Common Questions

How does the Reverse Mortgage process work?
 
Education
Do your research. Read up on the process as much as you can. Talk to your local Better Business Bureau (BBB) and your local American Association of Retired Persons (AARP) about the process and the lender. The AARP Foundation Reverse Mortgage Education Project includes a national network of reverse mortgage counselors dedicated to helping seniors understand and evaluate the risks and benefits of reverse mortgage borrowing.
 
Counseling
Federal regulations and state law often requires that reverse mortgage borrowers receive state-certified housing counseling. And while this counseling is mandatory for HECM and Home Keeper reverse mortgage borrowers, the service is free. Counseling appointments typically take about an hour and may be handled in-person or over the telephone. 
 
Loan Application
Your lending agent will require you to complete a loan application and determine how to receive payment. 

These are you options:

1.      Monthly income for a fixed term, or life
2.      Line of credit
3.      Lump sum
4.      Any combination of the above 3
 
Processing
Your lender will order:
  • A credit report
  • A title report
  • An appraisal,
  • Lien payoffs
Underwriting
Once your lender has received and completed the required documentation, your loan package will be submitted to the financial organization that will be underwriting the loan, for final approval.
 
Closing
After your reverse mortgage loan has been approved and signed, the loan's initial interest rate will be determined. Closing costs are typically financed by the loan.
 
Disbursement
Once you have officially closed on the loan, you have 3 business days to change your mind and cancel the loan. Atter the 3-day period, the funds are disbursed, including any amount that will be applied to a previous lien on the property. Then you will begin receive payments according to the payment option you selected.
 
Repayment
You will not be required to make monthly payments during the term of your loan. The reverse mortgage becomes due and payable in full once: 1) the home is no longer being used as a primary residence, 2) it is sold, or 3) the borrower passes away. Upon the death of the borrower, the loan may be repaid from the sale of the home or by refinancing the existing reverse mortgage. All remaining equity belongs to the heirs/estate.
 
What can I expect to learn from my housing counseling appointment?
 
Accredited housing counselors work with seniors to help them evaluate the viability of a reverse mortgage loan by looking at the borrowers: 
  • Current budget
  • Monthly income
  • Loan risks
  • Loan benefits
  • Interest rates
  • Associated fees
HUD-approved HECM housing counselors are required to use loan comparison and analysis software that meets the requirements established by the AARP. Certified counselors must also adhere to the AARP Foundation Reverse Mortgage Education Project counseling policies and procedures. Because it is their job to help insure that you are making a responsible financial decision, they may also review financial options with you.
 
The AARP Foundation Reverse Mortgage Education Project regulates a national network of HUD-approved HECM housing counseling agencies by administering the exam that certifies counselors for HUD-approved HECM housing counseling agencies. HUD's National HECM Counseling Network consists of the exam's highest scoring counselors. That means that that you can be sure that they are charged with looking out for your best interest.
  
What can I expect to be included in closing costs?
 

Most of the standard closing costs associated with your Reverse Mortgage can be included in the financing so you do not have to pay them out of pocket. These costs include:

Mortgage Insurance Premiums.  This is the insurance that the FHA uses to make the payment guarantees and non-recourse aspects of your reverse mortgage loan.   The premium of the HECM is based on if there are any mandatory obligations against the home and of what percent of the benefit. The Insurance fee can either be .5% or 2.5% of the  appraised value of your home (not to exceed $636,150), and is paid directly to the FHA insurance fund. These fees are built into the numbers as part of your reverse mortgage loan.  

Third Party Charges. You will have very similar costs to that of a normal conventional refinance including appraisal, title search and insurance, surveys, inspections recording fees, mortgage taxes, credit check and other fees.  The majority of these can be paid from the loan proceeds.

Origination Fee. Based on FHA and HUD guidelines. This fee is capped at a minimum of $2500 up to $125,000 value, or 2% of the first $200,000, and 1% of the amount over 200,000. Due to our direct endorsement as a lender, we have the ability to be more flexible and reduce off of these set standard guideline fees.

Servicing Fee. This fee is for the maintenance of your account: account statement disbursing loan proceeds and customer service, and is typically $30/month. This is not a fee that you must pay out of pocket. A reserve is set aside at closing for payment of this fee. Any unused portion is reimbursed to the reverse mortgage borrower when the loan is paid in full. At the current time, the products that we offer do not come with any monthly service fees or need to set up any form of additional set aside.

Rates. Rates vary from products and programs that can be chosen. We show a variety of products on our reverse mortgage calculator with a selection of rates to choose from.
Finally, if you are still on the fence – consider this. If there were a bank where the following were true would you invest?

1.    You could invest and make subsequent withdrawals, but the account would still appreciate based on the original investment.

2.    Withdrawals are free from any penalties.

3.    Withdrawals are not subject to taxes in any way.

4.    The account is insured to not only guarantee all payments but also protect you and your heirs from any future liability resulting from withdrawing more than your balance.

Your home combined with a reverse mortgage is just such an investment. When you look at it this way, a reverse mortgage makes a lot of sense.  Meeting with our Certified Reverse Mortgage Professionals can help clear up all of your questions.

 

 

Payment Plans Available on a Reverse Mortgage

 

·         Tenure – equal monthly payments for as long as at least one borrower is living in the home as their primary residence.  You can learn how much you can get in a free consultation with one of our reverse mortgage specialists.

·         Term – Equal monthly payments for a specified period of time

·         Line of Credit – an available amount that can be drawn upon until the maximum amount has been reached. Any unused credit line will increase every year giving the borrower more available credit. You can learn how much you can receive in a line of credit or lump sum with our reverse mortgage calculator.

·         Modified Tenure – A combination of line of credit and scheduled monthly payments for as long as you live in the home.

·         Modified Term – A combination of line of credit and fixed monthly payments for a scheduled period of time.

Payment plan can be modified even after the loan is closed for a nominal fee. The amount you can receive either in a lump sum, line of credit or monthly payment is based upon the age of the youngest borrower, the current interest rate, and the appraised value of your home (not to exceed $636,150).