Pain English Explanation of What is a Reverse Mortgage. We Make it Easy To Find Right Reverse Mortgage Lender.

What is a reverse mortgage?

The Reverse Mortgage, has always been viewed as a mortgage of last resort because the more you borrow, the less your children and grand children will inherit. Reverse mortgage closing costs are higher as well due to the up front FHA mortgage insurance expense at closing which will be 2.5% of the appraised value of your home on top of the normal closing Costs.

The Reverse Mortgage is simply an FHA interest only loan that allows you to skip the monthly interest payments for the rest of your life if you wish. This is a great option for Elderly home owners on a fixed income that are struggling to make ends meet . This is also a great option to help you avoid the mental anguish of selling your sentimental belongings in order to downsize into a small apartment or worse yet an assisted care facility.

A Reverse Mortgage loan will no exceed 50-60% of the appraised value of your home. In order to qualify for a Reverse Mortgage, first and foremost, you have to live in an FHA approved property. Some condominiums are not FHA approved and will not qualify. Co-ops are also not an approved property type. For homes in urban areas, there have to be an acceptable amount of comparable sales or you will not qualify. Then there is an age restriction and you will have to have substantial equity in your property, adequate verifiable income and bankable credit.

For some who still owe a mortgage on their home, the Reverse Mortgage program offers them an option to stop making principle and interest payments, which is a great help for home owners that are struggling with their monthly budget. Other qualified home owners may have their homes paid off and they have more options.

Qualified Reverse Mortgage Borrowers who have their homes paid off can borrow 50- 60% of the value of their homes and have several different programs to choose from.

A Reverse mortgage is not a Government loan. A Reverse Mortgage is a loan program established by  FHA which requires Mortgage insurance

Getting a Reverse Mortgage is an important financial decision and it is in your best interest to do your homework and research.

A qualified home owner that is thinking about getting a Reverse Mortgage needs to compare programs, closing costs and title fees and most important, the lending contracts.

It is crucial to compare Reverse Mortgage lending contracts to see the difference in the obligation you will be required to meet after you close on your Reverse Mortgage.

Reverse Mortgage Lenders Direct helps protect you against predatory lending practices and excessive lending fee’s by helping you shop and compare interest rates and lending fees with the biggest and most reputable Reverse Mortgage lenders in the industry. Our service is free, we are here to protect and help you and your family.

To get the best Reverse Mortgage deal or more information and a free no obligation or sales pressure quote, simply fill out the contact information below along with the best time of day to be reached for competent help and answers to your questions

What a reverse mortgage is NOT?

It is very important for seniors to realize that the HECM reverse mortgage is not the perfect solution for all, and that there times when it should be avoided. Here are some instances or scenarios for which the reverse mortgage should not be taken out.

  • Shorter time period than 5 years. If you are thinking about taking out a HECM for short term needs there may be cheaper options such as a home equity line of credit. Those who want to avoid payments for the 5 years should do research on home price appreciation to make sure that the area has a decent appreciation to offset any lending costs.
  • Spouse is not listed on the title. Avoid doing a reverse mortgage when the spouse is under 62 years of age and or not on the title. The loan becomes due and payable when the borrower passes away.
  • Taking out the funds to invest into a stocks or any investment with risks. If you are comfortable in your retirement and have been approved to take out your home’s equity for any investment be very careful to not fall into any scams. Investments can go up but they can also loose all of your initial investment.
  • Homes with low value. Please note that the closing costs will be a very high % of your homes current value. Higher value homes the closing costs will be a much smaller percentage of the value and, therefore, not that significant.
  • Invest in annuities. Again avoid taking out the equity to invest but specifically into annuities as the HECM loan has a term/tenure payment that is extremely similar to an annuity program but no money has to come out of your pocket.
  • Don’t need the funds or have other cash available at a lower interest rates. Reverse loans are NOT free money. If you need some short term cash look at tapping into IRA’s, CD’s, savings before considering a reverse loan option. Take your time in making a decision and figure out how much money you need and how much it will cost you to access that cash.
  • As mentioned above not a government loan but the FHA does provide insurance to protect both lenders and consumers making this a very safe mortgage option.

Do I even qualify for an HECM mortgage?

  • At least one borrower must be 62 years of age or older.
  • You must own and live in the property as the primary residence (it’s ok to have a mortgage balance).
  • Have sufficient equity available (current value of your home subtract any debt/mortgages this is your equity).
  • Never have defaulted on government backed loans/debt.
  • Can afford to pay for home’s taxes/insurance and maintenance.Great. I Qualify but is this the right option for me?

    Reverse mortgages are not a fit all solution, they are great for seniors who need to:

    • pay off an existing mortgage loan
    • to supplement your retirement income
    • to pay for medical costs
    • for home repairs or improvements

    The proceeds from a reverse mortgage can be used as you wish there is no restriction after you receive the funds.

If you are not sure if you will qualify or would like to ask additional questions first, don’t hesitate to reach out to one of our knowledgeable agents (the call is toll free 855-999-2293).

or click on the button above to fill out our contact form

Comparison of Benefits vs. the negatives?

Advantages Disadvantages
Tax free income (never taxed)
Funds may be used for any purpose – no restrictions May impact Medicaid benefits (not Medicare)
Own and remain in your home (no need to sell in retirement to get money out of the home) Reduces equity to pass on to heirs
No monthly payments to the lender Pay homes taxes/insurance
Can never owe more than the value of your home at repayment (non-recourse loan)
Does not affect Social Security or Medicare benefits
Pays off an existing mortgage, leaving no monthly mortgage payments
No longer expensive some lenders are waiving origination fees also HECM saver reduces costs
Receive funds as a lump sum, monthly income payments for life, and/or line of credit
You can retire in the property for life (even if home values drop significantly)
No risk of foreclosure
Your equity now your equity in the future (you keep ownership and decide what to do with your equity)

With a home equity conversion mortgage loan you have flexibility as to how you receive the proceeds. There are 3 different options:

  1. Lump sum. This option you will receive a lump sum of money upfrony. This amount can be up to 50-70% of the home’s appraised value.  The interest rates are fixed on the HECM lump sum option.
  2. Lifetime monthly income. This option will allow you to receive a lifetime source of equal monthly proceeds/income. The rates are adjustable and depend on your age and the available equity in your property.
  3. Credit line. With this option, the bank/lender qualifies you for a certain amount of money. You have access to this money when you wish and will only pay interest on the portion that you have borrowed. The interest rates are adjustable.

The Answer is YES!

Can I access my equity without making a mortgage payment or selling my home?
I will be able to receive my funds in either a – lump sum, credit line, monthly income?
I wont have any restrictions or taxes on the money I borrow?
Are HECM interest rates still at all time lows? Can I retire and eliminate my current mortgage payment?
Can I use the reverse mortgage loan to pay off other debts?
Can I use the HECM loan to avoid Bankruptcy?
Will I keep ownership of the home (not the bank)?
Will I be able to leave my home to my heirs?
Is it right that my heirs/estate are not held responsible for my mortgage debts?
Is it true that I won’t run the risk of foreclosure as long as I pay for property taxes/insurance?
Will I be able to decide whether I want an adjustable or fixed interest rate?
Are there lenders who will not charge me an origination fee or a reduced fee?
Can I avoid high upfront mortgage insurance premium with the HECM Saver?
Can I sell my home or refinance at any time?
Is it true that there are no early pre-payment fees?
I will not loose access to other government benefit such as medicare eligibility – Social Security?
Can I still qualify for the HECM loan without income or good credit scores?
Can I take out more equity in the future if I have equity at that time?
That some double wide mobile homes can qualify?
I can change my mind even after signing the closing documents before 3 days are up?