Retirement July 31 2019

Your Reverse Mortgage Questions, Answered

If you are 62 years of age or older, could use a cash infusion and have a large amount of equity in your home, a Reverse Mortgage may be just the financial tool you have been looking for. Essentially, your mortgage now pays you (instead of vice versa) and you can remain in your home for as long as you want!

Common Questions to Consider:

How is a Reverse Mortgage different from a standard forward mortgage?

  1. Typically, with a forward mortgage, the home buyer must make a down payment. With a Reverse Mortgage, no down payment is needed.
  2. No monthly mortgage payments need to be made – the loan only becomes due when the borrower sells the home, moves or passes away.
  3. Credit history and monthly income are not as important in a Reverse Mortgage as they are in a Forward Mortgage. The equity you have in your home and your age are the most important considerations.

What can the funds generated from a Reverse Mortgage be used for?

Seniors have many reasons for obtaining a Reverse Mortgage; increase monthly cash flow, cover rising medical costs, maybe even pay off debts. But, what’s important to remember is that the funds are yours to use however you see fit.

How do I Qualify for a Reverse Mortgage?

Unfortunately, just being 62 years of age or older doesn’t automatically mean you will qualify. If you don’t have enough equity in your home, you will not be able to obtain a Reverse Mortgage. And, you must meet financial criteria, as established by HUD, in order to qualify. Lastly, there are some types of homes that are not eligible. Your Eagle Home Mortgage Loan Officer will be able to tell you if your home qualifies.

To qualify for a Reverse Mortgage:

  1. The youngest homeowner must be at least 62 years
  2. The borrower(s) must live in the home as their primary residence
  3. There must be sufficient home equity available
  4. Borrowers also must meet financial eligibility as set by HUD

What about if I have a current mortgage on my house?

If you currently have a mortgage on your home, you are still eligible. In fact, many people who take out a Reverse Mortgage use the funds to pay off an existing mortgage; thus, eliminating having to make a monthly mortgage payment. What happens if I don’t have enough equity in my home? When you don’t have enough equity in your home to qualify for a Reverse Mortgage it is called a shortfall. A shortfall doesn’t necessarily disqualify the borrower as you can make up the difference by putting money towards the balance on your existing mortgage to pay it down.

Is There a Limit to How Much I Can Borrow?

The amount you can borrow with a Reverse Mortgage is dependent upon the appraised value of your home, current interest rates, and your age. Your Loan Officer will go over all of this with you to determine how much you will be able to borrow.

What Will My Interest Rate Be?

As interest rates for a forward mortgage fluctuate daily, so do the interest rates for a Reverse Mortgage. Your Loan Officer will do their very best to lock in the lowest possible rate for your loan.

What types of costs are included with obtaining a Reverse Mortgage?

The cost to you for your Reverse Mortgage depends on the type of loan you choose, the amount of money you take out upfront, and other associated fees.

What are Upfront Costs?

The upfront costs of a Reverse Mortgage include lender fees, upfront mortgage insurance, and closing costs. The mortgage insurance will be based on the size of your loan and much actual cash you choose to take out during the first year of the Reverse Mortgage. Oftentimes, borrowers decide to pay their upfront costs using the funds from their loan, as opposed to paying them out of pocket.

What are the costs over time?

The costs over time include interest and mortgage insurance premiums. And, don’t forget that you are still responsible for property taxes, homeowner’s insurance, HOA dues (if applicable), and any costs related to the upkeep of the property.

My adult children would like to be involved, is that OK?

Yes, in fact all family members are encouraged to meet with your Eagle Loan Officer to ensure that everyone has their questions answered. Because this is a unique financial tool, we understand that there are going to be lots of questions and in fact, we look forward to answering each-and-every one of them!

I'm Ready to apply for a Reverse Mortgage, where do I start?

If you are ready to move forward with a Reverse Mortgage, your best place to start is with your Loan Officer.

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