General Discussion

a kennedy

(29,673 posts) Tue Mar 11, 2014, 10:47 AM Mar 2014

Elderly Collecting Social Security won't Qualify for a HELOC no matter how much Equity in their home

Government Sequestration of the Elderly's Home Equity a 100% Success. Over 98% of the Elderly Collecting Social Security won't Qualify for a HELOC no matter how much Equity is in their Home!
The U.S. government has sequestered the home equity wealth of the elderly. Anybody who makes less than 3,000 dollars a month is not eligible for virtually any type of a loan, even if that person owns a home and has an abundance of equity in the home.

The average amount of social security income for 2014 is between $1,100 to $1,500 per month.
Anybody receiving less than $2,400 dollars a month in SS (SS 2,400 x 1.25 = $3,000) WILL NOT qualify for a HELOC in most scenarios! It is safe to say that over 98% of the elderly would NOT QUALIFY for ANY type of loan, even a loan secured by their home, even if their home is paid off!
There are literally millions of elderly who could probably have a plus net revenue every month if they could pay off credit card debt with a HELOC. The reduction in interest rate charges that range from 12% to 20% from credit card debt down to a more reasonable 4% HELOC would literally tip many elderly back into the black, thus allowing them to actually pay down their HELOC over time. The elderly would eventually have more spendable cash as well.
The U.S. government has basically sequestered the elderly from being able to pay down their higher interest rate credit card debt by use of their HELOC!
The U.S. government has basically forced the elderly who own homes into reverse mortgages or nothing at all.

The biggest problem I have with reverse mortgages is the more thrifty the elderly person is taking money out of their home via a reverse mortgage, the MORE they get penalized by the mortgage insurance premium that is tacked on based on the full value of their home!

For every dollar the thrifty elderly person takes out on a reverse mortgage plan, another dollar goes for mortgage insurance! And, all mortgage insurance payments that come out of the the Home's Equity get assessed that 4% or higher HELOC interest rate charge!

Why should you care? If the elderly are locked out of their own home equity, especially if all they want to do is eliminate credit card debt, they have little or no money to spend on local commerce since it is going to the credit card companies in the form of high interest rate charges.

Do you see the government orchestrated trap? Either the elderly stay stuck with high interest rate credit card debt that continues to erode their spendable wealth, or they sign up for a reverse mortgage and have their home equity eaten up by the mortgage insurance premiums.

If you fight against elderly wealth sequestration, you are actually helping free up dollars for local commerce and that helps everyone in your local community.

Is this true?? D*mn if it is.....haven't heard a word about this.
http://debtsuspensionrights.blogspot.com/2014/02/government-sequestration-of-elderly-100.html

5 replies

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Elderly Collecting Social Security won't Qualify for a HELOC no matter how much Equity in their home (Original Post) a kennedy Mar 2014 OP

My own Mom had been in this position -- Hell Hath No Fury Mar 2014 #1

This isn't true. Over 98% of the Elderly Collecting SS won't okaawhatever Mar 2014 #2

Please, what is a HELOC? nt LiberalEsto Mar 2014 #3

It's Home Equity Line Of Credit. a kennedy Mar 2014 #4

Thank you! nt LiberalEsto Mar 2014 #5

Hell Hath No Fury

(16,327 posts)

1. My own Mom had been in this position --

Reply to a kennedy (Original post)

Tue Mar 11, 2014, 11:11 AM

Mar 2014

She is 83, has over $300k in equity her SF home and has been trying the past 3 years to access it to pay down some consumer debt she has taken on in order to survive. Her credit score is excellent, she has around $3k in combined SS, pension, and income. She has been turned down four times for both refis and home equity loans. She has NEVER ever had a problem with either in the past. We have been totally stymied on why this was happening.

okaawhatever

(9,462 posts)

2. This isn't true. Over 98% of the Elderly Collecting SS won't

Reply to a kennedy (Original post)

Tue Mar 11, 2014, 11:22 AM

Mar 2014

qualify for a HELOC. They state this is because they don't make 3k per month. This is a lie, and making 3k per month isn't a pre-requisite for a HELOC.

Here are facts:
Yet, across the country, seniors are living off a median household income of $35,107, (In qualifying for a mortgage SS income is treated as non-taxable and is "grossed up" meaning 1.25 is multiplied to the amount of SS to use as income)

http://www.huffingtonpost.com/2013/06/10/senior-citizens-income_n_3415059.html

Older Americans are better off. The median inflation-adjusted income for senior Americans has more than doubled since 1962.

Fifty years ago the median income for those 65 and over was $8,027 for singles; in 2010 it was $17,845. For couples, the ’62 median was $20,424; in 2010 it was up to $43,114.

Social Security payments, which have risen faster than inflation -
____________________

For every dollar the thrifty elderly person takes out on a reverse mortgage plan, another dollar goes for mortgage insurance!

That is just a stupid lie. I'm not going to waste time debunking it, but I think an educated person knows that mortgage insurance isn't 100% of the amount drawn. If not, a five minute google search should prove it.