Reverse Mortgages for Seniors
Posted by: matthew
Sean Davis, a Reverse Mortgage Advisor for Genworth Financial Home Equity Access, Inc., explains what a Reverse Mortgage for Seniors is. Sean provides Reverse Mortgage information and resources for the clients of All Valley Home Care Spokane and All Valley Home Care Coeur d’ Alene.
What is a Reverse Mortgage for Seniors?
A Reverse Mortgage for Seniors allows a senior homeowner to convert a portion of the equity in his or her home, eliminating mortgage payments and gaining tax-free income without losing the title to his or her home. The equity in your home that has built up over the years of mortgage payments and appreciation can be paid to you. Unlike a traditional home equity loan or a second mortgage, no payment is required until the borrower(s) no longer uses the home as their principal residence. Reverse Mortgages offered by Genworth Financial Home Equity Access, Inc. (Genworth) are FHA insured and guaranteed.
Can I Qualify for a HUD Reverse Mortgage?
HUD’s Federal Housing Administration (FHA) guidelines require that a borrower is a homeowner; is 62 years of age or older; has a low enough mortgage balance that it can be paid off at the closing with the proceeds from a reverse mortgage loan; and must live in the home, to be eligible for a HUD Reverse Mortgage. The borrower(s) must receive consumer information from HUD-Approved counseling sources prior to completing the loan. NO Credit or Income qualifications are required.
What types of homes are eligible?
The home must be a single-family dwelling or a two-to-four unit property that is owner occupied. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA approved. It is possible for condominiums to qualify under the Spot Loan Program. The home must be in a reasonable condition and must meet HUD minimum property standards. In some cases, home repairs can be made after the closing of a Reverse Mortgage.
What’s the difference between a Reverse Mortgage and a Bank Home Equity Loan?
With a traditional second mortgage or a home equity line of credit, there must be sufficient income versus debt ratio to qualify for the loan, and monthly mortgage payments are required. The Reverse Mortgage is different in that it pays you and is available regardless of current income. The amount depends of age, current interest rate, other loan fees and the appraised home value or FHA’s mortgage limits for your area-whichever is less. As a home increases in value and the borrower ages, more money is available to borrowers. No payments must be made, because the loan is not due as long as the house remains the principal residence. As with all homeowners: Real Estate Taxes, Homeowners Insurance and other conventional payments like utilities must be paid.
Can the lender take my home away if I outlive the loan?
No! A borrower cannot outlive a Reverse Mortgage! Nor is the loan due. It does not have to be repaid as long as one of the borrower(s) continues to live in the house and keeps the taxes and insurance current. A borrower never has to repay more than the home’s value, which is referred to as a nonrecourse loan.
What’s the most you can owe?
Reverse Mortgages are nonrecourse loans, which means that in seeking repayment the lender does not have recourse to anything other than the Home. Not income, nor any other assets.
So even if a monthly loan amount advances until you are 115, the home declines in value between now and then, and the total of monthly payment advances become greater that the home’s value-you still can never owe more than the home’s value. If you or your heirs sell your home to pay off the loan, the debt is generally limited by the net proceeds from the sale. This is why mortgage insurance is so important. This insurance, which is part of your closing fees, ensures your heirs are not liable for a penny of your Reverse Mortgage after you are gone.
Tags: reverse mortgages
February 24th, 2009 | Posted by: matthew
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