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A reverse mortgage is a loan that allows seniors over the age of 62 to convert equity in their home to a monthly income, line of credit or a lump sum of cash while still living there as a primary residence. Reverse Mortgages are ideal for seniors whose monthly expenses outweigh their income from social security and other retirement funds. The reverse mortgage does not have to be paid back until the last surviving borrower has passed away, moved out, or sold the home. The amount of the loan is determined by the FHA based on the age of the homeowner, current interest rates and the value of the home.
There are a few requirements particular to HECM under the purchase program. Borrower’s assets must be verified by their lender with a verification deposit and verification of savings and checking account statements. Prospective customers are required take a HUD counseling class to ensure that they fully understand the program. For instance, these loan borrowers may not take out a bridge loan including financing, personal loans, credit card cash withdrawals and any other loose end loans.
Reverse mortgages work with a lender paying a borrower, rather than the traditional mortgage loan, where the borrower pays the lender. There are no income requirements to qualify for a reverse mortgage—in fact, many seniors use them in lieu of an income. All homeowners on the title must be at least 62 years old and occupy the home as their principal residence. Individual eligibility and costs for HECMs are vary based on state requirements and property values. These reverse mortgages are available in all 50 states as well as the District of Columbia, and Puerto Rico. Mobile homes are generally not eligible, though some manufactured homes are. Property conditions must meet HUD standards before they are eligible for the loan or part of the loan must be used to bring the house up to those standards.
In many cases, reverse mortgages can also work in a purchase transaction. A senior may purchase a home without making a single monthly mortgage payment. This option allows seniors to move close to family when the need arises. Although HUD and the FHA recently passed the HECM Reverse Mortgage home purchase program, allowing the purchase of a new home with reverse mortgage proceeds, borrowers in Texas are not yet eligible.
Before the age of reverse mortgages, senior homeowners whose expenses exceeded their cash flow had little opportunity for relief. They could sell their home and buy a smaller one, move in with family or to a rental property, or perhaps borrow against the equity in their home and face monthly loan repayments. Now, seniors can experience financial freedom from the comfort of their own home!
A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has earned the accolade of No. 1 reverse mortgage broker in the Southwest for three years in a row. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like an information packet or would like to set up an appointment with one of our Reverse Mortgage Specialists,
Please call (866) 683-3690 or complete our online Reverse Mortgage Information
Tags: FHA, HECM, Reverse Mortgage
Someone just informed me of a new reverse mortgage. I would like to get some feed back on they’re saying that there is a new program that lets seniors purchase the home with the equity instead of refinancing one. I just would like to know how true or untrue it is and what exactly is the process of this (new) program.
Thanks!
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