Frequently Asked Questions About Reverse Mortgages

It’s a concept that goes against everything we learned about mortgages - reverse mortgages pay you to live in your home, instead of the normal mortgage that is an out of pocket expense. It’s only for seniors, and only if you have a significant amount of equity in your home. Let’s take a closer look as Carlos Scarpero explains the basics of a reverse mortgage.

Reverse mortgages are an exciting and nimble growing way for seniors 62 and older to keep their estate and tap their equity to improve cash flow. Many people have questions about reverse mortgages and here are some common questions and answers.

A reverse mortgage is a loan for seniors 62 and older to tap their equity in their home. They do not make any payments on the loan until the house is sold.

Who qualifies for a reverse mortgage?

To qualify for a reverse mortgage, you need to be at least 62 years old and own the estate free and clear or have a very diminutive mortgage balance. Unlike traditional mortgages, credit and income is not considered for reverse mortgage eligibility.

How do I get my money?

This is up to you. It’s your equity. The only needfulness is that any outstanding lien (mortgage or other obligation against the home) on the proprietorship must be paid in full at the time the reverse mortgage is done. You can take the remainder of your reverse mortgage funds as a lump sum, line of credit or monthly payments. And the best part of all is, you can take any mixture of these choices- some wherewithal as a lump sum to perhaps pay off bills, some as a line of credit to meet at hand needs, and some as a monthly amount to supplement your current income. You can even change your mind down the road- it’s your equity, it’s your choice.

What are some things that I can do with a reverse mortgage?

You can do anything you want with the proceeds as for a long time as you pay off any liens against your home. Once that is done, the funds from a reverse mortgage can be used for virtually any purpose- supplement your current income, pay off bills, home improvement, travel, the bill is virtually endless.

Why don’t I just sell my home?

Sometimes, that may be the best solution. A behalf loan officer will answer all your questions about a reverse mortgage and then let you decide. However, if you sell your home, where will you live? You also need to consider the costs associated with the sale.

When does the reverse mortgage become due?

Once the home is no longer your residence, the loan becomes due. Depending on the situation, you may decide to have children or other heirs sell the home, or if they want to keep the property, they will need to pay off the reverse mortgage either with their own funds, or by obtaining a regular or ‘forward’ mortgage. In any case, a reverse mortgage is an FHA insured ‘Non Recourse’ loan which wherewithal that you will sine die owe more than the estate is worth. Of course, any remaining proceeds consecutively the sale of the home will go to you or your heirs. This is a very safe and highly regulated financial product.

How can I find out how much legal tender I qualify for?

This depends on your age, the interest appreciate and the amount currently owed. The best way to find this out is to contact your loan officer or use the calculator on the AARP website.

As you can see, reverse mortgages are here to stay. For more intimation about reverse mortgages and to see if they are right for you, contact your loan officer.

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Carlos Scarpero is a Dayton, Ohio based reverse mortgage originator and expert. Learn more about reverse mortgages by visiting www.CarlosScarpero.com

Thanks for the insight, Carlos. We certainly enjoyed your introduction to the reverse mortgage scene.

For readers who’d like a more personalized education about reverse mortgages and other options, drop us a line and we’ll help point you in the right direction.

Thinking about a Reverse Home Mortgage? First, Consider These Important Facts…

You may have heard a lot of good or bad things about a reverse mortgage, but I’m here to tell you that is a personal and case-by-case situation that shouldn’t be thrown in to a large general answer. Here today to help us explore the options of a reverse home mortgage is Michael Branson.

Reverse Mortgage ~ Pros and Cons

Since first reverse mortgages, I’ve oftentimes been asked, ‘How do I/we know if a reverse mortgage is right for me/us?’ This is a question that has a abnormal answer for anomalous people. I always start with the same first response, ‘The first thing I would recommend is that you seek the guidance of a qualified financial advisor’. After having given that advice, I am only too happy to go through the circumstances for the individual borrowers and give them their options.

A reverse mortgage is not an inexpensive loan.

The loan fees are based on the maximum credit limit for the HUD advance area for the authority Home Equity Conversion Mortgage (HECM). The loan also has an up-front mortgage insurance fee of 2% of the maximum mortgage limit which also increases the costs. Add to these the normal costs such as appraisal, escrow, medal fees, etc., and you may see fees as high as $17,000 or slightly more in some of the higher HUD advance areas.

While the costs seem high, the insurance on this loan are more for borrower protection than any other loan the master insures. This insurance protects the borrowers in two ways. Firstly, if a lender ever goes out of business or fails to pay a borrower in a in time manner for any reason, HUD steps in and makes certain that the borrower receives a steady stream of payments. As you read about lenders going out of business, with a HUD insured loan, you on no occasion have to worry about whether or not your payments will be productive of to you.

Also, HUD will insure that the borrower will sine die owe more than the estate is quality regardless of how much stock the borrower receives over the years, how much interest accrues, or what stake values do in the future. Everyone hopes that values will collate to go up, but if the values should fall, the senior borrower and their heirs will to no degree owe more than the stake is worth.

So now that you know what the costs are, how can you decide if you should go ahead with the reverse mortgage? If you’re a senior homeowner, ask yourself the following questions:

1. Do you find yourself short of funds every month?
2. Do you wish you had stock to repair your home but don’t and can’t adopt and make payments?
3. Are there medical costs you can’t quite overlay and your insurance doesn’t spread over them either?
4. Are you making a monthly settlement that is keeping you from being able to live your life as you would like?
Do you wish you could travel, or help a loved one through their education but you just don’t have the funds in the bank to do so?

If you answered yes to any of the questions above, it may be time for you to put your equity to work for you with a reverse mortgage.

I have seen a lot of improvement that Reverse Mortgages have done for senior borrowers. I’ve seen them change lives and quick situations for the better. I’ve seen people come out of foreclosure with a reverse mortgage and to no degree have to make another mortgage payment. But is there a time when a reverse mortgage is NOT right? Honestly, yes.

There are a few examples I can deliberate of off the top of my head for which I would recommend a senior borrower not to get a reverse mortgage. Reverse mortgages are not inexpensive, if you did not intend to occupy the interest much longer, that is, you deliberation you would move soon, I would suggest against a reverse mortgage unless it was the only alternative you had to keep your home out of foreclosure in the mean time. Some conjugal couples have one borrower old enough to take advantage of a reverse mortgage but the other spouse is too young. In this instance, I see them wishing to quit claim the younger spouse off honor to obtain the reverse mortgage.

I don’t recommend this unless the older spouse is adequately insured so that if the older spouse passes, the mortgage can be paid in full. If not, the loan would be due and payable, and even if the younger spouse was now old enough to qualify for a reverse mortgage, chances are pretty service that he/she would not be eligible for a high enough loan amount to face the old balance left by the reverse mortgage from the passing older spouse that has accumulated interest. In this case, if the younger spouse did not have adequate funds from another source to pay the mortgage in full, he/she would be forced to sell the home and would be displaced.

I do not recommend a reverse mortgage to those whose incorruptibility is so bad that they know there will not be at least one borrower able to stay in the home anyway (once all borrowers on the original loan are out of the home for a month of 12 months, which includes nursing homes, the mortgage becomes due and payable).

There is no income proviso for a reverse mortgage, however, if you know that even with the alleviation you gain from a reverse mortgage you cannot afford the taxes, insurance and upkeep on your property, then I would suggest you look at other alternatives. Reverse mortgages necessitate that the borrowers still pay all the taxes, insurance and maintain the possession in reasonably improvement condition. If your accounting needs are temporary, then the costs of a reverse mortgage may not make it the best option. Finally, if you don’t really even need a reverse mortgage and someone is trying to you into one, then carry on a conversation to your trusted family members or financial advisor.

It could be that the person trying to convince you is looking out for your best interests and wants to see you more comfortable or prepared for impending events, or it could be that they have other motives and you need to really look at your circumstances and determine whether a reverse mortgage is right for you.

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Michael G. Branson (CEO All Reverse Mortgage Company)is a Mortgage Broker who has over 31 years of mortgage banking experience. Toll Free (888) 801-2762
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Thanks for showing us the ropes, Michael, we’ve all learned a lot today.

Readers, we’ve put together a special team to help people like you make these big financial decisions. By weighing the options, and focusing on what’s best for your future, we can help clear up the murky waters of home mortgages and get you on the right track. Drop us a line today to get started.