Reverse Mortgage FAQs

What is a reverse mortgage?

A reverse mortgage is a loan product that allows homeowners 62 years of age and older to use their equity to generate tax-free income, without having to sell the home or take on a new mortgage payment. In fact the reverse mortgage is exactly what the title states, the reverse of a standard mortgage.

How is a reverse mortgage different from a standard mortgage?

With a standard mortgage, the borrower (or homeowner) makes monthly payments to the lender (or bank or mortgage company), in order to pay back the loan that the lender originally lent to for the purchase or refinance of the house. This payment includes interest that the lender charges the borrower for the loan. In a reverse mortgage, the situation is reversed; the lender makes monthly payments to the borrower. However, in both a standard and reverse mortgage, the lender secures their loan amount by using the house as collateral.

Do I make monthly payments on a reverse mortgage?

No monthly payments are due on the loan and the loan is repaid when the moves or sells the home, passes away, or ownership otherwise changes hands

What factors determine the amount of the reverse mortgage?

There are a few factors that determine how much money a borrower will receive from a reverse mortgage, such as the value of the home, borrower’s (and co-borrower’s) age, current interest rates and any lending limits that may be standard for your geographic area. As a rule of thumb, the older the borrower and the more valuable the home, the larger the available loan amount.

What can we use a reverse mortgage for?

The proceeds from the reverse mortgage can be used for anything, completely at the discretion of the borrower, though most borrowers use the funds for home repairs or modifications, health care expenses, to settle other debts, or for their long-planned vacation! Reverse mortgages are available for nearly all property types with the exception of co-ops, though co-op owners in some metropolitan areas, specifically New York, should have local options.

Can I receive a lump sum payment from a reverse mortgage?

Homeowners can choose how they want to receive their payments, either as a lump sum, monthly payments or as a line of credit. The line of credit is the most popular option, with nearly 60% of reverse mortgage borrowers choosing to the option to draw income or a lump sum off the line at the time of their choosing.

What happens if I decide to sell my house?

If the home is sold and the proceeds of the sale exceed the mortgage amount, the balance belongs to the borrower or their heirs.

What happens to my existing mortgage?

For reverse mortgage borrowers with an existing mortgage, that mortgage will need to be paid off completely, so that the new reverse mortgage will be the only lien on the house. If the proceeds from the reverse mortgage are not ample to pay off the existing mortgage, the borrower will need to access savings or other sources to pay off the rest of existing mortgage amount. In this scenario, the borrower won’t have access to any additional funds from the reverse mortgage; however, they will no longer have a mortgage payment!

Can I get expert advice before I get a reverse mortgage?

One very important facet of the reverse mortgage process is the consumer counseling that is required for borrowers contemplating a reverse mortgage. Your lender can help you find counseling agencies and most programs are approved and monitored by HUD and/ or A A R P. The counseling is required to make sure that the terms and risks of the program are clear to you. Counselors are obligated by law to review with you all of the implications of the new mortgage, and what your potential options are.

For more articles on Reverse Mortgage, visit: http://www.bills.com/reversemortgage

How a Reverse Mortgage Works

What’s Involved

Ever wonder how a reverse mortgage works? For folks that have lived in their home for a long time, they may very well be sitting on a gold mine. Home prices have increased greatly over the last thirty years, and nationally have nearly doubled in value over the last ten years. This has left a great many homeowners with valuable equity in their homes and many different options to access that equity, home equity loans and mortgage refinances being the most common. For older Americans, there is another, less common option that is growing in popularity as home prices have increased and baby boomers have moved closer to retirement age: the reverse mortgage. But do you know what it is, and do you know how a reverse mortgage works?

So what exactly is a reverse mortgage? A reverse mortgage is a loan product that allows homeowners 62 years of age and older to use their equity to generate tax-free income, without having to sell the home or take on a new mortgage payment. In fact the reverse mortgage is exactly what the title states, the reverse of a standard mortgage. With a standard mortgage, the borrower (or homeowner) makes monthly payments to the lender (or bank or mortgage company), in order to pay back the loan that the lender originally lent to for the purchase or refinance of the house. This payment includes interest that the lender charges the borrower for the loan. In a reverse mortgage, the situation is reversed; the lender makes monthly payments to the borrower. However, in both a standard and reverse mortgage, the lender secures their loan amount by using the house as collateral.

There are a few factors that determine how much money a borrower will receive from a reverse mortgage, such as the value of the home, borrower’s (and co-borrower’s) age, current interest rates and any lending limits that may be standard for your geographic area. As a rule of thumb, the older the borrower and the more valuable the home, the larger the available loan amount. Homeowners can choose how they want to receive their payments, either as a lump sum, monthly payments or as a line of credit. The line of credit is the most popular option, with nearly 60% of reverse mortgage borrowers choosing to the option to draw income or a lump sum off the line at the time of their choosing. And the proceeds from the reverse mortgage can be used for anything, completely at the discretion of the borrower, though most borrowers use the funds for home repairs or modifications, health care expenses, to settle other debts, or for their long-planned vacation! Reverse mortgages are available for nearly all property types with the exception of co-ops, though co-op owners in some metropolitan areas, specifically New York, should have local options. If you are in retirement, or nearing retirement, and think this may be the product for you, I will go into more detail about exactly how a reverse mortgage works.

For reverse mortgage borrowers with an existing mortgage, that mortgage will need to be paid off completely, so that the new reverse mortgage will be the only lien on the house. If the proceeds from the reverse mortgage are not ample to pay off the existing mortgage, the borrower will need to access savings or other sources to pay off the rest of existing mortgage amount. In this scenario, the borrower won’t have access to any additional funds from the reverse mortgage; however, they will no longer have a mortgage payment! The more common scenario is one in which there is a small or no mortgage on the home and then the borrower is able to access nearly the full amount of the reverse mortgage to use at their discretion. No monthly payments are due on the loan and the loan is repaid when the moves or sells the home, passes away, or ownership otherwise changes hands. If the home is sold and the proceeds of the sale exceed the mortgage amount, the balance belongs to the borrower or their heirs.

One very important facet of the reverse mortgage process is the consumer counseling that is required for borrowers contemplating a reverse mortgage. Your lender can help you find counseling agencies and most programs are approved and monitored by HUD and/ or AARP. The counseling is required to make sure that the terms and risks of the program are clear to you. Counselors are obligated by law to review with you all of the implications of the new mortgage, and what your potential options are.

Overall, for older Americans contemplating a stress-free retirement, the reverse mortgage may be just the option! Just make sure that you know your options and goals… and how a reverse mortgage works.

For more articles on Reverse Mortgage, visit: http://www.bills.com/reversemortgage

What is a Reverse Mortgage? Q & a

Q. What is a reverse mortgage?

A. A reverse mortgage is a loan that enables senior homeowners, age 62 and older, to convert part of their home equity into tax-free* income ”without having to sell their home, give up title to it, or make monthly mortgage payments. The loan only becomes due when the last borrower (s) permanently leaves the home.

Q. How is a reverse mortgage like a home equity loan? How is it different?

A. Both a reverse mortgage and a home equity loan use the equity you have built up in your home to provide you with readily available cash. They differ in that with a home equity loan you must make regular monthly payments of principal and interest. However, with a reverse mortgage you do not make any monthly mortgage payments for as long as you stay in the home.

Q. Can my current income influence my ability to get a reverse mortgage?

A. No. Since reverse mortgage borrowers need not make monthly repayments, there are no income qualifications.

Q. What are the advantages of a reverse mortgage?

A. There are many. Here are a few of the most significant: * Remain independent. A reverse mortgage allows you to remain in your home and retain home ownership. * Stay in your home. It allows you to remain in your home and retain home ownership. * No monthly mortgage payments. You need not pay back the reverse mortgage loan nor make any monthly mortgage payments until you permanently move out of the home. * Tax-free money. Because the money you receive from a reverse mortgage is not considered income, it is tax free* and will not affect your Social Security or Medicare benefits. * Freedom and flexibility. The money you get from a reverse mortgage is yours to use in any way you choose.

Q.I heard that with a reverse mortgage the lender would own my home. Is this true?

A. Totally false. The borrower retains title to the property. The reverse mortgage lender is merely extending a loan to the borrower. Because the homeowners retain title, they remain responsible for the payment of property taxes, insurance, utilities, home maintenance, and other expenses — just as they would with a standard first mortgage or home equity loan.

Q. Can I refinance a reverse mortgage, as I would be able to do with a traditional home mortgage?

A. Yes. Re financing can make sense if your home increases in value or interest rates drop.

Q. Is it possible for my loan balance to become greater than the value of my home?

A. No. You can never owe more than what your home is worth. What’s more, since the reverse mortgage is what is known as a “non-recourse” loan, the lender cannot seek repayment from your income, your other assets, or your estate. In other words, the house stands for the debt.

Q. Can a reverse mortgage lender take my home away if I outlive the loan?

A. No they cannot. And the loan is not due at that time either. In fact, you don’t need to repay the loan as long as you or another borrower continues to live in the house and keep the taxes paid and insurance in force.

Q. How do you determine the amount of cash I am eligible for?

A. The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current interest rates, the location of your home, and the appraised value of your home and FHA’s lending limits for your area. In most cases, the older you are, the more valuable your home, and the less you owe on it, the more money you can get.

Q. Are there any limits on how I use the money I receive from a reverse mortgage?

A. You can use the money for anything you choose, from daily living expenses, home improvements, health care expenses, paying off existing debts, or simply enhancing your retirement years. For many people, the money provides a “financial security blanket,” in case unexpected expenses arise.

Q. Is there a choice in how I receive the cash from my reverse mortgage?

A. Most definitely. With most reverse mortgages you have a wide range of payment options, one of which should be ideal to meet your financial needs. * You can choose to receive the money all at once, as a lump sum. * You can receive equal monthly payments as long as one of the borrowers lives and continues to occupy the property as a principal residence. * You can choose to receive equal monthly payments for a fixed period of months. * You can get a line of credit*; which allows you to take funds at times and in amounts of your choosing until the line of credit is exhausted. This is the most popular option, chosen by more than 60% of reverse mortgage borrowers. * You can opt for a combination of line of credit with monthly payments for as long as the borrower remains in the home. * Or, finally, you can choose a combination of the above. * Note: in Texas, lines of credit are not permitted by state law.

Q. Who can qualify for a reverse mortgage? A. Seniors 62 years of age or older qualify. There are no income, health or credit qualifications. Q. I still owe money on a first or second mortgage. Can I still get a reverse mortgage?

A. Yes. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. The funds you would receive in the reverse mortgage would be used to pay off whatever existing mortgages you have on the property.

Q. Can I get a reverse mortgage on a second home or resort property I own? A. Unfortunately no. Reverse mortgages may only be taken out on your primary residence.

Q. What kinds of homes are eligible for a reverse mortgage?

A. First and foremost, the reverse mortgage must be on the borrower(s) primary residence, that is, where they live most of the year. Most reverse mortgages are taken on single family, one-unit homes. Some programs also accept two-to-four unit buildings that are owner-occupied. Some programs grant reverse mortgages on condominiums and manufactured homes built after June 1976. Mobile homes and cooperatives are generally not eligible for a reverse mortgage. Click here to contact the Financial Freedom representative nearest you to determine if your home is eligible.

Q. Would a home that is in a “living trust” be eligible for a reverse mortgage?

A. Yes. In most cases a homeowner who has put his or her home in a living trust can usually take out a reverse mortgage. A review of the trust documents would be made by the reverse mortgage lender to determine if anything in the living trust would be unacceptable.

Q. When will I have to pay the principal and interests cost of this loan? A. Your reverse mortgage loan becomes due and must be paid in full when one or more of the following conditions occurs: (a) the last surviving borrower passes away or sells the home; (b) all borrowers permanently move out of the home; (c) the last surviving borrower fails to live in the home for 12 consecutive months due to physical or mental illness; (d) you fail to pay property taxes or insurance; (e) you let the property deteriorate, beyond what is considered reasonable wear and tear, and do not correct the problems.

Q. What has to be repaid when the loan becomes due?

A. When the last surviving borrower permanently moves out of the home or dies, the reverse mortgage loan becomes due. The reverse mortgage principal, interest charges, and service fees (such as closing cost fees) are paid from sale of the house or other assets of the estate.

The Reverse Mortgage is Meeting the Needs of Seniors in a Big Way

In most cases the senior is looking places to find money to off set the major loses they have felt from the banking and investment crisis. The one place that is still a safe haven in many areas is the home, even with declining values. The main reason is that most seniors purchased their homes when values were mush lower before the great appreciation era. If a seniors still has a mortgage on their home and many do have a current mortgage on their home and have to make payments every month. If a senior has a first mortgage lets say just for $100,000 at a 6% rate they are putting out over $600.00 per month or $7,200 per year. This amount if they did not have to make the payment would be added to their income that they would be able to use to live.

In many cases seniors over the years when the economy was booming many took at 30 year loans and or adjustable rate mortgage and are now faced with higher payments and they are trying to stay afloat.

If a senior is faced with this problem they should really consider a Reverse Mortgage for many reasons not to mention relief from payments. In many cases not only would they be free from mortgage payments, but they would receive additional funds to use as they see fit. Under the Reverse Mortgage program they senior controls how and what they spend the money on once they have closed.

Some things never change when doing a Reverse Mortgage and that is they still must pay the taxes and insurance on their home. If a senior is use to having an escrow of taxes and insurance they maybe able to set aside the monies with the company and have them pay it yearly for them.

One thing that all seniors should be looking at is the availability to access the money that they need from their home that they paid for over the course of their lives. In the years that you will need it the most and not have to worry about paying it back in their lifetime.

Many seniors are now thinking that if they take out a Reverse Mortgage and the bank or Mortgage Company goes out of business they will be out of luck. This is not true it is protected by the FHA mortgage insurance, that if they do go out of business then Federal Government takes over and pays them the money. The Reverse Mortgage is the safest mortgage in the entire mortgage industry. Unlike a typical mortgage where a lender has many options to force your paying of the loan, the Reverse Mortgage has the full protection of the US Government that guarantees that the senior will never have to leave their home for as long as they live. This of course is providing they pay their taxes and Insurance and continue to live in the home as their primary residence.

Now in 2009 a new program is emerging within the Reverse Mortgage and this a great option for many seniors who have one reason or another sold their home or have to move to a newer location. The Reverse Mortgage purchase program is now available to seniors over the age of 62. The program is design to allow seniors to purchase a home without any mortgage payments for life. Now just to make it very clear this does not mean that a senior can purchase with no money down. This is not the same mortgage that got this country in to the financial situation that we are in where people would by a home with zero down or less in some cases.

A senior who is looking to purchase a home will have to have money to purchase a home; it is all based on the age of the person and the appraised value of the home. Let’s say that a person age 62 wants to purchase a home that is appraised at $200,000, they would need approximately 40% down payment on the home. They would in most cases be able to finance all or part of the closing cost within the Reverse Mortgage. But let’s look at it in another way! Remember the older you are the less you will need down!

If that same person wanted to purchase a home using a conventional mortgage, they would need at least 20% down and would have to qualify with at least a 720 credit score and have the income to qualify for the mortgage payment.

So let’s look at the difference!

Conventional Reverse Mortgage

$200,000 Purchase price ………………………$200,000
$40,000 down payment ……………………….$80,000
$160,000 mortgage …………………………….$120,000
$858.00 per month payment……………………Zero per month

Now this is what it looks like on paper for a conventional mortgage verses the Reverse Mortgage the big difference is that a senior for a Reverse Mortgage purchase they will not have to qualify for the loan they already are if they are 62 or older. Also under the conventional mortgage if a senior fails to make a payment on their mortgage they will be foreclosed on just like anyone else.

For the senior who has a mortgage currently and is worried if they are going to be able to make payments on the mortgage Think Reverse Mortgage! No Income or Credit qualifying; if think this isn’t a big deal call your mortgage banker and see what it takes to get a mortgage today.

Also this is very important issue your conventional mortgage is not guaranteed that you will stay in your home for the rest of your life!

Here is what you have to do to get a Reverse Mortgage for your home!

Speak to a Reverse Mortgage Specialist who can educate you on all aspects of the program.
You will be required to have a FHA Approved counseling session and receive your certificate to hand to the mortgage company.
A Fully executed loan application must be signed and submitted.
The FHA appraisal must be completed for value and condition of property.
The title search must be completed and cleared of any and all liens and judgments
All insurances must be changed all endorsements
Closing is scheduled once all final conditions have been cleared.
Closing takes place either in the home or at a title office.
The client must wait three business days for the cancelation period which includes Saturdays.
Money is disbursed and all existing liens are paid off and any additional funds available are sent to the person who closed on the loan.

So if you are thinking of how you are going to make it through these hard times, waiting to see if the market will ever turn around you are loosing money in your home.

Remember this as the stock market, and real estate even stay where it is now you may never see the return of that money.

Forclosures Have Met Their Match… Reverse Mortgages

Foreclosure filings were reported on 2.3 million U.S. properties in 2008, an increase of 81 percent from 2007 and up 225 percent from 2006, according to the RealtyTrac U.S. Foreclosure Market Report released January 15, 2009. The soaring number of forclosures have sent ripples through the housing and banking industry with the affects being felt by millions.

According to RealtyTrac, California, Florida, Arizona posted the highest 2008 foreclosure totals. A total of 523,624 California properties received a foreclosure filing in 2008, the nation’s highest state total. Foreclosure activity in the state increased nearly 110 percent from 2007 and nearly 498 percent from 2006. With 385,309 properties receiving a foreclosure filing in 2008, Florida documented the second highest state total. Florida foreclosure activity increased 133 percent from 2007 and nearly 412 percent from 2006. Arizona’s 2008 total of 116,911 properties receiving a foreclosure filing was third highest among the states. Foreclosure activity in Arizona increased 203 percent from 2007 and 655 percent from 2006. Other states with Top 10 totals for 2008 were Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.

With mounting job losses and a weakening economy, forclosures and mortgage delinquencies are expected to continue to rise. The nation’s unemployment rate shot up at the end of the year, reaching 7.2 percent in December — its highest level since early 1993, according to a Labor Department report release January 9, 2009. That puts U.S. job losses at 2.6 million for 2008.

However, with all this doom and gloom in the housing market, there is a glimmer of hope for senior homeowners 62 years of age and older. That hope comes in the form of a HUD Home Equity Conversion Mortgage (HECM) or Reverse Mortgage. Those who have obtained a reverse mortgage need not be concerned with the increasing forclosure rates and whether or not they can make their mortgage payments. With a HECM reverse mortgage, there are no monthly payments required. 

Borrowers remain in their homes for life and never have to worry about making a mortgage payment again. All they need to do is keep the property in good repair, pay their property taxes and keep their homeowners insurance current and paid. 

For seniors who currently do not have a reverse mortgage, now may be the time to explore the option. It does not matter if a senior is currently late on their mortgage. They may still qualify for a reverse mortgage. To qualify all borrowers on title must be 62 years or older, occupy the property as their primary residence and not currently be in a bankruptcy. That’s it! 

MLS Reverse Mortgage has helped save several seniors who were months away from losing their homes. 

So, in these tough economic times, there is still hope for seniors looking for mortgage payment relief or cash out to enjoy life’s pleasures.

Learn more online: http://www.mlsreversemortgage.com

Understanding Reverse Mortgages

Seniors today often live with a great deal of financial uncertainty. The retirement they imagined may not be consistent with the reality they face.

Incomes are flat or declining, living and medical expenses are higher than ever and few income boosting alternatives exist.  Even those who have heard about Reverse Mortgages may be unsure about how they work or what questions to ask. As they search for information, they often turn to their financial institution for guidance and information. By becoming familiar with the product, you can be an even more valuable resource to your clients providing them with income supplementing alternatives to drawing down assets.  

What is a Reverse Mortgage?

A Reverse Mortgage is a special type of loan that allows a homeowner to convert a portion of the equity in their home into cash they can access. The funds are not taxable to the homeowner and typically don’t interfere with eligibility for Social Security or Medicare benefits. (However, in the federal Supplemental Security Income program, beneficiaries must keep their liquid resources under certain limits.) The customer retains title to the home as well as right to any appreciation in home value when the loan terminates after it is paid off. The loan remains in force until the last titleholder dies, permanently leaves the home or sells the property; the borrower can’t be forced to sell or move by the lender. The loan may be repaid at any time. But unlike a traditional home equity loan or second mortgage, no monthly payments are required. Instead of putting further pressure on an already stretched budget, a Reverse Mortgage can free a senior homeowner of monthly debt obligations.

Most Reverse Mortgages today are Home Equity Conversion Mortgages (HECMs) and are FHA-insured and guaranteed. Because HECMs are subject to FHA lending limits, proprietary products have also been developed to help homeowners with properties in excess of the FHA lending limits.  

Who qualifies for a Reverse Mortgage?

All titleholders must be 62 or older and own a home with some equity. There are no income or credit qualifications. Existing mortgages or liens must be paid off, but are often paid with proceeds from the Reverse. The homeowner must also remain current on insurance and property taxes, but these can also be paid with proceeds from the Reverse.

How can a borrower use the money?

The funds can be used for any purpose from making ends meet to living retirement dreams.  The top reasons for funds used given typically by borrowers are:

Paying off debts, primarily mortgage and credit cards

Home repairs and remodeling

Living expenses

Travel

Health care or long-term care

Easing the financial burden on children

Education

Hobbies

Escalating property taxes

The amount available depends on the borrower’s age, the value of the home, interest rates and local FHA lending limits. Older borrowers can receive a higher percentage of their equity than younger borrowers. Funds can be received in a lump sum, a monthly payment or a line of credit.

What are the costs?

As with most any loan product, there are origination fees and closing costs, but they can be paid from the proceeds of the Reverse Mortgage. HECM loans also have a charge for the FHA’s Mortgage Insurance Premium (MIP). There are usually no out-of-pocket costs to the borrower.

What consumer protections are in place?

Reverse Mortgages are non-recourse consumer loans – the loan payoff can never exceed the value of the home. To get a Reverse Mortgage, the customer must attend a mandatory counseling session and review their financial situation with a trained, professional Reverse Mortgage counselor. Many of the counselors are certified by the AARP. The counselor ensures that they understand the transaction, the costs and their other alternatives.

If you have questions regarding Reverse Mortgages or how they may provide life-changing benefits to your clients, contact MLS Reverse Mortgage at 1-888-888-4834 or www.mlsreversemortgage.com.

Fixed Rate Reverse Mortgage

MLS Reverse Mortgage

Myths, Pros and Cons of Hecm Reverse Mortgages

First and foremost; the bank does not, nor do they want to own your home. So why do so many people believe this? Prior to FHA getting involved in 1988, the lenders would take an equity position in their Borrowers homes.  That practice has resulted in unfavorable feelings towards today’s reverse mortgages. The Federal Housing Administration (FHA) has set the new standards and guidelines for HECM reverse mortgage loans and their involvement has produced a safe, well thought out and balanced loan for Seniors. Look below to find some of the pros and cons of reverse mortgages.

The Upsides

There are no monthly payments associated with a reverse mortgage. You will never be required to make a monthly payment while you reside in your home.
You stay on title and any equity remaining in the property is yours. The lender does not take title to your home!
You can never owe more money than your home is worth. HECM reverse mortgages are “nonrecourse” loans. This means that no matter how long you stay in your home, you will never be obligated to the lender to pay them any more than the value of the property, even if the loan exceeds the value.
A reverse mortgage will not effect Social Security or Medicare benefits.
Qualifying is easy. You must be at least 62 years of age and have value in you home. You do not not have to prove income or have good credit. The value of your home and your age determine loan amounts. It’s that simple.
The money you receive from your reverse mortgage is tax free.
The funds you receive can now be designed for your specific needs. Depending on the amount of funds you require, you can create your loan with a fixed or variable rate. You can also design your loan to provide one upfront payment of all cash, you can receive monthly payments or keep all of the funds due you in a line of credit and withdraw the funds as you need them. You can also create a combination of all three methods.
The funds from a reverse mortgage may be used anyway you want. After paying off any existing mortgages, tax liens or heath and/or safety issues regarding your home, you can use the funds for any purpose you desire. Take a vacation, you deserve it. Make repairs or upgrades to your home. Put all the cash on 7 and spin the wheel, the funds are yours.
You built the equity in your home over years of hard work, now you can let this equity work for you. You can feel the self reward and know that you are not necessarily reliant on your children or other family members to help you. There seems to be a since of pride that goes along with method.
FHA insures these loans. Given the state of this economy, you do not want to find out that the bank funding your monthly payments has gone out of business. With FHA insuring your loan proceeds, you can be comfortable knowing that your next payment will be guaranteed by the US government.
NRMLA. Lender/members of the National Reverse Mortgage Lenders Association are an elite group of individuals who are dedicated to helping American Seniors fulfill their retirement dreams. This group is available for you.  

The Downsides 

Lenders generally  charge their origination fees, FHA upfront mortgage insurance (MIP) and other closing costs that add up in a hurry. The flip-side to this, however, is that if you really need the funds from the equity in your home you could borrow the funds traditionally as long as you can afford the monthly payments or sell the property. If you sell the property, you are left without a home to live in and the 5-6% cost to sell your home is considerably higher than those fees assessed with a reverse mortgage. The longer you live in the property the lower the costs average out.
Most reverse mortgages require utilizing a variable rate. This can be overcome by using a fixed rate. Unfortunately, the fixed rate reverse mortgage requires that you draw all funds available to you and may not be the right loan for all applicants.
Your mortgage debt rises fairly quickly, but, there is no surprise that the loan increases rapidly since you do not make any payments while living in the property. The interest that would be due as in a traditional loan simply adds on and creates a new higher principle value.
Borrowers are of course responsible to keep the property properly maintained and they must stay current with their homeowners insurance and property tax.

 
All in all I believe the upside to reverse loans far outweighs the downsides. Call on a NRMLA member and do your homework. Vist us online: www.mlsreversemortgage.com