A Reverse Mortgage is a federally insured, private loan also known as a HECM (Home Equity Conversion Mortgage). Sometimes referred to as a "reverse loan," "reverse home mortgage," or "reverse loan mortgage," this type of loan enables homeowners 62 and older to borrow against a percentage of the equity in their home without giving up title or selling their home.
After the process begins with a reverse mortgage loan application, you will work with a licensed loan officer who is employed by a mortgage broker or lender to obtain the HECM loan. The amount you can borrow depends on your age or the co-owner's age (whichever is less), the current interest rate, other loan fees, and the appraised value of your home or FHA's lending limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, and the lower the interest rate, the more you can borrow.
After a reverse mortgage is in place there is no requirement to make any monthly payments but you are required to pay homeowners insurance, property taxes and any HOA dues. The borrower can never be forced out of their home provided they maintain the home properly and pay their property taxes and home owners insurance. The reverse loan does not become due until the borrower no longer occupies the property as their primary residence. The borrower or their heirs can never owe more than the market value of the home.
Reverse mortgages have emerged as a significant financial tool for many senior homeowners. These loans cover a wide range of needs that can be satisfied such as:
Here are the basic steps to obtain a reverse mortgage:
|Awareness:||Gather information and get educated on reverse mortgages|
|Action:||Select a Reverse Mortgage Lender to handle your loan|
|Counseling:||Get counseling from a HUD-approved counselor|
|Application:||Fill out and sign the initial reverse loan application and disclosures|
|Appraisal:||Have a FHA appraisal completed on the property|
|Submit:||Give all necessary paperwork to Underwriting|
|Review:||Reverse Mortgage Lender will review all documents and the appraisal|
|Approval:||Reverse Mortgage Lender approves loan and releases for closing|
|Escrow:||Sign final reverse mortgage loan documents and close loan|
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"Thank you for your courtesy, the way that you kept us updated weekly on the progress of our paperwork, whatever it took to finalize our loan. The service you provided was the best, bar none."
"Both the wife and I were very pleased with the service you provided for us and we would recommend you as the best."
"At this point, we are very satisfied with the work you did for us in obtaining the Reverse Mortgage. All has gone along very well for us. We would be pleased to recommend you and your services to anyone that is interested."
This information is not intended to be a substitute for legal, tax or financial advice.