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A reverse mortgage is a great loan product for the right person, but it definitely is NOT for everyone.

Who qualifies:

1.  62 years old or older

2.  Owner occupied home only

3.  The home does not need to be owned outright, but there has to be a lot of equity for this type of mortgage to make sense for you.

Frequently asked questions:

1.  Do I still own my house if I take out a reverse mortgage?   YES - the title remains in your name, as you draw out the equity as needed

2.  Do I have to take out a set amount every month?  or can I withdraw a lump sum if needed?  You can set up withdrawals any way you like.  Most people take out a set amount monthly, and utilize the option to draw more if the need arises, at any time. 

3.  Is there a maximum loan amount? Yes, since this is an FHA loan product, the maximum loan amount is $417,000 regardless of the value of your house. 

4.  What if I am 59, but my husband is 62?  Can we still qualify?  You do still qualify, but only the husband can be in title on this loan since you must be 62 to be on title.  There are ways to make this loan product work for you if this is your situation, but this is something we should discuss. 

5.  What if our credit is very poor?  Credit is NOT an issue to qualify for this type of mortgage.

A reverse mortgage is ideal for someone at least 62 years of age with a fixed and limited income, and a lot of equity in their home.  To qualify for this type of financing, there are only 2 criteria:  age and equity.  Even if you are facing foreclosure, if there is a lot of equity, a reverse mortgage can bail out the foreclosure, pay off the existing mortgage, and start paying you to live in your house.

6.  What if I run out of equity?  This can happen, especially if you use this mortgage as a Line of credit, rather than set it up with programmed payments in advance.  When you are set up with programmed payments, the payment schedule is designed to pay you to age 100!! 

7.  I've heard this type of mortgage is very expensive.  Is that true?  The initial cost to set up this type of mortgage is a bit higher than a typical refinance transaction, AND there is a monthly servicing fee (currently at $30/month).  Also, you should understand that the rate on this mortgage is variable, and can change every month.  This does not affect the amount you receive monthly, but does affect the payoff amount.

8.  Do I have to pay taxes on this money?  This income is tax free!  You have already paid taxes on this money, and this is considered a loan, not an income.  Also, this income will not affect Social Security or Medicare benefits.

9.  When do I have to start paying it back?  You don't ever have to pay it back until the home is no longer your principal residence

10.  How much can I borrow?  This amount is computed based on your age, the value of the property and the amount of equity.  The more equity, higher value, and older the applicant, the more you can borrow. 

With all the drawbacks to reverse mortgages, why would anyone even consider this?

There are currently 21.2 million seniors in this country who own their homes outright.  Of those people, the median income is less than $10,500 per year.  These are the people who would benefit most from a reverse mortgage.  Imagine living on less than $1000 a month, and what a difference an extra $1000 - $2000 a month could make in their standard of living.  These people will not qualify for a Home Equity Line of Credit or any other type of financing for almost any other needs. 

The FHA and our government did something right when the Reverse Mortgage program was established to help these households. 

Please call if you, or anyone you know would benefit from this program.  I'll be happy to talk to you and help any way that I can.

Warm regards

Shelby

503-819-6545