What is a Reverse Mortgage?
A Reverse Mortgage is a home loan. You borrow from the equity that you have built up in your home. You do not have to make any payments on the money that you borrow as long as you live in your home and as long as you pay your property taxes and homeowners insurance. You must remember however that failure to pay your property taxes and home owners insurance could result in foreclosure.
Who is eligible?
Any homeowner who is 62 years of age or older and owns or is buying their home may apply. Your eligibility is determined by the equity you have in your home, your credit history and your income level.
How much money can I get?
The amount of money available depends on the age of the youngest borrower, your home's value and current interest rates. You can select to receive your money through monthly payments, a line of credit, a lump sum, or some combination of the options.
How do people use the money?
You can use the money any way you desire. Most people use the funds from Reverse Mortgages for home improvements, for in-home health care, to pay taxes and insurance, or to generally improve their standard of living above what Social Security provides.
When does the loan have to be paid back?
Reverse Mortgages usually do not have to be paid back until the last surviving borrower dies, sells the home, or moves out. The total amount owed at the end of the loan equals all funds loaned from the cash advances you've received, plus the accrued interest. Other circumstances that could cause the loan to become due are non-payment of taxes and homeowners insurance, not keeping the property as a principle residence, letting the property deteriorate or violating any of the requirements of the loan documents.
Are Reverse Mortgages safe?
The lenders that we use offer loans that follow FHA guidelines. They are insured by FHA. It should be noted that while this information is accurate, the information is not from HUD or FHA and were not approved by HUD or a government agency.
How do interest rates affect my loan?
The interest rates are calculated using a formula set by the federal government. The interest rate at the time of closing is the initial rate for the loan. You may choose between monthly or yearly adjustable loans, or the relativley new fixed interest rate reverse mortgage.
Are there any costs associated with Reverse Mortgages?
Many of the costs associated with a reverse mortgage can be financed into the loan itself, which means that you must only pay the counseling fee and appraisal costs to apply. You will receive a “Good Faith Estimate” with your application showing the precise costs associated with your loan.
Who has title of the home?
The homeowners retain title to the property and can sell, payoff, or prepay the Reverse Mortgage at any time without penalty. The lender does NOT have title of the home, you retain ownership.
How are you paid?
Payment may be received 3 ways:
- A single lump-sum disbursement
- Equal monthly payments for as long as both borrowers live in your house.
- A credit line that grows over time.
Your payments are determined by:
- The age of the borrower, which determines the loan-to-value.
- The market value of the home.
- If there are any liens against the property.
Are the funds you receive considered income?
No. The money you receive is in the form of a loan and is not subject to federal income tax. There are no income or asset limitations for borrowers receiving a Reverse Mortgage, nor are there any medical or insurance examinations.
How do I get started?
To get started with a Reverse Mortgage, contact Dan Clark; He can personally answer any question you may have, and help you to get started on your application today. Dan will walk you through the application process step-by-step to ensure your Reverse Mortgage is an easy option for you.