What is a Reverse Mortgage?
A reverse mortgage is a loan available to homeowners over 62 years of age that enables them to convert part of the equity in their home into cash.
The loan is called a reverse mortgage because the traditional mortgage payback stream is reversed. Instead of making monthly payments to a lender (as with a traditional mortgage), the lender makes payments to the borrower.
What are the Misconceptions?
All too frequently we tend to read or hear misinformation about reverse mortgages doled out, sometimes in the press, sometimes by consumer groups or politicians. When wrong information appears in the press, we also find that it is often repeated in future press articles. We attribute this to the fact that a reverse mortgage is a unique product that needs to be studied—and those who misinform often do not take the time to properly study or research it. Here are some of those misconceptions:
- Reverse mortgages are some kind of scam
- Reverse mortgages are too good to be true
- Reverse mortgages are the loan of last resort
- When you take a reverse mortgage, the bank owns your home
- Salesman insist a senior use the loan proceeds to purchase another financial product as a condition for obtaining a reverse mortgage
- Reverse mortgage lenders aggressively push seniors to take the proceeds in a lump sum so they can earn interest on a high loan balance
- Counselors are in cahoots with the Lenders and only there to make sure you take out a reverse mortgage
- Reverse mortgages are expensive
- Advertising is misleading
What qualifies you for a Reverse Mortgage?
- Age qualification: All borrowers listed on title must be 62 years old.
- Primary lien: A reverse mortgage must be the primary lien on the home. Any existing mortgage must be paid off using the proceeds from the reverse mortgage.
- Occupancy requirements: The property used as collateral for the reverse mortgage must be the primary residence. Vacation homes and investor properties do not qualify.
- Taxes and Insurance: Borrowers must remain current on their real estate taxes, homeowners insurance, and other mandatory obligations, including condominium fees.
- Property Condition: Borrowers are responsible for completing mandatory repairs and maintaining the condition of the property.Conveyance of the mortgaged property by will or operation of law to the estate or heir after mortgagor’s death: When a reverse mortgage becomes due and payable upon the death of the last surviving borrower and the property is conveyed by will or operation of law, the estate or heirs (or parties if multiple heirs) may satisfy the HECM debt by paying the lesser of the mortgage balance or 95% of the current appraised value of the property.
Get Started Today
If you feel you meet the above requirements and are interested to see if you can apply for a loan.
Give us a call (702) 696-9900. Our staff is available typical working hours and will love to get you the loan you need for the house your want.
READY TO PURCHASE YOUR DREAM HOME? CONTACT US NOW!