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What is a Reverse Mortgage?
The Reverse Mortgage is a national program for homeowners age 62 and better, which enables you to access your home's equity without a monthly repayment.
The reverse mortgage is safe and is Government-Insured by the Federal Housing Administration (FHA), a division of the Department of Housing and Urban Development (HUD). The reverse mortgage was signed into law as a national program in 1988 and since its inception has helped thousands of homeowners safely access the equity in their homes, helping them better enjoy their retirement years.
Reverse Mortgage General Requirements:
- Minimum Age: 62 All Applicants
- Income / Credit: No income or minimum credit score is required
- Eligible Properties: 1-4 Unit properties including HUD approved Condominiums, PUD’s, and manufactured homes meeting HUD standards
- Occupancy: You must occupy your home as your primary residence, maintain home in a reasonably good condition, and continue paying property taxes and homeowners insurance.
It's Official! - Congress Extends $625,500 Loan Limit Through 2011
The continuing resolution that was passed by Congress in January and is now headed for the President's signature extends the $625,500 national loan limit for HECM through calendar year 2011. Although this is a temporary measure providing funding through 12/01/11 it will allow for a little more time for the final bill to be completed.
The Reverse Mortgage Calculator is a system designed by the Federal Housing Administration that determines a homeowner’s eligibility for a reverse mortgage HECM transaction. (request a quote)
Reverse mortgage proceeds available are based on the youngest borrower and property value. Unlike general consumer calculators found elsewhere, we regularly update and include current reverse mortgage programs and rates currently offered.
Borrowers have a choice of how they can receive their money. After the current liens on the property are paid off, you can choose a number of different ways to receive cash. You can choose to receive the funds all at once, in monthly installments, as a line of credit you can access as you choose, or a combination of any or all of the above.
Regardless of how you choose to receive your reverse mortgage funds, you never make a monthly payment for as long as you live in your home, maintain required taxes and insurance.
Interest Rates are updated every Monday afternoon following the weekly Wall Street Journal.
Fixed Rate Cash Lump Sum: For those who plan to take the full draw of their reverse mortgage funds in the beginning anyway, such as those paying off an existing mortgage or those planning to use the money immediately for other purposes, the fixed rate reverse mortgage will often give you thousands of dollars more than the adjustable reverse mortgage options. Recent improvements to the fixed rate option have greatly reduced the costs involved.
Adjustable Rate Credit Line: Unlike Home Equity Lines of Credit offered by your local bank, the line of credit reverse mortgage cannot be closed or frozen. The line also increases in availability each month based on the unused portion. Tenure Payment Plan: Sometimes referred to as an "annuity mortgage", the proceeds made available to you may be structured into monthly installments guaranteed for life.
A Reverse Mortgage is definitely not for all. It may surprise you to hear a reverse mortgage lender saying this but it is true. Borrowers looking for a short term loan may be better suited for a different type of financing as the loan requires insurance, origination and third-party fees that all must be financed making the loan impractical for a short term solution.
However, for those who wish to remain in their homes and need extra income or cash to do so, the Home Equity Conversion Mortgage may be exactly what you are looking for. Educate yourself or family on the safeguards and laws with our free Information guides. We explain what it is, how it works and provide answers to many Frequently Asked Questions and Common Misconceptions.
You may also find current information in our Blog with articles, personal advice, and industry updates.
History & Safeguards
The oldest and most popular reverse mortgage is the Federally Insured HECM which was signed into law by Ronald Reagan back in 1988. HUD guarantees you will receive your funds for the life of your loan.
With the passing of the economic stimulus of major improvements the product includes a higher nationwide lending limit of $625,500 and the use of proceeds for a home purchase.
Non-Recourse: Part of the HUD insurance guarantees that you and your children will never have to pay more than the property is worth in a bona-fide sale. If you or your heirs attempt to sell the home and an arms-length sale nets less than the amount owed, you or your heirs will not be responsible to pay that portion which the sale did not cover.
Mandatory counseling is one of the first steps which may take place by either phone or in person for a reverse mortgage. The role of the counseling agency is to review your unique financial situations during this private session and explore any alternatives that may be available such as selling your home and downsizing, available city or state grants, or other alternatives that may be available to you.
Although not a requirement of the reverse mortgage loan, counselors are now required to ask potential borrowers about income, assets, debts and monthly living expenses in order to perform a budget analysis. Once you have completed this session you will be provided a counseling certificate which you will need to sign and deliver to your lender of choice.
As a lender we must also give you a list of no less than 10 agencies, 5 of which are mandated by the FHA and include the National Council on Aging.
Only after a lender receives an application and signed counseling can we begin the processing of your reverse mortgage loan.
Purchase Reverse Mortgage: Would you like to buy a new home but really did not think you could qualify for the new mortgage based on today's underwriting guidelines? Did you think you would have to either put your plans on hold or use all your available assets to make your move? If you are 62 and over, you should consider purchasing with the HECM for purchase program.
The HECM for purchase is a federally-insured reverse mortgage which allows Americans age 62 and over to downsize, upsize, move closer to family and friends, live in homes more suitable for their needs and move to communities with activities more in line with their lifestyles...without having to purchase a home for all cash and with no monthly mortgage payment.
The HECM is a home loan that allows you to live in your home with no monthly payments and does not require you to pay the entire amount of the home in cash; giving you more liquidity for your individual use (you are responsible for taxes, insurance, upkeep and any homeowner’s dues). Let us show you how to purchase your next home with the purchase reverse mortgage.
Working with a Realtor? If you are ready to make an offer on a property and need help explaining to Realtors and sellers how the reverse purchase program works and how it will actually benefit all parties, please let us assist you. We have successfully closed dozens of Purchase HECM loans and are here to assist you with the necessary steps for approval. |
