| WHAT IS A REVERSE MORTGAGE? |
| Non-recourse loans that allow homeowners 62
years and older to convert home equity into cash. |
| Allows seniors to stay in their homes as
long as they wish without any mortgage payments. |
| When loan is due heirs have the option of
paying off the loan and keeping the home or selling it. |
|
| WHAT DETERMINES LOAN AMOUNT? |
| AGE: Minimum 62 based on youngest
owner. |
| Value of home: Current market
appraisal |
| Liens against property - must be paid from
proceeds of reverse mortgage. |
|
| WHAT TYPE OF PAYMENT PLANS ARE THERE? |
| Tenure: Equal monthly payments for as long
as one borrower occupies the property as primary residence. |
| Line of credit: Scheduled installments in
amounts of borrower's choosing until line is exhausted. |
| Modified tenure: Combination of line of
credit with monthly payments as long as a borrower remains in the home. |
| Lump Sum / Cash |
|
| WHAT ABOUT QUALIFYING? |
| There are no income requirements. |
| There are no credit requirements. |
| Property taxes must be current. |
| Property insurance must be provided. |
| Age of borrower |
Property
condition:
* TERMITE REPORT (May Be
Required)
* ROOF
CONDITION
* PLUMBING LEAKS |
|
| BENEFITS OF REVERSE MORTGAGES |
| Owner ALWAYS retains ownership and title of
the home. |
| Loans proceeds may be used for any
purpose. |
| Loan proceeds are not considered "Income"
and will not be taxed. Proceeds should not affect Social Security, Medicare or
Medicaid benefits. |
| Heirs can keep home once reverse mortgage
is repaid. |
| Repayment never exceeds value of home. |
|
| ALTERNATIVES TO REVERSE MORTGAGES |
| Forward mortgage: Cash out refinance-lump
sum amount. Equity line-establish line, pay only on amount used. |
| Credit qualifying: Average score O.K. |
| Sale of property - cash out, installment
sale, seller, carry-back. |
| Use SRES (Senior Real Estate Specialist) -
A trained and trusted real estate resource for the senior market. |
|
| COSTS FOR REVERSE MORTGAGES |
| Title, Recording, Appraisal, Flood Cert.,
Termite/Roof Inspections included in closing. |
| Origination Fee - One time fee usually 2%
of loan amount. Some programs have a lower fee or no fees. |
| FHA Mortgage Insurance: Required on HECM
loans. All fees deducted from loan proceeds, no upfront costs. |
|
| COUNSELING |
| Must discuss loan with a counselor approved
by HUD. |
| Family may attend. |
| No cost for counseling. |
| Usually done over the telephone. |
