Reverse mortgages - HandyLoan.com

What is a Reverse Mortgage

Our federal government created the Home Equity Conversion Mortgage, or HECM Reverse Mortgage, to help homeowners 62 and older access their home equity as a means to supplement their retirement income and gain greater financial independence.

A reverse mortgage is a loan against your home that you do not have to pay back for as long as you live in the home. It can help turn the appraised market value of your home into cash without having to make monthly mortgage payments; and can help you better manage your financial future.

Rather than making a monthly mortgage payment, you actually receive funds from the lender based on the loan terms that you select. Perhaps best of all, a reverse mortgage allows you to still own your home throughout the entire term of the loan.

Reverse Mortgages are loans for Senior Homeowners age 62 years and above with sufficient equity
All borrowers on title must be 62 or above
There is No Income Qualification
There are No Monthly Mortgage Payments
There is No Prepayment Penalty
There are Minimal Credit Verification Requirements
There are No Title Seasoning Requirements
Borrower must be on property title, and property must be borrower's primary residence
Repayment only at maturity event: death, property sale, relocation, or failure to perform any obligation of the security instrument
A Reverse Mortgage is Non-recourse: You cannot owe more than the home's appraised value at the time of repayment

Key Features and Benefits of a HECM Reverse Mortgage:
There are numerous features and benefits to getting a reverse mortgage
... but what do they mean to you? See below.

No more monthly home loan re-payments of any kind What this means to you:
For as long as one owner occupies the home as their primary residence, they will never have to make any mortgage payments again.

All other mortgages and/or liens are paid in full at closing What this means to you:
No longer having any monthly mortgage or home equity loan payments to make will not only will increase your monthly cash flow, but it also means there is no future risk of foreclosure for failure to make those monthly mortgage payments.

All cash advances from your reverse mortgage are TAX FREE What this means to you:
The Freedomn Bar Association guide states that generally, "the IRS does not consider loan advances to be income", and a reverse mortgage is a loan against the primary residence. However, you should consult a tax advisor for more information about your specific situation.

Credit Line Growth is approximately 0.5% per year over the current interest rate What this means to you:
HECM borrowers may elect to access some or all of their tax-free money via a credit line. As the home appreciates, so does the credit line. Credit line growth allows the borrowers to get more cash from their reverse mortgage as the value of the home appreciates-until it is used up. As a result, there may be a large increase in the available credit line over time.

There are numerous Cash Advance Options, and YOU decide how you will receive the loan proceeds What this means to you:
You may choose from four options including a line of credit, monthly cash advances, a lump sum, or a combination of the above payment methods.

Loan balances do not have to be re-paid until the last owner moves, sells, or passes What this means to you:
Repayment is only required after any of the folllowing the maturity events: death, property sale, relocation, or if there is a failure of the owners to pay property taxes or hazard insurance, properly maintain the property, or violate any of the loan terms.

By law, a HECM Reverse Mortgage is "non recourse" What this means to you:
The lender is paid only from the sales proceeds, and the lender can only look to the home value and selling price to pay off the loan. The lender may not seek repayment from any other assets of the borrower's their estate or heirs even if the sales proceeds do not pay off the loan in full.

Counseling with a HUD approved Counselor is required What this means to you:
Before applying for a HECM reverse mortgage, all homeowners listed on the Title must complete a 30-45 minute telephone interview with a HUD approved counselor. This consumer protection allows you to ask questions, confirm the features and benefits, and help homeowners determine if a reverse mortgage is right for their specific situation.

What Can The Money Be Used For?

With a reverse mortgage, you have the freedom and flexibility to use the money from your home in any manner you see fit ... there are no restrictions on how you may use the funds you receive from your reverse mortgage.

Experience indicates that people use the funds for a variety of reasons including:

Healthcare and prescription drug costs
Home remodeling or repair
Supplemental income for everyday living expenses
Assisting grandchildren with education expenses
Estate and financial planning
Long-term care insurance
Buying a new car or taking a vacation
... or anything else you decide you want to use it for!

You also have flexibility in HOW you receive your reverse mortgage money.

As a growing line of credit that the homeowners decide when and how much to use
A regular monthly cash advance for a fixed term or for life of the owners
A single lump sum of cash for the full eligible amount
As a combination of the above payment methods

Common Misconceptions

Many misconceptions exist about reverse mortgages. Below are some of the more common of these misconceptions, followed by the appropriate facts.

Misconception: If I get a reverse mortage, the lender owns my house.	Fact: The homeowner retains ownership. The loan is secured by a deed of trust or a mortgage just like a regular "forward" mortgage, however the homeowners NO LONGER HAVE TO MAKE MORTGAGE PAYMENTS as long as they live in the property.
Misconception: I can be thrown out of my house. own out of my house.	Fact: Homeowners can stay in their home until they move out of the home permanently (sale, death, etc…).
Misconception: My heirs will be against it.	Fact: Experience demonstrates heirs, once educated about the loan product, are in favor of Reverse Mortgages as it allows the family member to live in their property without a financial burden on the heirs.
Misconception: The loan balance could exceed the property value and I will owe more than my house is worth.	Fact: The reverse mortgage loan amount due will NEVER exceed the value of the home. If for some reason the loan balance exceeds the value of the property the additional amount is “forgiven”, and is NOT the responsiblity of the heirs.
Misconception: Reverse Mortgage loan proceeds/income will affect my Medicare/Social Security income.	Fact: Loan proceeds DO NOT affect Social Security or Medicare benefits. It is your “tax-free” money to spend as you please. However, please consult your tax advisor should you have any questions.
Misconception: The children will lose their inheritance.	Fact: Historically, most houses continue to appreciate over time. A high percentage of houses still have enough equity to pass down as inheritance – allowing heirs to sell the home or refinance balance - and keep the difference.
Misconception: The costs of a Reverse Mortgage are too high.	Fact: Compared to other mortgage loans, in many instances the benefits will outweigh the costs with the homeowners’ ability to finance all closing costs (so there are no out-of-pocket expense). The major benefit of a Reverse Mortgage is NOT having a monthly mortgage payment, as long as the property is occupied as a primary residence. In the long term, keeping the Reverse Mortgage for the member’s life, the costs are comparable to regular mortgage loans.

Steps To Get a Reverse Mortgage

The steps outlined below are intended to help you understand each stage of the loan process

1. Determine If You Qualify

Although the qualification process may vary by lender, there are typically no income or health qualifications and only minimal credit score requirements needed to qualify for a reverse mortgage. The amount of the reverse mortgage loan for which you qualify is determined by several factors, including:

Homeowner age - all homeowners on title must be at least age 62
Current appraised value of the home
Current interest rate

2. Explore whether a reverse mortgage program would fit your needs

Assistance is available to explain your various reverse mortgage options and to help you determine if a reverse mortgage best addresses your financial needs. If you decide a reverse mortgage is the right solution for you, the next step is determining which reverse mortgage loan program works best for your particular situation.

3. Get Educated

Regardless of the reverse mortgage program you choose, counseling by a Department of Housing and Urban Development (HUD)- approved counselor or a Freedomn Association of Retired Persons (AARP)- approved counselor is required. The counselor is there to help make sure you are fully aware of your options and that you understand the reverse mortgage program and the loan process itself. With your consent, a representative of your lender may arrange for a HUD-approved counselor to contact you, or they may provide you with a list of approved counseling agencies in your area. In addition to counseling, you are encouraged to also seek advice from your family, legal, and financial advisors.

4. Appraisal

Upon completion and submission of your application, the lender will schedule an appraisal to determine the current market value of your home and whether or not any repairs will be needed in order to meet loan underwriting guidelines.

5. Underwriting

Underwriters will then review the loan file and appraisal in accordance with the applicable FHA or lender loan policy. Upon completion, a representative of your lender will notify you of the lender's decision and inform you of any conditions that must be met prior to loan closing.

6. Loan Closing

If approved, you will then decide how you want to receive your cash from the loan proceeds. The final step will be signing the documents at loan closing. Disbursement of payment from your reverse mortgage loan may begin within just days after closing.

7. If you qualify, and think a Reverse Mortgage could be of benenfit to you ... Get started today!

Call us at 888-435-5293, or email us for more information and help in determining if a reverse mortgage best addresses your financial needs. You've been taking care of your home for years. Isn't it about time your home started taking care of you?