What is a Reverse Mortgage?
A Reverse Mortgage is a type of mortgage designed for homeowners over 62 years of age; gives them access to home's equity in cash payments, frees up money they may use for other important costs or to make needed home repairs. Essentially, the homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves. There are two types of reverse mortgages currently being offered through FHA. HECM - (Home Equity Conversion Mortgage) The monthly adjustable HECM is the most popular type of Reverse mortgage that is FHA insured. This program uses either the treasury index or the libor index along with a margin to determine the loan rate. The monthly adjustable HECM almost always yields a lower rate which in turn gives your borrower more loan proceeds.
Fixed Rate HECM This program is for the borrower who is uneasy with adjustable rates. While usually carrying a higher interest rate than the adjustable HECM, the fixed HECM typically pays lesser proceeds but will give the borrowers the security they require.
| | | | | | | | Seniors age 62 and Older. | | | You Must Own the Home as Your Principle Place of Residence, or You May Purchase a Home as Your Principle Place of Residence. | | | You Have Equity in your home. [Usually 50% or more] | | | Will I Qualify
Homeowners who are looking to qualify for a reverse mortgage should contact one of our loan consultants to go through all the options available. | | | | | | | | You will NOT have to make a monthly mortgage payment as long as you occupy your home. The obligation to repay a reverse mortgage is deferred until you move, sell or take your last breath. It’s that simple! | | | You can remain in your home until the day you take your last breath without fear of losing your home because you can not make your mortgage payment. As long as you maintain your home, pay the property tax and fire insurance, you can never be foreclosed on. | | | A reverse mortgage is a Non-recourse loan . That means you will never owe more on your home than it is worth. If the value of your home goes down below the balance of your reverse mortgage, you and/or your heirs will never be responsible for the difference because that difference is insured by the FHA. | | | Option to refinance anytime in the future. If your home value goes up in value you can re-qualify with your new older age and higher home value and if the rates are favorable you may receive even more income or another lump sum payment. | | | Spend your time and money on the important things in life. Family, medical, travel without fear of not having enough left over to pay the mortgage. | | | Tax-Free cash in a lump sum or over your lifetime. | | | Our Reverse Mortgages are HUD approved and FHA insured. You will never have to be worried about your lender taking advantage of you. Before any reverse mortgage is funded, there is a process in place that is designed to help you make the right choice from the beginning. | | | Reverse mortgage proceeds The amount of money available to the consumer is determined by five primary factors: - The appraised value of the property, whether any health or safety repairs need to be made to the house, and whether there are any existing liens on the house.
- The interest rate, as determined by the U.S. Treasury 1 year T-Bill, the LIBOR index or 1 Year CMT.
- The age of the senior (The older the senior is, the more money he/she will receive).
- Whether the payment is taken as line of credit, lump sum, or monthly payments. Line of credit will maximize the money available, while lump sum provides the cash immediately, but the interest fees are the highest. Monthly payments are set up as a "Tenure"payment,borrowers receive them for the rest of their lives no matter how long they live.Or "Term" a predrtrmined,shorter period,if you choose.*The value of the property, and whether that value is higher than the national loan limit set by HUD.
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