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Reverse Mortgage Explained
The basic requirements of a HECM Reverse Mortgage Loan are
1) the youngest homeowner must be 62 years of age or older,
2) there is significant equity in the home (greater then 30%), and
3) the home is the primary residence of the borrower.
Ready to talk to a lender about how much you qualify for? Fill out our short Reverse Mortgage Quote
A HECM reverse mortgage is a program that allows seniors aged 62 years or older convert part of the equity in their home to tax free usable cash without having to sell the home, give up title to the house, or have to take on new monthly payments.
Seniors can receive their cash in four ways:
1) as a lump sum all at once,
2) as monthly payments guaranteed for life,
3) as line of credit that can be accessed as needed or
4) a combination of the above choices.
Money can be used however the senior wants and no monthly payments are made by the borrower for the duration of the loan. A reverse mortgage does nor affect social security or medicare benefits. The loan is not due until the borrower moves out permanently or the last surviving spouse passes away. Upon death any remaining equity in the home passes on to the seniors estate. The reverse mortgage loan is insured by the FHA and approved by the AARP.
Ready to obtain more information from a Reverse Mortgage Lender.
Reverse Mortgage Explained – Who is The Counselor
Initially, every reverse mortgage borrower is required to meet with a qualified reverse mortgage counselor. This is a requirement that the Federal Government has required to ensure that seniors are not taken advantage of and fully understand the Reverse mortgage loan. The Reverse Mortgage Counselor is there to help you make the right decisions and answer any questions you may have and provide information about the loan. Every Reverse Mortgage Lender can provide the contact information for a Reverse Mortgage Counselor to help you make the right decision for your situation. Obtain more information about a Reverse Mortgage Loan
The majority of counselors although some may tend to charge a nominal fee of sorts (usually around $100). Unless you live in an area whereby the nearest counselor charges for their services, try to avail one that is offered at no cost. You can also be assured that whatever issues that are brought up with the counselor is strictly confidential between you and him/her. Do not hesitate to be thoroughly transparent. Many times people will take their family member who they feel most comfortable with along for added comfort and support.
Originator – More of the Process Explained
The originator is the Reverse Mortgage Lender who is the person who gets your loan started. They are the ones who will determine if you qualify and have selected the best reverse mortgage option for your circumstances. They are also the ones who are at hand to help you fill out the loan application form and proceed to submit them to the underwriters and lenders. The underwriters on the other hand, are the parties that will verify your information while the lenders (as the name suggests), will be the ones who will give you the loan. You will meet the originator for a minimum of 2 times (once during the application form-filling and the other to finalize the closing process. You should be able to trust your originator. No one has the right to tell you what to do or what decisions you should make.
Talk to a Local Reverse Mortgage Lender
Appraiser of the Reverse Mortgage Explained
The next party to discuss after the originator and counselor is the appraiser. The appraiser will come to your house to inspect the home. The appraiser will also look at recent comparable sales of similar homes in the neighborhood to determine the value of the house. This part of the process is important because it is a big factor in the qualification process. You must have a significant amount of equity in your home for a reverse mortgage so a low appraisal can change the amount of equity relative to the amount of your existing loan. You will not be able to sway an appraiser’s evaluation of your home but it does help to keep it neat and tidy.
Find out how much cash you qualify to receive in a Reverse Mortgage Loan
The above are among the parties that involved in a reverse mortgage process.
The following video is both rather cute and quite helpful regarding learning what a reverse mortgage is. This forth grader actually does a great job of explaining it. I’m sure her parents are very proud.
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