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Reverse Mortgage Insurance

It’s important for seniors who are taking on a reverse mortgage to know their funds are protected not only from the downfall of the company they chose to service their loan but also from the pitfalls of a sagging real estate market as we have been experiencing for the past several years due to reverse mortgage insurance. When a senior depends on additional cash flow from a reverse mortgage he doesn’t want to have to worry about those payments reducing his equity to the point there will be nothing left for his heirs when he passes away or nothing left for him to pay expenses on another place if he chooses to sell the property.

When you take out a HECM it has reverse mortgage insurance through the FHA.  You pay two percent of the home value at the time of settlement and one half of one percent annually. The annual premium is usually aid for you by the lender and added to the balance of your loan for the reverse mortgage insurance. You don’t need to be concerned about owning more on your reverse mortgage than the value of your home because reverse mortgage insurance will cover any potential losses that may occur because of a declining real estate market.

Reverse Mortgage Insurance is Important

Many financial institutions are going out of business either through bankruptcy or just closing their doors. Without reverse mortgage insurance a senior homeowner could lose any funds from his reverse mortgage that lender still has. Since you don’t have clear title to your property it would mean being able to find another lender willing to assume the remainder of your reverse mortgage. Once a company closes it is very difficult to obtain any remaining assets in the form of accounts receivable or accounts payable they may still have. The premium you pay at settlement and throughout the term of the loan are your reverse mortgage insurance that the funds of your reverse mortgage are protected from additional encumbrances or potential losses.

Reverse mortgage insurance is essential during those times when real estate prices are declining rather than rising. Though reverse mortgage insurance is designed to protect the homeowner, it also helps lenders in the respect the borrower never owes more on the property than it is worth. This means when the homeowner decides to move from the home or the property is sold upon his death there will be enough funds to pay off the reverse mortgage. Of course, whether there is any remaining cash will depend on the real estate market at the time of the sale, but at least the sellers will be able to clear the mortgage and provide a clear deed to new owners due to reverse mortgage insurance.

The minimal price for the insurance is small compared to the benefits it provides, especially when you look at what a senior homeowner stands to lose. These reverse mortgage insurance premiums also allow more flexibility in the loan amounts compared to obtaining reverse mortgages from private lenders with no government insurance on the loan.

Reverse Mortgage Insurance Lender

Reverse Mortgage 360 has helped over 3000 Americans find financial security with a reverse mortgage. If you would like more information, please call (866) 683-3690 or visit our website to research reverse mortgage insurance.

Tags: Benefits of Reverse Mortgage, home equity loan insurance, reverse mortgage mip

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