REVERSE MORTGAGE
Reverse Mortgages have become a popular alternative for many senior homeowners needing access to the equity they have accumulated in their home after years of monthly mortgage payments. As the name implies, this type of loan can be used to reverse the owner's monthly cash flow. Rather than making monthly house payments to your lender, you can elect to have monthly disbursements made directly to your bank account. Qualifying for a reverse mortgage loan is simple. You must be 62 years of age or older and have equity in your home. Since you are the one being paid, there are no credit checks, no medical evaluations and no source of income required for obtaining a reverse mortgage. Proceeds from a reverse loan can also be paid to you in a lump sum or your reverse mortgage lender can establish a home equity line of credit (HELOC) for immediate equity access to as little or as much tax-free cash whenever it's needed.
As long as you continue to live in your home, you will retain ownership and will never need to repay the loan. Your reverse mortgage lender does not own your home. You retain title to your home and, once the property is passed to your estate, your heirs can elect to refinance the home with a traditional mortgage, sell the property and pocket the difference, or walk away allowing the reverse mortgage lender to settle the payoff. Since reverse mortgages are non-recourse loans, the amount owed will never be more than your house is worth at the time your home is sold by you or your estate. You or your spouse are required to occupy your home as your primary residence. Should both of you leave your home for twelve consecutive months, e.g. for nursing home care, the reverse equity loan must be repaid at that time through the sale of the home or the refinancing of your property.
With a traditional mortgage, or a home equity line of credit, a senior homeowner must have sufficient income versus their debt ratio to qualify for a home equity loan. When applying for a reverse mortgage, it is very different. The amount you can borrow depends upon your age, the current interest rate and the appraised value of your home. Typically, the older you are and the more equity you have in your home, the more you can borrow. To determine how much money you might be eligible to receive, try our reverse mortgage calculator. If you are a senior living in your home, contact Trinity Reverse Mortgage at 1-866-707-4664 for additional information about using a HECM to access the equity in your existing home to accommodate your needs for an independent retirement lifestyle. Call today for your "No Obligations" free quote.
Home Equity Conversion Mortgages, or HECM, are government-backed reverse mortgages that are insured by the Federal Housing Administration (FHA). By insuring the loan, HECM lenders are more attracted to aggressively marketing the reverse loan and the borrower is protected in cases where the reverse mortgage lender fails or enters bankruptcy under Chapter 11. Today, the FHA-insured HECM is the most popular type of reverse mortgage and accounts for about 90% of the reverse loans underwritten in the United States, including California, Hawaii, Puerto Rico and the District of Columbia. The closing costs for a Home Equity Conversion Mortgage are usually lower than other types of reverse mortgage loans but there are limits to how much the senior homeowner can borrow with a HECM reverse loan.
The "HECM for Purchase" Program allows senior homeowners, age 62 or older, to purchase a new primary residence using loan proceeds from a reverse mortgage or HECM. The program was designed to enable aging homeowners the opportunity to downsize to a smaller home, move to a specially equipped house or relocate to be closer to family members during their senior years. The FHA reverse mortgage provides eligible seniors a means of obtaining a reverse mortgage with a single transaction by eliminating a second closing for the purchase of a new home. The Federal Housing Administration does require seniors to use their own money or money obtained from the sale of assets as a source of funding for a FHA HECM for Purchase. The use of builder incentives, interest rate buy downs, discount points, personal gifts or other closing cost assistance is prohibited.
To meet the eligibility requirements for a FHA reverse mortgage, the government requires you to be 62 years of age or older and own your home outright, or have a low mortgage balance that can be paid off with monies received from the reverse loan. After closing, you are required to live in the home as your primary residence. You must also attend HUD-approved counseling to discuss in detail the advantages and disadvantages of reverse lending based on your particular needs to access your home equity. HECM consultations are usually provided by non-profit affiliates and must be completed prior to submitting your application for a government-insured Home Equity Conversion Loan. For the property to be financed by a FHA HECM, your home must be a single family dwelling, a one-to-four unit home condo, town home, or manufactured home ( some reverse mortgage lenders include mobile homes manufactured after 6-15-1976) that meets FHA structural standards.
If you are a senior property owner, it may be time to unlock the tax-free income in your home's equity. Reverse mortgage loans have allowed many seniors nationwide to stay in their home while enjoying financial freedom. You can tap into your assets and never have to make another monthly mortgage payment as long as you continue to live in your home. In fact, you will never be pressured to leave your property regardless of how long you live. Naturally, the longer you stay in the home, the more money you will receive. As far as your heirs go, they are still entitled to the property and the remaining equity upon your passing. Your estate will be settled and probated in a normal manner. If they decide not to live in the property, your heirs will have up to one year to sell the home, pay off the balance of the loan and distribute the money. For cases where the proceeds from selling home are not sufficient to pay off the loan, the lender absorbs the loss.
