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How Do I Know If I Qualify For A Reverse Mortgage?
What states are you able to originate a reverse mortgage in?
What is the difference between a home equity line of credit and a reverse mortgage?
What happens to the liens I have against the property?
How much is due when I repay the loan?
What if I owe more than my home is worth?
Will I have an estate that I can leave to my heirs?
Are the proceeds from my reverse mortgage taxable income?
How do I know how much my home is worth?
What if my home is in a “living trust”?
I am the Power of Attorney for my mother who would like a reverse mortgage, can I handle the transaction on her behalf?
Who pays my real estate taxes and homeowner’s insurance?
How long does it take to close my reverse mortgage?
How are rates determined and how often do they adjust?
Term - Annual membership or maintenance fee.-
Term - Annual percentage rate (APR).-
Term - Application fee.-
Term - Balloon payment.-
Term - Cap.-
Term - Closing Costs.-
Term - Credit limit.-
Term - Equity.-
Term - Index.-
Term - Interest rate.-
Term - Margin.-
Term - Minimum payment.-
Term - Points.-
Term - Security interest.-
Term - Transaction fee.-
Term - Variable rate.-
To be eligible for a reverse mortgage, any interested individual(s) must be 62 years old or older. In the case that a husband is over the age limit and his wife is under the age limit (or vice versa), the older of the two homeowners would still qualify for a reverse mortgage. Another important factor in determining qualification is that you must have a low mortgage balance compared to your home’s value or own your home outright. The final requirement is that your home be your primary residence and be a single family dwelling or two-to-four unit property. Townhouses, detached homes, units in condominiums, and some manufactured home are eligible. The Federal Housing Administration (FHA) must approve all condominiums. Second homes are considered on a case-by-case basis. Qualification Review 62 years old or older Low mortgage balance* compared to home value or own home outright Occupy home as primary residence Property is a single family dwelling or two-to-four unit property
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At this time, we are able to offer reverse mortgages in Florida, Arkansas, Alabama, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Mass., Minn., New Hamshire, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tenn., Texas
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A home equity line of credit will also release equity in your home in the form of cash to be spent as you like. The main difference is that a home equity line of credit will need to be paid back monthly as do all forward mortgages. A reverse mortgage does not have to be repaid until you sell your home or no longer occupy the residence.
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Housing repair grants and other miscellaneous grants usually do not have to be paid off. Any mortgages or federal liens must be paid off prior to or at the closing of your reverse mortgage. This includes but is not limited to mortgages, a home equity line of credit, property tax liens, etc.
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The original loan amount plus accrued interest will be paid once you sell or no longer occupy the residence.
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Reverse mortgages are considered non-recourse loans meaning you cannot owe more than the value of your home. Your assets and your heirs’ assets are never taken into account when it comes to lending a reverse mortgage. Your home serves as the only collateral.
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Once you no longer occupy the residence, your estate will repay the loan balance with proceeds from the sale of the property or by refinancing the transaction. In the first case, the estate will retain any additional proceeds from the sale. If your estate decides to refinance, they will retain the home and any additional equity.
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The Internal Revenue Service considers your reverse mortgage proceeds loan advances and not taxable income.
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It never hurts to check with a local real estate agent or appraiser to give you an estimate on the value for little to no charge. To play it safe, you can check the taxable value online in many counties. The tax assessment is a good starting point, but it may not accurately reflect current market conditions. A full interior/exterior appraisal will be ordered after application to nail down a specific amount.
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Homes placed in a “living trust” will qualify for a reverse mortgage. The “living trust” documents will be reviewed by a real estate attorney for approval.
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As Power of Attorney, you will be able to be the main contact person, but the homeowner listed on the title must attend counseling and sign the application documents. The Department of Housing and Urban Development requires the homeowner to act on their own behalf unless they have a doctor’s note citing mental incompetency based on a particular reason.
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The homeowner will be responsible for paying his/her own taxes and insurance premiums. In the case the homeowner does not have an insurance policy on the house, we will help with setting one up prior to closing.
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The typical amount of time from application to closing for a reverse mortgage is 30 to 45 days.
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Rates are determined weekly based on the information found below. There are three main reverse mortgage products, each with different rate characteristics. Home Equity Conversion Mortgage (Monthly Adjustable) 1-yr. T bill + margin (1.50) No monthly/annual cap Lifetime cap = 10% above initial rate Home Equity Conversion Mortgage (Annually Adjustable) 1-yr. T bill + margin (3.10) 2% annual cap increase Lifetime cap = 5% above initial rate Fannie Mae Homekeeper Reverse Mortgage 1-month CD index + margin (3.40) No monthly/annual cap Lifetime cap = 12% above initial rate
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An annual charge for having the line of credit available. Charged regardless of whether or not the line is used.
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The cost of credit on a yearly basis expressed as a percentage.
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Fees that are paid upon application. May include charges for property appraisal and a credit report.
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A lump-sum payment that may be required when the plan ends.
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A limit on how much the variable interest rate may increase during the life of the plan.
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Fees paid at closing, including attorney fees, fees for preparing and filing a mortgage, fees for title search, taxes, and insurance.
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The maximum amount that may be borrowed under the home equity plan.
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The difference between the fair market value (appraised value) of the home and the outstanding mortgage balance.
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Published rate that serves as a base for the interest rate charged on a home equity line and also as the base for rate changes used by the lender.
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The periodic charge, expressed as a percentage, for use of credit.
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The number of percentage points the lender adds to the index rate to determine the annual percentage rate.
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The minimum amount that you must pay (usually monthly) on your account. Under some plans, the minimum payment may cover interest only; under others, it may include both principal and interest.
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One point is equal to 1 percent of the amount of the credit line. Points must usually be paid at closing and are in addition to monthly interest.
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An interest that a lender takes in the borrower’s property to ensure repayment of a debt.
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A fee charged each time you draw on your credit limit.
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An interest rate that changes periodically in relation to an index. Payments may increase or decrease accordingly.
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