Reverse Mortgage Loans

Many homeowners have found that a reverse mortgage loan is a great way to take advantage of the equity they have built in their homes.

A reverse mortgage loan is different than a traditional mortgage. With a traditional mortgage loan, you make monthly mortgage payments. Still, with a reverse mortgage loan, the lender pays you money through monthly installments, a one-time lump sum payment, a line of credit, or a combination of a line of credit and monthly installments. The money you receive depends on your age, the value of your home, and the current interest rate.

One of the significant advantages of a reverse mortgage loan is that you are not required to pay the loan back until the home is no longer your primary residence or you fail to maintain the house or fail to pay property taxes and homeowner's insurance or do not otherwise comply with the terms of the loan.

You might be eligible for a reverse mortgage loan if you’re 62 or older and own your home. Contact us to learn more about reverse mortgage loans and ways to make it work for you, or apply now and start tapping the equity in your home. Check out these pages for more information about reverse mortgage loans.

You’ve worked hard to pay the mortgage on your home. You can receive some of the equity you earned with a reverse mortgage loan. A federally insured HECM reverse mortgage loan can help unlock equity by increasing your monthly cash flow. Rest easy knowing you’re protected because with a reverse mortgage loan, you can:

• Access the equity in your home and stay there as long as you want. However, if you move, pass away, fail to pay property taxes or homeowners insurance, or otherwise fail to comply with the loan terms, you could be forced to sell your home or repay the loan.
• Receive an annuity-like cash flow for as long as you, the borrower(s), remain in the home, maintain the house, stay current with property tax and homeowner's insurance payments, and otherwise comply with the loan terms. Some borrowers elect to receive a lump-sum payment rather than the monthly payments.

Please speak with one of our professionals today and learn how to make the most of a reverse mortgage loan.

A reverse mortgage loan is designed to allow seniors to draw upon the equity in their homes. Seniors can receive the loan proceeds either by a lump sum payment, monthly installments, as a line of credit, or as a combination of a line of credit and monthly installments, thus providing cash flow even after retirement. This type of loan is called a “reverse mortgage " because the loan proceeds are paid to the homeowner.

Eventually, the money paid to the homeowner is repaid with interest. However, the loan generally does not become due until the borrower passes away, sells the home, no longer maintains the house as the primary residence, fails to pay property taxes, pays homeowners insurance, or fails to comply with the loan terms.

Getting a reverse mortgage loan is a big step and needs to be carefully evaluated. Many people have found that by taking a reverse mortgage loan, they avail themselves of the equity they have built in their home.

Typically, those who benefit most from a reverse mortgage loan plan to stay in their homes over an extended period and have built a decent amount of equity in their homes. 

Contact one of our professionals today to find out if you have enough home equity to make a reverse mortgage loan a good decision. If you have a good amount of equity in your home and plan on staying there for an extended period, then a reverse mortgage loan might be right for you.

If you own your home and are 62 or older, you might be eligible to apply for a reverse mortgage loan. The home you consider taking the reverse mortgage loan must be your primary residence. There are some conditions to what type of home may qualify.

• Typically, single-family units are accepted
• HUD-Approved Condominiums
• Most mobile homes and co-ops are generally not eligible

We can help determine if you’re eligible for a reverse mortgage loan. Call us today!

Below is the most common process for getting a reverse mortgage loan. Our professionals are eager to help you understand the reverse mortgage loan process. Please get in touch with us with any questions.

Step 1 - Research Reverse Mortgage Loans
Speak with a mortgage professional about reverse mortgage loan options. Familiarize yourself with the various types of reverse mortgage loans and pick the one that is right for you.

Step 2 - Meet with a HUD-approved counselor
To receive a reverse mortgage loan, you must meet with a HUD-approved counselor who will help you understand what it means to have a reverse mortgage loan. Independent HUD counseling typically costs $125, and we would happily provide you with a list of HUD-approved counselors in your area.

Step 3 - Fill out our Reverse Mortgage Loan application
After determining which reverse mortgage loan option best suits you, fill out our application by clicking here. Your information is securely stored and transmitted.

Step 4 - Your application is processed, and your home is appraised
While your application is being processed, a licensed appraiser will determine if your house needs repair. Any problems must be fixed before you can be approved.

Step 5 - Your loan reaches underwriting
All details have been worked out, and your loan is underwritten. Additionally, it will be determined whether you’ve been approved or not.

Step 6 - Your loan reaches closing
Once approved, your loan will enter closing, where you’ll get the chance to review the terms and sign the paperwork.

Step 7 - Receive your payments
After closing, you’ll have three business days to cancel the loan. Once that grace period is up, you’ll receive the reverse mortgage loan proceeds according to the manner that you have elected: one-time lump sum payment, monthly installments, as a line of credit, or as a combination of a line of credit and monthly installments.

Step 8 - Repaying your Reverse Mortgage Loan
Your reverse mortgage loan becomes due under the following circumstances.

• Homeowner death (unless the home continues to be the primary residence for a non-borrowing spouse)
• Sale of home
• The home is no longer the borrower or non-borrowing spouse's residence.
• Failure to maintain insurance, property taxes, or otherwise comply with loan terms.
• Any other event of default. (Failure to pay property taxes, Failure to keep the home in good repair, Failure to insure the home, Taking of new debt on the home, Bankruptcy, Abandonment or donation of the home, Eminent domain)

The very nature of a reverse mortgage loan can be confusing. With a reverse mortgage loan, lenders pay you either in monthly installments, with one lump sum, a line of credit, or as a combination of a line of credit and monthly installments. The following lists provide information regarding the repayment of a reverse mortgage loan.

A reverse mortgage loan comes due when under the following conditions:

• Death of the homeowner or last surviving eligible non-borrowing spouse
• Upon sale of the home by the homeowner
• If the homeowner lives elsewhere for 12 consecutive months (i.e., assisted living home)
• Upon an instance of default.

When the reverse mortgage loan becomes due, there are two options for paying it off.

1. Proceeds from the sale of the home
2. The homeowner or heirs of the homeowner can refinance the loan

Like all loans, a reverse mortgage loan does carry conditions to remain valid. Reasons a borrower may find themselves in default include:

• Failure to pay property taxes
• Failure to keep the home in good repair
• Failure to insure the home
• Taking of new debt on the home
• Bankruptcy
• Abandonment or donation of the home
• Eminent domain

Much like a traditional mortgage, a reverse mortgage loan does have fees associated with securing it. The following is a list explaining the standard fees you may have to pay when getting your reverse mortgage loan.

Origination Fee – The origination fee covers the lender's operating expenses for making the reverse mortgage loan. This can include things like overhead, marketing, and title searches.

A lender can charge a HECM origination fee of up to $2,500 if your home is valued at less than $125,000. If your home is valued at over $125,000, lenders can charge 2% of the first $200,000 of your home's value plus 1% of the amount over $200,000 up to a cap of $6,000.

Appraisal Fees – Before a reverse mortgage loan can be approved, an appraiser will come to your home and inspect it. The appraiser will be looking to determine the worth of your home based mostly on condition, location, and the current market situation.

If the appraiser uncovers a significant problem, you must hire a contractor to fix the problem before obtaining your reverse mortgage loan. That same appraiser will come out again and re-inspect the property.

Mortgage Insurance Premium – The mortgage insurance premium is a HECM reverse mortgage loan fee. The initial MIP will be .5 percent or 2.5 percent, depending on the amount you request to be disbursed. Additionally, you will be charged an annual MIP that equals 1.25% of the loan balance.

The mortgage insurance premium guarantees that you will continue to receive your monthly payments and will never owe more than your home is worth once the loan reaches maturity unless you pay off the loan. At the same time, you or a non-borrowing spouse still live in the house.

Closing Costs – Closing costs that are generally included in a reverse mortgage loan are:

• Credit Report
• Document Preparation
• Flood zone certification
• Termite inspection
• Attorney’s fee and title examination
• Recording fees
• Escrow/Settlement fee
• Other fees

These materials are not from HUD or FHA and were not approved by HUD or a government agency.