What is a Reverse Mortgage
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What is a Reverse Mortgage?
Reverse Mortgages are becoming more popular in the United States as more Americans retire and decide to "age in place", but you should be cautious before spending down the equity in your home. In fact, it never hurts to be cautious about any financial product someone is trying to sell you. Since for many seniors their home is their largest asset it is important to know more about Reverse Mortgages, and decide if one is right for you. If you have other assets or you have a mortgage and are able to make the payments on it, this product might not be a good idea. However, a Reverse Mortgages can be a valuable financial tool when an eligible senior has home equity but not a lot of monthly cash flow. Reverse mortgage loans are a type of home loan that is available only to people over 62 years of age that allows a homeowner to convert a portion of the equity in his or her home into cash. Homeowners with sizeable equity in their homes can borrow against the equity and use the loan proceeds for any purpose. Currently homeowners are not subject to any specific income or credit requirements to qualify to receive reverse mortgage loans because the loans are secured by the equity in their homes. Unlike conventional mortgages, reverse mortgage borrowers do not make monthly payments to repay the loan. The loan amount a borrower can get depends on a number of factors, including the appraised value of your home, amount of equity in the home, the borrower's ages and the current interest rates. Seniors who take out reverse mortgages retain ownership of their homes; lenders do not want your house they want repayment. Once you receive the money, there are virtually no restrictions on the way in which it can be used. In general, the loan should not be used for frivolous purchases but rather for necessary expenses. Like all mortgages there are costs involved and Reverse Mortgage loans include several fees, including an origination fee, counseling fee, closing costs, a servicing fee, mortgage insurance, and interest. Reverse mortgage loans must be repaid when the last surviving borrower dies, sells the home, or permanently moves out of the home. However, Reverse Mortgage lenders can require repayment at any time if you fail to pay your property taxes, fail to maintain and repair your home, or fail to keep your home insured. If you wonder how your heirs will be affected if you take out a reverse mortgage loan, it is important to know that heirs are not burdened with any debt. When you sell your home or no longer use it for your primary residence, you or your estate must repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. You or your heirs can either pay off the loan with existing funds or sell the house in order to satisfy the loan. The remaining equity in your home, if any, belongs to you or to your heirs. Interested borrowers are required to receive counseling from a HUD approved Reverse Mortgage counselor prior to obtaining a Reverse Mortgage loan. Senior Financial Care® a program of CCCS of Forsyth, Inc. has trained HUD qualified Reverse Mortgage counselors available to discuss the Reverse Mortgage process, eligibility requirements, financial implications, and alternatives to obtaining a Reverse Mortgage. Upon completion of the counseling you should be more comfortable in making an independent, informed decision of whether this product will meet your needs. For additional information contact: Senior Financial Care® @ (336) 896-1328
A "Routine" Reverse Mortgage Counseling Session
In December of 2010 an elderly man sought Reverse Mortgage counseling from Senior Financial Care®. At the time he was struggling to pay his day to day living expenses and his home needed repairs. His counselor completed a benefits check up screening and determined his potential eligibility for Medicaid and food stamps. She suggested he look into a local church run home repair program and contact the Veterans Administration about his possible eligibility for health care benefits to help with some of his medical expenses. When he left the counseling session he had an action plan, and several potential resources to help him while he considered whether to obtain a Reverse Mortgage. When his counselor followed up a few months later, he informed her he had been approved for Medicaid and food stamps but was holding off on the RM as he still needed some home repairs and wanted to utilize the weatherization program and Nehemiah's Few to get the repairs completed. In July of 2011 the counselor received a call from his daughter stating her father's financial circumstances were still dire, and his health had declined. Since his original counseling certificate had expired, a second session was scheduled so his son-in-law could be included. During the second session the counselor determined he was receiving his Medicaid and food stamp benefits but had forgotten to apply for VA benefits. He was now several months behind on his house payments and the bank was demanding he pay the loan balance in full. His son-in-law and I determined the client had enough money to catch the payments up and bring his mortgage current, but his lender refused to accept anything but the full payment. The counselor informed him that provided he was approved for a RM loan, he should receive enough proceeds from the Reverse Mortgage to pay off his current mortgage. The client and his sonin-law left the office with new counseling certificates and were urged once again to apply for Veterans benefits. The counselor followed up in late August and was told by the client's son-in-law a court date had been set regarding foreclosure on the client's property but they were also waiting to hear whether he would be approved for the RM loan. The counselor suggested they have the RM lender provide the court with a letter stating he had applied for a RM loan, and it should provide enough proceeds to pay off the balance on his current mortgage. In Mid September the counselor followed up once again and spoke with the client's daughter. She said her father will close on the RM the last week of September. They were able to get a stay on the foreclosure and the RM loan proceeds will pay off his current mortgage. Additionally, the VA application was completed and she wanted to share their good news. Recently, she and her father were in the grocery store trying to figure out what he could buy with his $16.00 in food stamps when she received a call from her husband. He received a letter from the VA stating her father qualified for a VA pension of $864.00 per month, and would receive an additional Aid and Attendance benefit of$1400.00/month that will help pay for transportation, housekeeping and personal care. He is now part of the VA medical system and all his medical care and prescriptions will be paid at 100%. In addition, he received a check for six months of back pay on his VA pension. She said her father was literally jumping up and down in the grocery store. As the result of his Reverse Mortgage counseling session this elderly client is now more financially secure, no longer needs to rely on Medicaid and food stamps and receives close to $2,300 in additional income and benefits that will help him maintain his financial security and successfully age in place. He received much more than he was looking for, but everything he deserved!
Reverse Mortgages are becoming more popular in the United States as more Americans retire and decide to "age in place", but you should be cautious before spending down the equity in your home. In fact, it never hurts to be cautious about any financial product someone is trying to sell you. Since for many seniors their home is their largest asset it is important to know more about Reverse Mortgages, and decide if one is right for you. If you have other assets or you have a mortgage and are able to make the payments on it, this product might not be a good idea. However, a Reverse Mortgages can be a valuable financial tool when an eligible senior has home equity but not a lot of monthly cash flow. Reverse mortgage loans are a type of home loan that is available only to people over 62 years of age that allows a homeowner to convert a portion of the equity in his or her home into cash. Homeowners with sizeable equity in their homes can borrow against the equity and use the loan proceeds for any purpose. Currently homeowners are not subject to any specific income or credit requirements to qualify to receive reverse mortgage loans because the loans are secured by the equity in their homes. Unlike conventional mortgages, reverse mortgage borrowers do not make monthly payments to repay the loan. The loan amount a borrower can get depends on a number of factors, including the appraised value of your home, amount of equity in the home, the borrower's ages and the current interest rates. Seniors who take out reverse mortgages retain ownership of their homes; lenders do not want your house they want repayment. Once you receive the money, there are virtually no restrictions on the way in which it can be used. In general, the loan should not be used for frivolous purchases but rather for necessary expenses. Like all mortgages there are costs involved and Reverse Mortgage loans include several fees, including an origination fee, counseling fee, closing costs, a servicing fee, mortgage insurance, and interest. Reverse mortgage loans must be repaid when the last surviving borrower dies, sells the home, or permanently moves out of the home. However, Reverse Mortgage lenders can require repayment at any time if you fail to pay your property taxes, fail to maintain and repair your home, or fail to keep your home insured. If you wonder how your heirs will be affected if you take out a reverse mortgage loan, it is important to know that heirs are not burdened with any debt. When you sell your home or no longer use it for your primary residence, you or your estate must repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. You or your heirs can either pay off the loan with existing funds or sell the house in order to satisfy the loan. The remaining equity in your home, if any, belongs to you or to your heirs. Interested borrowers are required to receive counseling from a HUD approved Reverse Mortgage counselor prior to obtaining a Reverse Mortgage loan. Senior Financial Care® a program of CCCS of Forsyth, Inc. has trained HUD qualified Reverse Mortgage counselors available to discuss the Reverse Mortgage process, eligibility requirements, financial implications, and alternatives to obtaining a Reverse Mortgage. Upon completion of the counseling you should be more comfortable in making an independent, informed decision of whether this product will meet your needs. For additional information contact: Senior Financial Care® @ (336) 896-1328
A "Routine" Reverse Mortgage Counseling Session
In December of 2010 an elderly man sought Reverse Mortgage counseling from Senior Financial Care®. At the time he was struggling to pay his day to day living expenses and his home needed repairs. His counselor completed a benefits check up screening and determined his potential eligibility for Medicaid and food stamps. She suggested he look into a local church run home repair program and contact the Veterans Administration about his possible eligibility for health care benefits to help with some of his medical expenses. When he left the counseling session he had an action plan, and several potential resources to help him while he considered whether to obtain a Reverse Mortgage. When his counselor followed up a few months later, he informed her he had been approved for Medicaid and food stamps but was holding off on the RM as he still needed some home repairs and wanted to utilize the weatherization program and Nehemiah's Few to get the repairs completed. In July of 2011 the counselor received a call from his daughter stating her father's financial circumstances were still dire, and his health had declined. Since his original counseling certificate had expired, a second session was scheduled so his son-in-law could be included. During the second session the counselor determined he was receiving his Medicaid and food stamp benefits but had forgotten to apply for VA benefits. He was now several months behind on his house payments and the bank was demanding he pay the loan balance in full. His son-in-law and I determined the client had enough money to catch the payments up and bring his mortgage current, but his lender refused to accept anything but the full payment. The counselor informed him that provided he was approved for a RM loan, he should receive enough proceeds from the Reverse Mortgage to pay off his current mortgage. The client and his sonin-law left the office with new counseling certificates and were urged once again to apply for Veterans benefits. The counselor followed up in late August and was told by the client's son-in-law a court date had been set regarding foreclosure on the client's property but they were also waiting to hear whether he would be approved for the RM loan. The counselor suggested they have the RM lender provide the court with a letter stating he had applied for a RM loan, and it should provide enough proceeds to pay off the balance on his current mortgage. In Mid September the counselor followed up once again and spoke with the client's daughter. She said her father will close on the RM the last week of September. They were able to get a stay on the foreclosure and the RM loan proceeds will pay off his current mortgage. Additionally, the VA application was completed and she wanted to share their good news. Recently, she and her father were in the grocery store trying to figure out what he could buy with his $16.00 in food stamps when she received a call from her husband. He received a letter from the VA stating her father qualified for a VA pension of $864.00 per month, and would receive an additional Aid and Attendance benefit of$1400.00/month that will help pay for transportation, housekeeping and personal care. He is now part of the VA medical system and all his medical care and prescriptions will be paid at 100%. In addition, he received a check for six months of back pay on his VA pension. She said her father was literally jumping up and down in the grocery store. As the result of his Reverse Mortgage counseling session this elderly client is now more financially secure, no longer needs to rely on Medicaid and food stamps and receives close to $2,300 in additional income and benefits that will help him maintain his financial security and successfully age in place. He received much more than he was looking for, but everything he deserved!
