See, reverse mortgage lenders who are in the business of writing reverse mortgages can help you convert some of the equity you’ve built up in your home into cash.  And the good news is that you will be free to stay in your home for as long as you live, or until the home ceases to serve as your primary residence.

How Reverse Mortgage Lenders Work

Reverse mortgage lenders provide financial vehicles that function like normal mortgages.  However, unlike a typical home mortgage loan, reverse mortgages pay money to you, the borrower, without you having to pay the money back for as long as you live in your home.

The key component to reverse mortgages and paying them back is that the loan is paid back to reverse mortgage lenders when you sell the home, or when the last living homeowner dies.   Payment can also be triggered if your home ceases to be listed as your primary place of residence.

These mortgage programs are great sources of financial relief for home owners who have spent their hard earned money and time building up large equity positions.  You can improve your quality of life and not have to worry about paying back the loan as long as you live in the home and maintain the home’s property taxes and home owners insurance.

Qualifying to Work with Reverse Mortgage Lenders

If you own your home, have a large equity position in the home, and are age 62 or older, then it is very likely that you can qualify for a reverse mortgage loan.  The money you receive from the reverse mortgage comes to you tax free, as it is not counted as income.  As always, be sure to talk with your tax professional to make sure you are covered in this area.

Three Kinds of Reverse Mortgages

There are three kinds of reverse mortgages – single purpose, federally insured (also called Home Equity Conversion Mortgages or HECMs), and proprietary.

Single purpose reverse mortgages are best for home owners who do not have a lot of money for upfront fees and preliminary costs normally associated with reverse mortgages.   The trick here is that single purpose loans are very limited in terms of how the funds from them can be used.  Reverse mortgage lenders who issue these types of loans set the guidelines for whether the loan must be spent to repair specific damage to the home, to pay property taxes, or perform some other set goal.

Home Equity Conversion Mortgages (HECMs) and the lesser used proprietary reverse mortgages (which are private mortgages) run much higher in costs to the borrower upfront than do single purpose reverse mortgages.

By far, HECMs are the most frequently utilized kind of reverse mortgage.  Their high upfront costs dictate that you should know whether you will be spending enough time in the home after you take out the mortgage to justify taking it out in the first place.   The idea time frame you set should be longer than three years and preferably five year.

Knowing the Facts About Reverse Mortgages

You are not allowed to enter into a contract with reverse mortgage lenders without first meeting in person or talking on the phone with a independent, registered and government approved housing counseling agency.

The purpose of this interview is to make sure that you, as the mortgage borrower, are fully informed about the different fees, costs, and the nature of the reverse mortgage you are seeking to take out.  This counseling service must be very clear about any possible negatives associated with your reverse mortgage, and you must also be informed about any alternatives that might exist to taking out this type of loan.   Once you have gone through your counseling session, your reverse mortgage lender will be issued a certification that you’ve completed it – allowing you to move forward with the loan process.

As with any mortgage or loan product, you must take your time and be very careful about making a final decision.  As reverse mortgages deal with individuals who are in the later stages of life, it’s a good idea to consult with remaining family members to be sure they understand what it is your are planning to do.

Once you’ve made the decision to move forward with this type of loan, there is any number of reputable reverse mortgage lenders for you to choose from.  Call around, as rates and terms may be better from one lender to the next.

What Everyone Should Know About Reverse Mortgage Lenders is from Florida Home Loan Report

Well, a reverse mortgage is a type of loan product that allows home owners age 62 or older receive cash in exchange for the equity in their home without having to sell the home or make any type of monthly payment in return.

When considering the “What is a mortgage” issue, it’s important to gain an understanding of how these financial instruments work.  It’s also important to know the different types of reverse mortgages and how they work.  This knowledge will help make sure that you get the deal you can.

Unlike a standard mortgage, where you send monthly payments in to a mortgage lender, a reverse doesn’t require you to pay any monthly payments at all as long as you live in your home.  In fact, as long as you do live in the home and keep your taxes and insurance payments current, you will not have to worry about paying back the loan.  As an extra perk, the money you receive from a reverse mortgage come to you tax-free, and most reverse mortgages don’t have any sort of income restrictions.

Now, you may be asking:  “How do reverse mortgages get repaid?”  Reverse mortgages are repaid when the last home owner to sign on the loan passes away, or when you sell your home, or when your home ceases to be your primary residence.

Different Kinds of Reverse Mortgages

As with most financial products, especially mortgages, there are several varieties of reverse mortgage.  Actually, there are three, and we’ll discuss them for you here.

• Type 1:  Single-purpose Reverse Mortgages
• Type 2: Federally-insured Reverse Mortgages
• Type 3: Proprietary Reverse Mortgages

Single-purpose Reverse Mortgages

Single purchase reverse mortgages are your most cost effective option. They are not offered by every lender in every location, and they’re limited to only one kind of use.  How you may use this type of loan is regulated by the government or non-profit lender that lends the money.  In many cases, these types of reverse mortgages are used to pay off property taxes or make specific home improvements and repairs.  If you’re at a lower or moderate level income, these types of reverse mortgages may be your best and most affordable option.

Federally-insured Reverse Mortgages

Federally-insured reverse mortgages are also known as Home Equity Conversion Mortgages (HECMs) and represent the oldest and most widely used reverse mortgage product. HECMs have been available since 1989 and are insured by the Federal Housing Administration (FHA.  The dollar amount you can receive from this type of reverse mortgage is based on your age, the appraised value of your home, and the interest rate you are able to secure.   In short, the older you are, and the more equity you have in your home (the closer you are to paying it off), the more money you are likely qualify for.  At present, the maximum loan limit for HECMs is set at $625,500.

Proprietary Reverse Mortgages

Proprietary reverse mortgages are private loans that are backed by the companies that develop them.  They’re typically meant for homes with appraised values of over $1,000,000 and are no longer widely available.  In general, HECMs and proprietary reverse mortgages have upfront costs that run higher than normal home loans.

Some Facts about Reverse Mortgage Costs

If you plan to stay in your home for only a short time longer, or you are considering borrowing a small amount, a reverse mortgage may not be the best choice for you.  This is mainly because the upfront costs associated with reverse mortgages can be high, and you want to be sure the amount you’re taking out on the home is justified vs. these expenses.   This said, HECM loans are the most popular types of reverse mortgage.

Counseling Required to Make Sure You Understand Your Options

Before you apply for a HECM, you have to meet with or talk on the phone with a counselor from an independent government-approved housing counseling agency.  This professional explains the your loan’s costs and financial implications, and they provide you with potential alternatives to a HECM, like government and nonprofit programs or a single-purpose reverse mortgage.

You work together and compare the costs of different kinds of reverse mortgages and the counselor explains how different payment options, fees, and other costs impact the total cost of your loan over time.

Reverse mortgage counselors can be found by visiting the Hud Website’s HECM Counseling Look Up area or placing a call to 1-800-569-4287. You will typically pay a fee of around $125 for their services. Typically, this fee can be paid from the loan proceeds, but you cannot be turned away if you can’t afford the fee.

What is a Reverse Mortgage? is from Florida Home Loan Report

The Home Equity Conversion Mortgage, or HECM, is probably the most typical kind of reverse mortgage.  This financial vehicle has been around for a while, as it was first brought into existence by the Federal Housing Administration (FHA) back in 1989.

As most people understand, standard fixed or variable rate mortgages provide a payment to borrowers for the purpose of buying a home and must be paid back over a set period time – typically 15 or 30 years.  Where reverse mortgages are different is in the fact that they do not need to be repaid until the loan has reached maturity.  Homeowners are not required to pay any of the interest or mortgage payments and may stay in the home until death or their decision to move as long as insurance and tax payments are kept current.

Do I Still Own My Home with a Reverse Mortgage?

Absolutely.  In fact, you still make insurance and tax payments as normal, and you retain full ownership and use of the home.  You receive monthly statements that track the interest growth on your reverse mortgage total, but you do not pay anything, as the mortgage does not come due until the end of its term.

What Are the Qualifications to Receive a Reverse Mortgage?

Permanent residents and citizens of the United States age 62 or older may qualify for reverse mortgages so long as they maintain a substantial equity position in the home.   Your loan amount depends on a variety of factors include the age of the  youngest owner, current mortgage rates, and your home’s appraised value.  No credit score or income information needs to be provided, as you are not making monthly payments on your reverse mortgage.  The main stipulations are that you need to continue paying property taxes and homeowner’s insurance and must remain living in the home.

Can I Choose to Pay Back My Reverse Mortgage And Keep My Home?

Absolutely.  If you desire, you may begin making payments back to the loan company on a voluntary basis to pay the mortgage in full or in part without incurring any sort of penalty.  If you choose to do repay your reverse mortgage loan, you may also take some of the interest payments you make off your yearly tax bill.  Consult your tax professional for details.  Additionally, you may pay the loan off in full at any time by selling your home, paying it off with cash, or refinancing your home.

How Are Reverse Mortgages Typically Repaid?

As mentioned, you may pay off your reverse mortgage on a voluntary basis.  However, should you choose to let the loan run its course, the total will come due at the passing of the last surviving homeowner.   The loan will also come due if the last surviving homeowner chooses to stop using the home as her or his primary residence.  Any heirs to the home have up to 12 months to sell or refinance the home to pay off the remaining balance, should they choose to keep it.

Should any remaining heirs to the home not want to keep the residence, the lender typically forecloses on the home.  If the foreclosure sale does not earn enough to cover the balance due on the reverse mortgage, the FHA insurance premium  you paid when you closed your reverse mortgage will kick in and reimburse the lender for what balance remains.

Who Are the Best Candidates for Reverse Mortgages?

Reverse mortgages are for anyone who needs money to take care of life’s unforeseen circumstances.  These mortgage programs are perfect for anyone who wants to use the equity they have built up in their home without having to move from it.

Who Should Not Consider Reverse Mortgages?

People who do not foresee living in their home for a long period of time after the reverse mortgage has been taken out should not seek a reverse mortgage?  There are costs you must pay up front (appraisal fees, etc.) for this mortgage just like any other, which you would want to avoid paying as well.

Do I Pay Taxes on Reverse Mortgage Funds?

No.  Any funds received from reverse mortgages are not considered income and are not taxed.

Am I Required to Go Through Mortgage Counseling to Get a Reverse Mortgage?

Yes.  Per federal guidelines, you are required to go through a face to face or phone-based counseling session pertaining to reverse mortgages.   Certification of your completing such a session is sent to your mortgage lender.

Is There Anything Else I Should Know About Reverse Mortgages?

There is a chance that the inflow of cash from your reverse mortgage may move you outside of the range of benefits received from public assistance programs (Medicare or Medicaid) should you currently receive these.  Check with your tax professional for details.

All reverse mortgages carry the same safeguarding measures discussed in this article.  So, you should shop around to find mortgage lenders who service their own loans, if this is important to you.   You may also find that there are better interest rates with different lenders, so be on the lookout for these as well.

What You Need to Know About Reverse Mortgages is from Florida Home Loan Report

On March 25, 2004, HUD published an interim rule in the Federal Register at 69 FR 15586 amending Title 24 CFR Part 206 to implement its refinance insurance authority and mandate an “anti-churning disclosure” requirement as a consumer protection measure. The originating mortgagee of a HECM refinance must contact the current HECM Servicer and obtain the following information:

• The payoff amount for the existing HECM.
• The current principal limit of the existing HECM. This form ensures that the mortgagor is not being induced to refinance his/her existing HECM without benefit to the mortgagor and/or solely for the benefit of the mortgagee.

This measure ensures the borrower is not allocating additional debt. 1) The mortgagor has received the required HECM Anti-Churning Disclosure form; The originating mortgagee of a HECM refinance must contact the current HECM Servicer and obtain the following information.

The major condition is the house is the property of the candidate. If the loan is over a lengthy period of time, when the mortgage comes due, there may be a big amount due. Similarly , if the cost of your house decreased, there won’t be any equity left over.

How Reverse Compounding Mortgages Work

Differing from a standard “forward mortgage”, your debt increases together with your equity. Borrowers who’ve got a high debt to revenue proportion or poor credit could also find reverse mortgages appealing as the equity in the home and the value of the home are far more applicable factors than credit report. As well, reverse mortgages must be the sole debt against your home.

Similarly , if the cost of your house decreased, there won’t be any equity left over. If the loan is over a lengthy period of time, when the mortgage comes due, there may be a big amount due. Often single family homes and little apartments and city houses are also suitable for a reverse mortgage.

In addition to being a home owner of at least 62 years of age, the borrower needs to either completely own their home outright (i.e. Over the years of making mortgage payments you build up equity in your home; that equity can be withdrawn to provide you, the homeowner, with funds that can go a long way in assisting with your standard of living, lowering your medical bills, make improvements on your home, or even towards that dream vacation you’ve been putting off. The reverse mortgage does not need to be repaid to the lender as long as you, and other approved borrowers, use the property as your primary residence.

However, you can use the money obtained from the equity to purchase additional properties. This type of mortgage differs from a conventional mortgage in several key ways; with the age restriction being just the first requirement of qualification. A reverse mortgage is a unique, and often misunderstood, home equity loan that has been tailored specifically for home owners over the age of 62.

If you’re looking for how to figure your potential dollar amount for this type of loan, take a look at our other posts on mortgage calculators.

What Everyone Should Know About Reverse Compounding Mortgages is from Florida Home Loan Report

If you are Shopping for a mortgage mortgage brokers or looking to refinance your existing mortgage, you crapper attain a lot of phone calls to assorted mortgage brokers and receive lots of quotes over the net. The following inform module provide you the knowledge necessary that module save you thousands of dollars.

The par evaluate is the evaluate without any added fees added on to the back. Anything player added to the evaluate gives the broker what is called a Yield Spread Premium, or YSP. Typically, a broker module requirement to acquire 2 points on the backwards end. they does this by increasing the YSP on your interest rate. If a broker charges you anything more than a half saucer up front, you should pay no more than of a Yield Spread Premium to provide the broker five some also a half backwards modify points. A broker should be able to acquire most 2% of your provide turn in fees when your Shopping for a mortgage.

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If you are stipendiary a total of 2 points in front and backwards modify fees, the most you should pay in added broker fees is $600 on large loans and $1000 on small loans. This covers the fixed outlay of every the work that has to be done on effort the provide through, and the authorization to the provide tar and company overhead. The average provide tar module do only 4 loans per month, or basically five some a week. Thus, if a provide is stipendiary discover $2500 in fees, the provide tar module intend most $1000, which is acceptable for the skill necessary to be a provide officer. The remaining $1500 covers overhead and direction fees, and the gift that goes to the provide underwriter, which crapper be $500. Believe it or not, for every provide that is finished, a broker haw pull assign on as lots of as 20 or 30 tire-kickers. Each assign inform costs most $15, so right there’s $450 in fees that hit to be paying from somewhere. The broker fees do not allow other third-party fees much as appraisals, denomination search, denomination insurance, notary fees, document fees, tax escrows, etc.

Did you know that it is not illegal to device and alter in the mortgage industry? Most borrowers rely on the pleasant Faith Estimate when effort mortgage quotes. But, there is no law that says the pledge e or broker haw charge no more than the estimate. Recently Congress tried to pass much a law, but the mortgage business fought it and it died. basically, lots of borrowers who consortium the quotes they received in writing modify up shocked when they intend to closing, and the actual fees being live do not match the pleasant Faith Estimate. The provide tar module look as surprised, even though they or they knew what the real cost were when the deal was submitted. they module say things like something came up on your assign report, or the provide to value ratio was above the lender’s guidelines or some other excuse. lots of borrowers are embarrassed to intend up and leave, so they sign the writing and accept the higher rates and fees. The folks at the Department of Housing and Urban Development are trying to attain it mandatory for lenders to disclose exactly what you module owe before you intend to closing. If the bill passes, a pledge e must verify you a insipid turn that you module owe and that is the test figure. But for now, it is borrower beware.

Buy today you should understand a bit more most the mortgage industry. A pleasant broker module work with as lots of as 20 or more assorted lenders. So there is no requirement to class brokers when Shopping for a mortgage mortgage loans . Let the broker class for you. create a relationship with the broker. Run assorted scenarios by him. Don’t believe any quote you intend or rates that sound great if your assign score is below 680. lots of brokers module beam you a provide covering also a pleasant Faith Estimate with rates that they can’t deliver. If your score is in the low-600′s or less, your evaluate is going to be between 7.5% and 9.5% if you requirement a fixed rate. If your broker won’t fax or beam you a copy of the pledge e approval letter, then you haw embellish individual of a device and alter program, where days from the provide closing, you module intend a call stating the pledge e changed the evaluate and fees based on your assign report. At this point, you hit paying for the appraisal, you hit provided every the documents that hit been asked for and you already hit the money spent in your mind. The broker basically hopes that you won’t backwards discover at the last minute. The problem is that the borrower’s score was 599! there’s no lenders discover there that module do an 80% loan-to-value with a 599 mid-score at 6%. The broker crapper put anything they requirement on the pleasant Faith Estimate. The pleasant Faith Estimate is an estimate and not a commitment!

How To Avoid Some Unexpected Mistakes When Mortgage Shopping is from Florida Home Loan Report