A Reverse Mortgage HECM is a product guaranteed by the government, designed for individuals aged 62 and above, allowing them to transform a portion of their home’s equity into liquid funds. HUD gives further information, “The sole reverse mortgage underwritten by the U.S. Federal Government is termed a Home Equity Conversion Mortgage, or HECM, and it’s exclusively obtainable via a lender approved by the FHA.”

Qualification for a reverse mortgage requires you to be a minimum of 62 years old and hold homeownership You must have equity in the house to pay off any outstanding balances, and your home must be occupied as your principal residence. All applicants are subject to a financial assessment to determine their financial capacity and willingness to pay obligations as part of the qualification process.

Reverse mortgages are designed for homeowners at least 62 years of age. They typically have moderate to significant equity in their homes who want to eliminate debts or receive additional cash. They can also serve in acquiring a new residence! A Financial Evaluation will be conducted to verify that the borrower satisfies the income and credit stipulations set by the FHA. There are a few reverse mortgage options to choose from, so we’ll help you find the right one for you. Give us a call for information and to learn more about the application process.

Yes. Indeed, counseling with an independent, HUD-approved third party is mandatory to shield borrowers from potentially misleading information regarding reverse mortgages.

None at all! You have the freedom to utilize the funds you obtain in any manner you choose. Of course, existing mortgages and certain other federal debts (i.e. IRS tax liens) must be paid off with the proceeds right out of the gate. Nonetheless, beyond that point, there are no restrictions imposed on the ways you can employ the proceeds.. You’re free to reserve the funds for future needs or allocate a sum towards settling credit card dues, enhancing your home, managing estate affairs, covering medical expenses, or even indulging in a vacation. Basically, anything and there are no restrictions, but we do encourage financial prudence and disclipine

You bet! This scenario is quite typical and occurs on about 50% of our transactions. Any existing mortgages will be paid off at closing. Subsequently, you’re at liberty to relish the financial liberation that accompanies the eradication of your mortgage payment.

But remember! You are still responsible for maintaining the property, paying property taxes and homeowner’s insurance. A Life Expectancy Set Aside (LESA) may or many not be created to help you with the property taxes and homeowner’s insurance. Contact us for more information.

The proceeds from a Reverse Mortgage do not affect these benefits. However, please note that it can (we said “can”, not “will”) affect Supplemental Security Income and Medicaid. If you are on Medicaid or SSI, be sure to let us know and we’ll give you further information on structuring the reverse mortgage correctly. We still recommend that you consult your financial advisor or contact these agencies directly for the most current information.

The expenses and charges linked to a reverse mortgage are determined by various factors. For example, an origination fee is paid to the broker/lender, a MIP (mortgage insurance premium) is paid to FHA on the Home Equity Conversion Mortgage (HECM), an appraisal fee, a flood certification fee, a document preparation fee, title, settlement, and escrow fees. All costs are clearly shown on the Good Faith Estimate (GFE). Monthly servicing fees could apply.

No! Non! Nein! Niet! One of the biggest misconceptions is that either the bank or the government now owns the house.
To clarify, the ownership title stays under the borrower(s)’ name. Said another way… You still own your home and your heirs will inherit the property. Over half of the individuals I first converse with possess incorrect details… but that’s not the case with you. Please tell your friends!

Remember, property taxes and homeowner’s insurance must be kept current and the property must be maintained in order to avoid early repayment of the entire loan amount. Under some rare circumstances the loan servicer or FHA may be required to foreclose and only if you fail to meet your obligations under the reverse mortgage.

No, repayment can be accomplished by refinancing the existing reverse mortgage loan. The choice is your heirs to make. If the heirs sell the property and the proceeds exceed the amount of the home, they keep the difference!
In situations where the proceeds fall short of covering the loan, the bank covers the deficit and subsequently receives reimbursement from HUD/FHA. However, if the heirs choose to keep the property, they will have to pay off the existing mortgage balance by refinancing or other available means. Read more here: What happens to your house after a Reverse Mortgage?