The Reverse Mortgage Program: A reverse mortgage is a way to glean equity from your home using your home as collateral and turning it into tax-free cash, all without having to pay any monthly mortgage payments. The term "reverse mortgage" is the popularized version of a mortgage program for qualified senior homeowners wanting to withdraw a portion of their home's equity for their use. The only reverse mortgage insured by the Federal Housing Administration (FHA) is the Home Equity Conversion Mortgage (HECM) and is only available through an FHA-approved lender such as Advisors Mortgage.
Over the past fifty years from the inception of reverse mortgages and ever since the very first FHA-insured reverse mortgage closed in 1988, reverse mortgages have been enhanced to provide all the safeguards you'd want in a mortgage. There is independent, HUD required reverse mortgage counseling, caps on interest rates, and clauses in the final documents to protect borrowers from ever owing more than the home is worth. If you are not interested in obtaining a reverse mortgage, Advisors Mortgage can offer you a variety of mortgage products to suit your needs. Let us know what you are looking for, and we will assist in finding you the right mortgage for all your mortgage needs. We truly care, and that's the Advisors Mortgage difference.
"NO ONE CARES HOW MUCH YOU KNOW UNTIL THEY KNOW HOW MUCH YOU CARE." Theodore Roosevelt
According to the National Council on Aging, one third of senior households have no extra cushion at the end of the month and may be in debt after meeting essential monthly expenses. It's often referred to as "more month left at the end of the money". This is hardly the retirement many seniors dream about. Some senior homeowners refer to themselves as being "house rich and cash poor". This is not unusual for the Long Island area or with other areas across America. And though this does not apply to every senior homeowner, it is often true for many.
"Why not let your home pay you back?" Perhaps, this is a concept you've never considered. You care for your home, you've enjoyed family barbeques, celebrations, you've fixed up the house, yet out of its equity, your home has not returned its wealth back to you. Tapping into the equity in your home means a more comfortable retirement. Not all senior homeowners are "house rich, cash poor", and many take out a reverse mortgage for a variety of reasons. What could be your reason? Would it be to supplement your income, pay off an existing mortgage, supplement your grandchild's college education, do some traveling? Reverse mortgages are often used for in-home or medical care and always structured by you for your benefit. If you have been thinking of the reverse mortgage as an enhancement tool for your lifestyle and want to know more, this website is for you.
Just What is a Reverse Mortgage?
A reverse mortgage is a special type of loan which enables homeowners age 62 and above to convert part of the equity in their home into tax-free cash without having to sell the home, give up title, or take on a new monthly mortgage payment. A reverse mortgage will not affect Social Security or Medicare, and there are no health qualifications or stipulations on the use of the proceeds. And although no monthly mortgage payments are required, you are free to make mortgage payments at any time throughout the year.
Currently, the federally insured reverse mortgage that is available is the Home Equity Conversion Mortgage (HECM) created by the federal government and managed by the Department of Housing and Urban Development (HUD). To qualify, the HECM requires that all borrowers:
* Be at least 62 years of age at closing and own their home
* Reside in a single family home as their primary residence (1-4 units, FHA approved condos, PUDs, manufactured homes, some mixed-use)
* Receive HUD-approved reverse mortgage counseling
* Not be delinquent on any federal debt
If your home is valued at over $500,000, there is a proprietary JUMBO reverse mortgage product available. A reverse mortgage comparison will outline which program is best for you. (SEE BELOW FOR JUMBO REVERSE MORTGAGES)
About Medicaid Eligibility: Refer to page REVERSE MORTGAGE FAQ on how a reverse mortgage might affect eligibility for Medicaid and other financial assistance programs.
As long as there is enough equity in your home, you may be able to pay off credit card debt and even a current mortgage. Wiping out a monthly mortgage payment puts a smile on anyone's face! Your reverse mortgage proceeds are your money to use as you wish. It's your equity. Ask yourself if having more spendable cash would change your life for the better.
Have you been putting off traveling or buying a new car or visiting the kids and grandkids? A reverse mortgage can change your financial situation with either a cash out sum or a monthly stipend that arrives in your bank each and every month. You can also establish a line of credit (depending on equity) or you can choose a combination of all three of the above.
Many reverse mortgage borrowers renovate their homes with their reverse mortgage proceeds while others help their grandchildren with college expenses. It all depends on your needs and desires. In-home care can also be paid with your reverse mortgage proceeds. There is never any stipulation on how you can spend your reverse mortgage proceeds.
So you're thinking about a reverse mortgage, but you've got more questions than answers. You have come to the right place. Advisors Mortgage has helped senior homeowners to achieve many of their financial goals. Whether a reverse mortgage or a conventional mortgage, we'll help you with the loan and in a timely manner.
People say LOTS of things about reverse mortgages, and many have gotten it all wrong. Erroneous information, however well-intentioned, doesn't help. The BEST way to find out if a reverse mortgage is right for you is to get the facts from a duly licensed Reverse Mortgage Specialist. You will know firsthand which option is best for you.
Reverse mortgages have become a popular tool for retirement planning for those homeowners who have adequate equity in their homes Your proceeds can be considered a retirement plan sitting under your roof just waiting to be used and is one way your home can pay you back. There are no restrictions on how your reverse mortgage proceeds can be spent, after all, it's YOUR money to use how you wish.
The Reverse Mortgage and the Reasons Why They Are Done
A lot of seniors today are dependent solely on Social Security and their pensions but have no further resources to fall back on, therefore, a reverse mortgage can make all the difference in the world. Many borrowers simply wish to supplement their income so they are free to enjoy their retirement to the fullest. In a word, a reverse mortgage is freedom, freedom to do what you want with the equity in your home.
MAXIMUM BORROWING AMOUNT
The Maximum Claim Amount or maximum amount you can borrow with the FHA HECM is currently $970,800 regardless of where the property is located. The amount you receive called the Principal Limit is based on the age of the youngest borrower, the maximum lending limit or appraised value of your home (whichever is less), your available equity, and current interest rates. For higher value homes, there is a proprietary or jumbo reverse mortgage.
Jumbo Reverse Mortgages are a viable option for higher value homes. Minimum home values for the jumbo reverse mortgage start at $500,000 with a maximum loan amount of $4,000,000 and maximum home values of $10,000,000. One to four family homes are eligible for this program. Closing costs are lower than the traditional FHA HECM, but rates could be higher. Reverse mortgage counseling is required. You can refinance or purchase a home with a JUMBO Reverse Mortgage. Call Advisors Mortgage with any questions you may have or to receive a free proposal which compares the FHA HECM with the JUMBO reverse. Jumbo reverse mortgages (and commercial mortgage loans) are all arranged through third party providers.
