obtaining a Home Mortgage!

You are about to make what will most likely be the largest transaction of your life: your home mortgage. Unfortunately, many homebuyers do not take the time to research some of the little but weighty intricacies of mortgages. Researching the mortgage process takes little time compared to the tens of thousands of dollars it could save you.

Doesn’t it make sense to become as completely informed as possible before you buy your next home? This special report is designed to help you avoid nine common mistakes. Remember that the right lender can help you make good, sound business decisions based on your personal financial situation.

1. Find a Reputable Lender - This is the most important choice you can make when starting the mortgage process. If you don’t trust your lender, you are in for a long and stressful home-buying experience.

2. Pricing - Don’t be lured into a mortgage company strictly by promises of low rates. Find out how long the advertised rate is guaranteed for. Make sure there is enough time to close on your loan. Some companies may make these "promises" but will try changing the rate prior to closing. They may claim that your "lock-in" rate has expired so make sure you have the expiration date in writing. In some cases, the lender may even try to delay your closing to break the "lock-in" rate. In other cases the delay may be beyond the lender’s control. Make sure to allow yourself plenty of time for closing. Delays in the process are common and everyone (builders, title companies, even yourself) is responsible.

3. Programs - You will see several programs that offer special low-interest rates. Keep in mind that they may not be the best program for your situation. Make your lender explain what programs they feel best serve your needs and more importantly, why.

4. Fixed or Adjustable Rate Mortgage (ARM) - Conventional thinking is that fixed is always better and while this is sometimes true, it is not always the case. The key here is to ask, "How long am I going to live at this property?" An ARM can actually be a better choice if you are going to be in the home for a short time. The average for how long a first time homebuyer keeps their mortgage is less than four years. In general, the longer you plan on staying in your home, the better a fixed rate mortgage will suit your needs.

5. Don’t try to bottom out the market - Deciding when to lock in to a mortgage rate can be difficult. Many people will float, trying to guess when rates have hit bottom. Unfortunately, a lot of times they will wait too long and end up with a much higher interest rate. There is nothing wrong with floating but keep a close eye on economic indicators. Your daily newspaper or even the nightly news can be an excellent source of information on the latest interest rate activity. As closing nears, it might be worth locking in.

6. Negotiate problems prior to closing – Its common for a problem to arise before closing. Waiting until closing will rarely be in your best interest. For instance, if you accept $400 at closing in lieu of the seller making a repair and after closing you find that the repair will actually cost $600, you’ve obviously made a poor decision. Whether the builder agreed to add an item and has not or the seller has made a repair that is not acceptable to you, discussing a solution prior to closing will give both parties time to analyze and determine options.

7. Be prepared for closing costs – In addition to the down payment, you will be required to pay fees and other closing costs at the time of the final transaction. Closing costs typically range from 2 percent to 6 percent but will be dependent upon your situation. Lenders must provide you with a "Good Faith Estimate." The "Good Faith Estimate" will breakdown all costs so that you may know what to expect at closing.

8. Close at the end of the month – When making a mortgage payment, you will be paying interest that has accrued from the previous month. Upon closing however, your lender will charge you prepaid interest for the date the loan is recorded through the end of that month. Therefore, one way to lower your closing costs is to close in the latter part of the month. This will lower the amount of prepaid interest that you must pay.

9. Look out for hidden fees -- Check for certain miscellaneous fees such as inspection, notary, and document preparation. These types of fees can mean hundreds of dollars in closing costs. Remember that this is your money at stake. Never should you be afraid to ask for explanations of fees you are being charged.

Avoid Mistakes That Could Cost You Thousands

Selling your home can be an exhausting experience. Last minute walk through, inconvenient calls, price adjustment and the possibility of being stuck with two mortgages are real concerns. If you are not completely prepared you could end up losing hundreds, even thousands, of dollars in profit.

The difference between a profitable smooth transaction and a break even, miserable experience is often a fine line. In the majority of cases it comes down to the subtle know how of your professional. By utilizing the knowledge of a well-trained real estate professional, you'll ensure the quick, profitable sale of your home. This report is designed to arm you with the knowledge to avoid 11 common mistakes that cost sellers serious money.

1. Refusing to Make Profit Inducing Repairs
It always costs you more money to sell 'as is' than to make repairs that will increase the value of your home. Even minor improvements will often yield as much as three to five times the repair cost at the time of sale. Your agent will be able to point out what repairs will significantly increase the value of your home. Seemingly small fix up jobs can have quite an impact.

2. Not Considering Other Financing Terms
Cash is not always the most advantageous transaction. Income level, tax benefits and current legislation are all critical factors when considering purchase terms. Real Estate Agents are experts at home transactions and can lead you down the path that will give you the highest yield.

3. Provide Easy Access for Showings
Accessibility is a major key to profitability. Appointment-only showings are the most restrictive, while a lock box is the least. However there are certain considerations to take into account: your lifestyle, time frame for the desired sale and the relationship with the person representing your interests. The more accessible your home is, the better the odds of finding a person willing to pay your asking price. You never know if the one that couldn't get a viewing was the one that got away. By developing a trusting relationship with an investor, he or she will show the home with your best interests in mind.

4. Priced Too Low/Priced Too High
One critical reason to find an experienced professional real estate person is to make sure the property is priced appropriately for a timely and profitable sale. If the property is priced too high it will sit and develop the identity of a problem property. If it's priced too low it could cost you considerable profits. The real estate market has subtle nuances and market changes that should be re-evaluated by your representative every 10-14 days to help you maximize your return.

5. Relying Solely on Traditional Methods To Sell Your Home
The real estate professional that is innovative and willing to offer new strategies of attracting homebuyers will always outperform those who rely on traditional methods. Demand around the clock advertising exposure, innovative lead generation methods and lead accountability. These services exist and should be offered on your home sale.

6. Market Timing/Seasonal Selling
Just as a broker who continually follows the trends of a stock, your real estate professional continually follows trends of your home market. They will know if the market cycle is poised to net you the most money. Avoid believing that property sales are seasonal. Property is always selling.

7. Refusing to Make Cosmetic Changes
The prospective homebuyer's first impression is the most important. Hundreds of thousands of home sales have been lost to unkempt lawns, cluttered rooms, bad stains, unpleasant odors... all the seemingly little things. Imagine you were the homebuyer and clean your place from top to bottom... military style.

8. Wasting Time With An Unqualified Prospect
Your representative's responsibility is to screen a prospect's qualifications before valuable time is lost. Be sure to align yourself with the right professional and eliminate negotiating with unqualified prospects.

9. Don't Test The Market
Never put your property on line to sell unless you are serious. The right professional will find you buyers and if you are harboring indecision... you will blow the sale.

10. Believing You are Powerless to Make a Difference
Be a part of the team! Take an active role with your real estate professional to see what you can do to facilitate your sale. Networking with professional peers and personal friends often results in the sale of a home. It's surprising how many homes are sold this way.

11. Believing All Realtors, Brokers & Others are the Same
With all the intricate details and critical decisions to be made concerning your home sale, should you rely on anyone but an experienced real estate professional? Many friends and family members have been estranged as a result of failing to meet expectations. Your home sale is a time consuming, effort related, difficult task. Maximize your profit by utilizing a experienced real estate professional.

The Basics of “Short Sales”
by William Bronchick

You will likely come across dozens of properties in foreclosure with little or no equity, that is, the seller owes at close to or more than the property is worth. In these situations, lenders are sometimes willing to accept less than the full amount due, commonly referred to a "short pay" or "short sale."

Negotiating a short sale with the lender is a difficult process, generally because it is a daunting task finding a bank officer who has the authority to accept a discount. You will have to call around to locate the lender’s “Loss Mitigation Department.” More than likely, each lender you deal with will have a separate name for this department, so be patient when calling. Much like getting your phone bill corrected, you can expect the process to involve a lot of waiting on hold and being bounced around an intricate maze of automated voice mail systems. Once you get in touch with the right person, then the negotiating begins.

From the lender’s perspective, a short sale saves many of the costs associated with the foreclosure process - attorney fee's, the eviction process, delays from borrower bankruptcy, damage to the property, costs associated with resale, etc. In a short sale scenario, the lender gets the property back faster, so it is able to cut its losses. Your job as the investor is to convince the lender that it will fare better by accepting less money now.

The lender will want some information about the property, the borrower and the deal he has made with you. Specifically, the lender wants to know what the property is worth. The lender will generally hire a local real estate broker or appraiser to evaluate the property (called a broker’s price opinion or “BPO”). You can also submit your own appraisal or comparable sales information. In addition you will want to offer as much specific negative information about the property as possible. Also, include some relevant information about the neighborhood and the local economy if things are bad (copies of newspaper articles with “bad news” may help). A contract’s bid for repair estimates should also be submitted, which, of course, should be the highest bid you can obtain!

The lender will also ask for financial information about the borrower. Sort of a backwards loan application, the borrower must prove that he is broke and unable to afford the payments. The borrower must show that he has no other source of income or assets to repay the loan. This process may involve as much, if not more paperwork than an original mortgage application! The borrower should submit a “hardship letter”, which is basically a sob story about how much financial trouble the borrower is in. This may require a little literary creativity, and some help on your part. Don’t lie, just paint a picture that doesn’t look good.

Finally, the lender generally wants to see a written contract between you and the seller. The lender wants to make sure the seller isn’t walking away with any cash from the deal. Generally, the contract must be written so that the buyer pays all costs associated with the transaction, so that the “net cash” to the seller is the exact amount of the short pay to the lender. A preliminary HUD-1 settlement statement is often requested, which can be difficult, since many title and escrow companies simple won’t prepare one in advance of closing. You can prepare your own HUD-1, and simply write “preliminary” on the top.

Don’t be surprised if your short sale bid is rejected. Lenders aren’t emotionally attached to their properties, so they aren’t as likely to give you “steal.” Many short sales fall through if the BPO comes in too high, which is often the case. You can’t pull the wool over a lender’s eyes - if the property isn’t is need of serious repair, it is unlikely you can convince the lender the property is worth a whole lot less than the appraised value.

Understanding the Mortgage Loan Market
by William Bronchick

The mortgage business is a complicated and ever-changing industry. It is important that you understand how the mortgage market works and how the lenders make their profit. In doing so, you will gain an appreciation of loan programs and why certain loans are offered by certain lenders.

INSTITUTIONAL LENDERS

The first broad category of distinction is institutional versus private. Institutional lenders include commercial banks, savings and loans, credit unions, mortgage banking companies, pension funds, and insurance companies. These lenders generally make loans based on the income and credit of the borrower, and they generally follow standard lending guidelines. Private lenders are individuals or small companies that do not have insured depositors and are generally not regulated by the federal government.

PRIMARY VERSUS SECONDARY MARKET

First, these markets should not be confused with first and second mortgages. Primary mortgage lenders deal directly with the public. They “originate” loans, that is, they lend money directly to the borrower. Often referred to as the “retail” side of the business, lenders make a profit from loan processing fees, not the interest paid on the loan.

Primary mortgage lenders generally lend money to consumers, then sell the mortgage notes (in large packages, not one at a time) to investors on the secondary mortgage market to replenish their cash reserves.

The largest buyers on the secondary market are the Federal National Mortgage Association (FNMA or “Fannie Mae”), the Government National Mortgage Association (GNMA or “Ginnie Mae”) and the Federal Home Loan Mortgage Corporation (FHLMC or “Freddie Mac”). Private financial institutions such as banks, life insurance companies, private investors, and thrift associations also buy notes.

MORTGAGE BROKERS VERSUS MORTGAGE BANKERS

Many consumers assume that “mortgage companies” are banks that lend their own money. In fact, a company that you deal with may be either a mortgage banker or a mortgage broker.

A mortgage banker is a direct lender; it lends you its own money, although it often sells the loan to the secondary market. Mortgage bankers (also known as “direct lenders”) sometimes retain servicing rights as well.

A mortgage broker is a middleman; he does the loan shopping and analysis for the borrower and puts the lender and borrower together. Many of the lenders through which the broker finds loans do not deal directly with the public (hence the expression, “wholesale lender”).

CONVENTIONAL VS. NON-CONVENTIONAL

“Conventional” financing, by definition, is not insured or guaranteed by the federal government. Conventional loans are generally broken into two categories: “conforming” and “non-conforming.” A conforming loan is one that conforms or adheres to strict Fannie Mae/Freddie Mac loan underwriting guidelines.

Conforming loans are a low risk to the lender, so they offer the lowest interest rates. Conforming loans also have the strictest underwriting guidelines.

Conforming loans have three basic requirements:

1. Borrower Must Have a Minimum of Debt: Lenders look at the ratio of your monthly debt to income. Your regular monthly expenses (including mortgage payments, property taxes, insurance) should total no more than 25 to 28% of gross monthly income (called “front end ratio”). Furthermore, your monthly expenses, plus other long-term debt payments (e.g., student loan, automobile, alimony, child support) should total no more than 36% of your gross monthly income (called “back end ratio”). These ratios can sometimes be increased if the borrower has excellent credit or puts more money down.

2. Good Credit Rating: You must be current on payments. Lenders will also require a certain minimum credit score called a “FICO” (http://www.myfico.com).

3. Funds to Close: You must have the requisite down payment (generally 20% of the purchase price, although lenders often bend this rule), proof of where it came from, and a few months of cash reserves in the bank.

NON-CONFORMING LOANS

Non-conforming loans have no set guidelines and vary widely from lender to lender. In fact, lenders often change their own non-conforming guidelines from month to month.

Non-conforming loans are also known as “sub-prime” loans, because the target customer (borrower) has credit and/or income verification that is less-than-perfect. The sub-prime loans are often rated according to the creditworthiness of the borrower – “A,” “B”, “C” and “D.”

The sub-prime loan business has grown enormously over the past ten years, particularly in the refinance business and with investor loans. Every lender has its own criteria for sub-prime loans, so it is impossible to list every loan program available on the market. Suffice it to say, the guidelines for sub-prime loans are much more lax than they are for conforming loans.

Where do You Start? Start with Your Credit!
Information for Buyers

When you look for a mortgage, lenders will review your credit report. Your credit report is a history of how you have managed your finances and repaid debt. It provides information on money you have borrowed and a history of your payments.

Your credit history is pulled together into a credit report by three private companies: Equifax, Experian and Trans Union. These companies sell your credit report to banks and other creditors so they can review mortgage and loan applications.

Your credit report includes:

• A list of debts, such as credit cards and car loans, and a history of how you have paid them.
• Any bills that have been referred to a collection agency. This can include items like phone and medical bills.
• Public record information, such as tax liens or bankruptcies, even if these have happened several years ago.
• Inquiries made about your creditworthiness. An inquiry is made when you request credit. Many times your report will also show if you were given credit based on the inquiry.

Most of the information in your credit report is deleted after 7 years (a bankruptcy is deleted after 10 years) and is continuously updated to reflect the latest information.

It's important that you look at your credit reports from each of the three companies to make sure they are correct. Your credit report may vary from one company to the other.

Your Credit Score

When you apply for a mortgage, the lender may request a credit score as well as a credit report. A credit score is a computer-generated number that indicates your ability and willingness to repay a debt based on your credit record.

Your credit score is part of the mortgage information that will decide if your application is approved. Your credit score may also be used to determine the mortgage interest rate.

Start Building Your Credit

Building good credit doesn't have to be difficult. Follow these tips and you're on your way:

• Pay Your Bills on Time. How you've paid your bills in the past can indicate how you'll pay in the future. Credit scores emphasize your most recent payment record so if you've been late, start paying on time!
• Pay at Least the Minimum Amount Required. You can always pay more, but you should never pay less.
• Keep Credit Card Balances Low. Don't "max out" your credit cards.
• Don't Apply for Too Many Loans or New Accounts. Requesting a lot of credit in a short time span may concern lenders that you won't manage your debt well.
• Establish Credit if You Have None.
• Apply for one or two credit cards. Use the cards carefully and pay them off each month.

Make a Budget and Live Within It!

A budget will help you meet your monthly bills, and therefore help your credit. It also can help increase your savings for things like a down payment on a house.

Demonstrating your ability to save and having funds on hand will help you in the mortgage approval process. Your personal savings should be sufficient to last several months should you lose your job or source of income.

Why Should You Own a Home?
Information for Buyers

Some people like the flexibility that comes with renting. When you rent, you can live in a neighborhood for as little or as long as you want. You're also free of most maintenance responsibilities – your landlord usually handles repairs.

Of course there are many other reasons owning a home can be beneficial. These are just a few....

Build Equity

In the early years of most mortgages, the majority of your monthly mortgage payments go towards interest on your loan. Over time, an increasing amount of the monthly payment goes toward reducing mortgage balance, or "principal."

As you make payments, you reduce the principal and increase your share, or "equity," in your home's value. If your home increases in value through appreciation, your equity will build even faster.

Building equity—or savings—in your home is important. For many people, it lets them plan for retirement and other future goals.

Gain Tax Advantages

You are allowed to deduct mortgage interest and property taxes from your federal income tax and from some states' income tax. These deductions can mean significant tax savings, especially in the early years of the mortgage when interest makes up most of the monthly payment.

After calculating your taxes, you may find that it's cheaper for you to buy than to rent.

Rely on Payment Stability

If you select a fixed-rate mortgage, you will pay the same monthly principal and interest payment for the term of your loan. Unlike renting, this type of payment will remain the same month after month, even when inflation leads to higher prices. However, your total monthly housing expense could vary if tax and/or insurance expenses change.

Today is Good Friday, when Christians honor the day that Jesus Christ was crucified on the cross.

It’s called “good” because, according to Christian doctrine, on this day Jesus was crucified for the redemption of our sins. The term “good” (used in English and Dutch) is probably a corruption of the term “God’s Friday.” It’s called “Holy Friday” in Latin America. Slavs and Hungarians call it “Great Friday.” In Germany, it is “Friday of Mourning.” And in Norway, it’s “Long Friday.”

But why is the stock market closed?

The New York Stock Exchange, the Nasdaq and all regional stock exchanges are closed on Good Friday because of a long-standing tradition of respect for Christian holidays. This tradition is even stronger outside the United States...

When I lived in Latin America in the 1960s, I remember cities that virtually closed down on Good Friday and prohibited driving an automobile! While it’s business as usual in retailing here in the U.S., the stock exchanges maintain a strong historical tradition of staying closed.

Here is the 2007 holiday schedule at the NYSE (you can put this email in your “keeper” folder for future reference):

January 1 New Year's Day

January 2 National Day of Mourning

January 15 Martin Luther King, Jr. Day

February 19 Washington's Birthday (observed)

April 6 Good Friday

May 28 Memorial Day

July 4 Independence Day

September 3 Labor Day

November 22 Thanksgiving Day

December 25 Christmas

Several things are notable about this list.

First, whenever a president dies, the exchanges select a day of mourning. January 2nd was chosen as the day to mourn the passing of President Gerald Ford.

Second, the stock exchanges, particularly the NYSE on Wall Street and the London Stock Exchange in England, close on Christian holidays – today and Christmas.

Third, Wall Streeters are very traditional. They have refused to change Washington’s Birthday observance to President’s Day. Until 1953, they observed Lincoln’s birthday (February 12), Columbus Day (October 12), Veterans Day (November 11), and often Election Day (the first Tuesday of November).

Although the NYSE closed on the funeral day of Martin Luther King Jr. in 1968 – the first time they did so in honor of a private citizen – the Exchange resisted adding Martin Luther King Day until 1998, years after it was declared a national holiday. (The Exchange did close to honor the death of J. P. Morgan in 1913, but only for two hours.)

What Could Close the Markets Unexpectedly?

Since 1953, the exchanges have attempted to reduce the number of official closing days, knowing that investors want the markets open as long as possible.

There is growing pressure, with the Internet and computerized trading, that markets can be open 24/7. Personally, I like a break from the gyrations of the stock market, and I fear the day when I will be in church one Sunday morning meditating when suddenly my cell phone rings telling me that the stock market has crashed.

I recently reviewed all the reasons the New York Stock Exchange closed since 1885. I was surprised by the number of unexpected closings, such as:

· Computer failures

· Circuit breakers (the NYSE is required to stop trading when the market declines by a certain percentage)

· Power failures, especially in the 1970s

· Hurricanes

· War (the exchange was closed for 5 months in 1914 at the beginning of World War I, but was never closed for World War II).

· Terrorist attacks (September 11-14, 2001)

The biggest concern is that when the markets are closed, you can’t get at your money. Your account is frozen, and there’s nothing you can do about it. And when the markets reopen, the value of your accounts may drop sharply.

What to do? Always keep a month’s worth of spending cash (banknotes) stored safely at home and/or a safe deposit box. Buy some gold and silver coins (pre-1965 silver dimes, quarters, halves and dollars, known as “junk” silver). They will maintain their value, and may even increase in value, during a financial crisis.

Tax-free income hard to beat

Are you or someone you know a senior citizen homeowner who is "house rich" but "cash poor?" If so, a reverse mortgage can solve the problem if the homeowner is at least 62, needs tax-free income with no monthly payments, and plans to stay in his or her house or condo at least five years.

WHAT IS A REVERSE MORTGAGE? Just the opposite of an amortized mortgage, which requires the borrower to make monthly payments over 15 to 30 years, a reverse mortgage pays money to the borrower whenever needed and requires no repayment until the homeowner sells the home, moves out for longer than 12 months or dies.

When one of those events occurs, the reverse-mortgage principal and accrued interest "matures" and becomes payable in full. If the homeowner dies, the heirs can sell the home, pay off the reverse mortgage and keep the remaining equity. Or, if the heirs want to retain the residence, they can obtain a new mortgage to pay off the reverse mortgage.

Contrary to widespread myth, the reverse-mortgage lender does not "own" the home. The lender can never force the senior citizen homeowner to sell or move out. The reason is reverse mortgages are "non-recourse" without any personal liability. Only the residence is responsible for eventual repayment, even if it loses market value or the borrower lives to be 110.

To qualify for a reverse mortgage, the homeowner must be at least 62. If any co-owner is younger than 62, the residence is not eligible unless the under-62 co-owner signs a quitclaim deed conveying his/her interest to the over-62 co-owner. When there are two co-owners, both aged 62 or older, reverse-mortgage eligibility is based on the age of the youngest co-owner.

Advanced age is an advantage when obtaining a reverse mortgage. The reason is the borrower's life expectancy determines the amount the homeowner can receive. For example, due to a shorter life expectancy, an 80-year-old homeowner will qualify for larger reverse-mortgage payments than will a 62-year-young "whippersnapper."

THREE TYPES OF REVERSE-MORTGAGE PAYMENTS. Reverse-mortgage borrowers have a choice of how to receive their money. The alternatives are (1) lifetime monthly income (called "tenure"); (2) a lump sum for any purpose (such as a new roof or a trip around the world); and/or (3) a credit line for future borrowing (except in Texas). Most reverse-mortgage borrowers select the credit line.

Or, the senior citizen homeowner can select any combination of these choices, such as one-half monthly payments, one-fourth lump sum and one-fourth credit line. Borrowers can change their choice at any time by notifying the loan servicer.

A REVERSE MORTGAGE MUST BE A FIRST MORTGAGE. Because a reverse mortgage has a growing balance, due to principal advances and accrued interest, it must be recorded as a first mortgage.

If the home has an existing first mortgage, it can be paid off with a reverse-mortgage lump sum. As a very general rule, if the existing first mortgage plus any other liens such as a home equity loan or an IRS tax lien exceed 40 percent of the home's market value, the residence usually will not be eligible for a reverse mortgage.

Many senior citizen homeowners obtain reverse mortgages to pay off their existing mortgage balances. The happy result is they get rid of their monthly mortgage payments, thus increasing their monthly cash flow, since a reverse mortgage requires no monthly payments.

FOUR REVERSE-MORTGAGE ELIGIBILITY CRITERIA. The three major nationwide reverse-mortgage lenders are very different, but they all use the same eligibility criteria to determine how much cash the senior homeowner can obtain.

The criteria are: (a) the adjustable interest rate at the time the reverse mortgage is originated (all reverse mortgages use adjustable interest rates); (b) the age of the youngest homeowner (minimum age is 62); (c) the lender's appraised market value of the home; and (d) the lender's maximum mortgage limit.

The borrower's income and credit rating don't matter, but the homeowner must not be currently involved in a bankruptcy, and the residence must meet minimum standards.

THE THREE MAJOR NATIONWIDE REVERSE-MORTGAGE LENDERS. Each of the three major nationwide reverse-mortgage lenders offers very different programs.

The most popular, with approximately 90 percent of the market, is the FHA plan. However, the major FHA drawback is the low lending limits, which vary by county. Borrowers owning homes in expensive communities are often disappointed with FHA.

Higher lending limits, currently up to $417,000, are offered by the Fannie Mae "Home Keeper" reverse mortgage. But the cash available is often less than the FHA program.

However, Fannie Mae is the only lender offering a "reverse mortgage for home purchase" where the senior citizen home buyer won't have any monthly payments.

Financial Freedom Plan (FFP) offers reverse mortgages with no maximum limit for their "jumbo cash account." The result is owners of homes worth more than $500,000 can usually obtain the largest amount with an FFP reverse mortgage.

HOW TO DETERMINE HOW MUCH CASH YOU CAN OBTAIN. Because there are three major variables to consider -- the homeowner's age, the home's fair market value, and the reverse-mortgage lender's maximum lending limit -- computing the available cash from each of the three major programs requires a computer.

The best Web site to estimate this amount is www.FinancialFreedom.com. Enter your ZIP code, birth date, approximate market value of your home, and total of any existing mortgages and/or other liens, such as a home equity loan. The calculator will then compare all three reverse-mortgage programs, and provide the maximum amount available from each, including "growth rates" for the FHA and FFP plans.

WHERE TO FIND LOCAL REVERSE-MORTGAGE REPRESENTATIVES. Most traditional mortgage lenders do not offer reverse mortgages because of the specialized knowledge required. Before a senior citizen homeowner can obtain one, all three major lenders require independent counseling so the borrower understands the reverse mortgage pros and cons.

The largest reverse-mortgage originators are Financial Freedom Plan (which offers all three major reverse-mortgage programs), Wells Fargo Mortgage, Seattle Mortgage and GMAC Mortgage.

The Web site of the National Reverse Mortgage Lenders Association (NRMLA), at www.ReverseMortgage.org, has lots of great information that answers typical reverse-mortgage questions. However, the NRMLA calculator is incomplete because it compares only the FHA and Fannie Mae programs. It does not include the more generous FFP program, although FFP is a member of NRMLA and subscribes to its code of ethics.

The NRMLA Web site includes state-by-state lists of local reverse-mortgage originators who subscribe to the NRMLA code of ethics. But a major list disadvantage is that only names and phone numbers, plus lender Web sites, are included so prospective borrowers don't know if the representative is nearby or across the state.

REVERSE-MORTGAGE DISADVANTAGES. Reverse-mortgage tax-free cash sounds wonderful to senior citizen homeowners who have large home equities but not enough income. However, the reality is the homeowner will be borrowing on that equity.

Prospective heirs often discourage obtaining a reverse mortgage because the homeowner will be "spending" the heir's home-equity inheritance. However, many potential heirs encourage their senior citizen parents to obtain a reverse mortgage so they can fully enjoy their "golden years" with financial comfort.

Some reverse-mortgage borrowers object to the substantial upfront loan fees. FHA and Fannie Mae "cap" these fees at about 2 percent of the amount borrowed, plus third-party charges for appraisal fees and lender's title insurance. Because of these fees, which are quite reasonable when amortized over five or more years, it usually doesn't pay to obtain a reverse mortgage if the homeowner plans to stay less than five years.

Reverse mortgages have no effect on Social Security or Medicare payments. However, senior homeowners receiving SSI (Supplemental Security Income), Medicaid (Medi-Cal in California) or other welfare payments should know those benefits can be reduced if the recipient does not spend their entire reverse-mortgage income each month.

More information is available in my new special report, "Everything You Need to Know About Reverse Mortgage Pros and Cons for Senior Citizen Homeowners," available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.