1How Do I Repay a Reverse Mortgage?
The special thing about reverse mortgages is that they don’t become due until the last borrower vacates the property. This means that, should you pass away, the loan becomes due. Also, if you sell your home, you must repay the reverse mortgage. If your heirs decide to keep the home once you pass away, they can simply repay the balance of the loan and pocket any remaining equity that may be left on the home.
2Can multiple people be listed on the loan?
Yes. All owners involved with the house must meet the age requirements.
3What are the associated fees and interest rates for a reverse mortgage?
The exact fees and interest rates change with the market and valuation of the home, as well as the amount borrowed. IT is common, however, for the fees to be included into the loan, removing any out of pocket expenses for you. For a specific quote, give us a call and our experts will help you determine what your costs will be, if any.
4What is the difference between a reverse mortgage and a reverse annuity mortgage?
They are indeed the same thing, just different titles. You will see the use of the terms flipped, depending on the lender.
5What am I required to continue to pay while under a reverse mortgage?
Your obligations as a home owner will continue. This means that you will still be responsible for:
• Maintenance costs
• Property Taxes
Your ability to pay these, and any other obligations deemed necessary by the lender, will be evaluated as part of the approval process.
6What payment methods are available to me and how long is the loan for?
Most lenders offer these payment types:
• Line of credit-which allows you to draw money as you need it.
• Monthly Payments-Allows you to receive monthly checks for the duration of the loan.
• One Lump sum-gives you the total balance of the loan up front, or whichever portion you decide you need.
Some lenders will ever allow you to choose a mixture of these. As far as the length of the loan is concerned, if generally becomes due when you vacate the house, either by death or moving.
7Do I have to be under a certain income to qualify? Should it be used as a last resort?
Using a reverse mortgage as a last resort is a misconception started by those that are against this financial option. If used correctly, a reverse mortgage can greatly enhance your quality of life by removing any looming medical bills or other expenses.
NO, you don’t have to be poor to use it; you just have to have a need. Give us a call and let one of our experts help you determine if a reverse mortgage is right for you.
8What constitutes a jumbo reverse mortgage?
Most homes will fall under the FHA regulations of being valued at $625,000 or less, which is their limit; these are considered a traditional reverse mortgage. However, some lenders offer Jumbo reverse mortgages for homes valued up to $6 million. This tend to be rare and are not federally insured.
9If I increase the value of my home, does the loan terms change?
No. That would just mean that your heirs would be able to have more money if they sold your home, after they paid back the reverse mortgage. The terms of the original loan will remain the same. However, if the balance of the loan matches the new valuation, no equity would be had. This is usually done if you receive monthly payments as your form of payment instead of a lump sum.
10How can a reverse mortgage benefit me?
Besides allowing you to stay in your home, there are several other reasons a reverse mortgage may be the right option for you. These include:
• The balance of the loan will never be more than the home is worth.
• As long as your live there, no repayment is required.
• You other means of income, such as social security and retirements, will not be effected.
• You receive the money necessary to pay unexpected expenses, or to take you dream trip you’ve always wanted to take.
11What makes you the best company for reverse mortgages?
We take the time to listen to each of our customer’s stories and decided if a reverse mortgage is the right option. We then tailor the loan to meet our client’s specific requirements and needs. TO us, you aren’t just another number; you are our family. We want your experience with us to be the best financial decision you have ever made. That’s why we strive to answer all of your concerns and ensure we are on the same page before signing any papers.
Our team of experts are experienced in providing reverse mortgage loans to a diverse range of clientele. Regardless of your situation or needs, we can tailor a loan to meet your needs. Call us today and see how we are becoming the leader in reverse mortgage lending.
12Can I out live the reverse mortgage?
No, since it doesn’t become due until you vacate the property, the borrower can never out live the loan. The only way for it to become due before your death is if you move. Reverse mortgages are not transferrable.
13Will my heirs be responsible if the loan becomes more than the home’s value?
No. Since Reverse mortgages are federally insured; the balance of the loan cannot exceed the value of the home. This means that the home, or the proceeds after the sale of the home, is the only asset that can be taken to repay the loan. The lender can, in no way, come after your heir’s home or other assets they might have at the time.
14Are there requirements on how I can use the money?
The only requirement is that you pay off any traditional mortgage first. Once the mortgage is paid off, you are then able to use the funds however they are needed. Just be sure you are able to maintain the normal costs of owning a home as the lender will not cover these expenses.
15How are reverse mortgages regulated?
Reverse mortgages were started by, and are regulated by, the Federal Housing Administration (FHA). This government agency sets the guidelines and monitors each lending company to ensure their compliance. Also, the FHA insures most reverse mortgage loans, protecting both the company and the consumer. This means that, if the home loses value, or the balance of the loan becomes higher than the value of the home, the value of the home is the only amount needed to repay. The government absorbs any additional balance.
Not just any lender can offer reverse mortgages, they must be approved and accredited by the FHA. If you see a lender that operates outside of FHA guidelines, report them and don’t do business with them.
16Where can I go to get the required counseling?
Call us today and our experts can get your set up with a HUD-licensed counselor in your area. It does need to be someone who meets the HUD requirements and are licensed for the sole purpose of financial counseling.
17What if I die before I receive all of my loan?
Simply put, the balance that was given to you becomes due. If it doesn’t match the total value of the home, the difference of what you received and what wasn’t sent to you then becomes equity in the home. This increases the amount your heirs will receive.
18How do I qualify?
The basic qualifications are that you must be 62 years of age or older, own your home, and that home be your primary residence. Vacation homes and commercial properties do not qualify. You also must be able to afford the necessary upkeep of the home and any maintenance fees.
19Can I use a Mobile home for a reverse mortgage?
Generally speaking, most mobile homes do not qualify for reverse mortgages. This can be because they are not permanently on the property, have been moved, or were built before 1990. Though it’s not common, some manufactures homes are HUD-approved. It must meet these guidelines:
• Have a seal on the outside of the home that conforms to the Federal Manufactured Home Construction and Safety Standards.
• BE constructed after January 1, 1990
• Classified and taxed as real estate and be occupied as such.
• Cannot have been moved since it was put in its original place.
• Be at least 800 sq. feet.
• Must have a permanent chassis
• All wheels and axels must be removed.
• Must have the skirt on the underneath.
• Must be above the 100-year flood elevation.
• Must be a doublewide or larger
• The loan must include both the trailer and property.
20How long do I have to change my mind?
The rescission period is 3 days. This means that you have 3 days after you sign the papers to change your mind. After that, if you change your mind you simply pay back the loan and any interest that has accrued.
21What if the lender closes its doors?
Since it is federally insured, you will still receive your money and your loan terms will stay the same. Yes, the loan will still be required to be paid back upon you vacating the property. The only difference will be that the repayment will be to the party that insured the loan, usually the FHA.
Though most seniors know the basics of a reverse mortgage, there are still some facts that you may not know. For example, did you know that you can refinance a reverse mortgage, similar to a traditional mortgage. Since the interest rates fluctuate often, refinancing can allow you to save money when paying back the loan.
Also, even though the home is usually used to repay the loan, your heirs can keep the home simply by repaying the loan. It’s simple; should you pass away your heirs will have the option to either pay back the loan or sell the home. Either way, their personal assets will not be in danger.
Before deciding on a reverse mortgage, you will want to discuss it with your family so that they are informed about your decisions. Be sure you allow them ample opportunity to express any concerns they may have and answer their questions. The last they you want is for you family to be blindsided by your decision.