 | | | As a result of the upheaval in the mortgage industry, there has been an influx of mortgage companies and mortgage loan advisors from the
traditional mortgage business enter the reverse mortgage business. Most of these have had little or no experience with reverse mortgages or working with seniors. As a result, we feel that it is now even more important that you work with experienced professional reverse mortgage companies and loan advisors. Be certain that the originating lender is approved by FHA/HUD and is a member of the National Reverse Mortgage Lenders Association. Be certain that the individual loan officer has extensive reverse mortgage experience. Make sure that you are dealing with someone you can TRUST. | |
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Reverse Mortgage Information
Learn About Reverse MortgagesWhat is a Reverse Mortgage?
Why get a Reverse Mortgage?
How do I qualify for a Reverse Mortgage?
How much money can I receive?
What costs are involved?
How is interest charged?
How can I get the money?
Questions and Answers: What is a Reverse Mortgage?
A reverse mortgage is a special type of home loan that enables homeowners to convert a portion of their equity into cash. The equity built up over years of home mortgage payments and appreciation can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. The U.S. Department of Housing and Urban Development (HUD) reverse mortgage provides these benefits, and it is federally-insured as well. . Back to top Why get a Reverse Mortgage?
The income received through a reverse mortgage can be used for a variety of proposes and you are not restricted in how to use the funds. Examples of potential uses for funds received through a reverse mortgage include:
- Investments
- Purchase long-term care insurance
- Supplement retirement income
- Cover medical expenses and prescription drugs
- Make home repairs or improvements
- Pay property taxes
- Pay for in-home care
Back to top How do I qualify for a Reverse Mortgage?
The eligibility requirements are quite simple. There is no income, employment or credit qualifying restrictions.
- All homeowners must be age 62 or older and occupy the property as their principal residence.
- The home must be owned free and clear or having a remaining mortgage balance which can be paid off by a reverse mortgage.
- The property must be a single-family home or a two to four unit dwelling.
- Town-homes, detached homes, condominium unit, planned unit developments (PUDs) and some manufactured homes are eligible.
- The home must meet HUD minimum property standards, in some cases, home repairs can be made after the closing of a reverse mortgage.
Back to top How much money can I receive?
The maximum amount that can be borrowed is based on the following factors: - The age of the youngest homeowner.
- The appraised value of the home.
- The current interest rate.
- The county in which the property is located.
In general, the more your home is worth, the older you are, and the lower the interest rate, the more you’ll be able to borrow. Back to top What are the costs involved?
Just like a standard mortgage loan, reverse mortgage costs include appraisal, credit report, title insurance, legal fees, loan origination, and recording fees. All of these normal loan costs can be included in your loan balance. How is interest charged?
The interest rate on a reverse mortgage adjusts and is tied to readily available market indexes plus a margin. You are not charged any interest on money that have been approved but not yet withdrawn. Back to top How can I get the Money?
Customers have unique needs. Some prefer to get the entire amount upfront, while others would prefer a steady monthly payment to supplement their other income. Regardless of which distribution plan you pick, you are able to adjust your plan as often as you wish to accommodate changing needs. These are your options. - Lump Sum – Cash is immediately available
- Term – Equal monthly payments for a fixed period of months selected.
- Tenure – Equal monthly payments as long as at least one homeowner lives and continues to occupy the property as a principal residence.
- Line of Credit – A credit line which the customer can draw upon as he or she wishes.
- Combination – Any combination of the above plans.
Back to top Questions and Answers: Q1. Am I qualified for a reverse mortgage if I currently have an existing loan on my home?
A. Yes, but the existing loan must be paid off prior to or at the settlement of the reverse mortgage. Quite often the reverse mortgage is used to refinance an existing loan. Q2. My property is held in a Living Trust. Do I qualify?
A. Yes, as long as you are the primary trustee and are qualified by age. Q3. My children and I own the property in joint tenancy. Do we qualify?
A. Yes, if the children are age 62 or older and live in the property. Otherwise, they would need to be taken off title prior to settlement. Q4. Does the IRS consider the monthly advances from the reverse mortgage income?
A. No, the cash advances are actually loan distributions and are not considered income. The cash advances are tax-free. Q5. Are mobile homes eligible?
A. Yes, the home must have been built after June 1976 and have a permanent foundation that is approved by Federal Housing Administration (FHA) with a professional engineer’s stamp. Q6. My spouse is permanently in a nursing home. Can we participate in a reverse mortgage?
A. Yes, the requirement is only that one owner occupies the property as a principal residence. Q7. Are there restrictions on how I can use the money?
A. No, of course not, after all – It’s your money. Q8. Can the lender take my home away if I outlive the loan?
A. No! Nor is the loan due. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home’s value. Q9. Will I still have an estate to leave to my heirs?
A. Your heirs will be able to choose whether to keep the house or sell it. If they decide to keep the home, they must pay the balance due on the reverse mortgage. Otherwise, they may sell the home and use the proceeds to pay off the remaining mortgage. They get to keep any excess proceeds from the sale of the house. Back to top
WARNING - On-line calculators simply fail to give you real numbers!
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