[Loan Doctor]

What is a reverse mortgage?

It is a way to take money from the equity of your home and you never have to pay it back.

Qualifications:
At a minimum the youngest person on title has to be 62. Works best if you are 70's.
At 75 you can have 65% equity in your home and it works to an extent. What I mean by this is that with that situation, you won't have any house payments ever. If you are older or have more equity in your home, you can get money back. So, someone that is 62 would need about 50% equity, someone that is 80 would need about 20%.

If you qualify, once you get the loan you can never be foreclosed on. Let the hospitals/doctors etc say what they want they can not do much to you. These are non-recourse loans that can not be foreclosed on. You can live there as long as you live. No mortgage payments.

You have to pay off any judgments and Tax liens that show up on title. Collections don't matter

You keep title to your home, when you die your heirs inherit the property. One (or maybe all of them) have a clause that-worst case-when you die your heirs can have the property for 95% of current appraised value. In my mom's case-she is 78 and in bad health-when she dies her heirs will get about 65% of the value of the home.

Hope that is informative, but that it raises some questions.

Charles

[Hedwig]

Good information. I've heard a lot about reverse mortgages. In fact, one of the instructors in my MBA program does reverse mortgages. I know something about them but never knew all of the requirements.

They are federally-backed loans, aren't they? Or the government has something to do with them, anyway, as I recall.

[Loan Doctor]

There are 3 different types of Reverse Mortgages.
1) The best for most people are called HECM (Heck'em). These are FHA programs. Interest rate is the lowest, if you part part of your money into a HELOC type fund it pays the highest etc.

2) Fannie Mae. These loans are sold to the FNMA pool, rates are a bit higher-mostly only good if your home is in a price range that does not fit the FHA limits (soon to be raised anyway) Loan size limited by the max conforming amount, currently 417K

3) Proprietary programs. Most of the providers of Reverse Mortgages have their own program. If someone wants to get a Reverse mortgage on a million dollar home (I guess it would be nice to live in one if you did not have to clean it) then this is the one to select. Because the program rules are a bit different for each lender, these loans typically don't get sold to other investors.

Charles

[ilovemydogs]

Originally Posted by Loan Doctor

There are 3 different types of Reverse Mortgages.
1) The best for most people are called HECM (Heck'em). These are FHA programs. Interest rate is the lowest, if you part part of your money into a HELOC type fund it pays the highest etc.

2) Fannie Mae. These loans are sold to the FNMA pool, rates are a bit higher-mostly only good if your home is in a price range that does not fit the FHA limits (soon to be raised anyway) Loan size limited by the max conforming amount, currently 417K

3) Proprietary programs. Most of the providers of Reverse Mortgages have their own program. If someone wants to get a Reverse mortgage on a million dollar home (I guess it would be nice to live in one if you did not have to clean it) then this is the one to select. Because the program rules are a bit different for each lender, these loans typically don't get sold to other investors.

Charles

I have done four for friends and family.
The last one I did was for my elder friend who lost her husband. They had not saved a lot of money (about 100K) Home and artwork was THE asset.
Well my friend was feeling panicked as she is used to hubby bringing in money, and I knew that if she did not get a reverse mortgage she was going to have to sell her home, which she did not want to do.
About ten years ago I had advised her to move to one floor (better for her husband that had a heart problem)and rent out upstairs, which she did and it brought in an income of $1900 a month.
There are no children involved and my friend has no one save a cousin.
Well we found that many banks were eager to do reverse mortgages and we would set up meetings at her home to see which would be the best for her.
After a few weeks we decided on one, and they had an appraiser come out. Home was appraised for 980K,)assessed value was 1.2 so I knew there was still going to be more value left if needed later on)there was no mortgage, and they gave her 540k which she took in a lump sum, AND because Hedwig had told me about some things, we did a lot of different years cd's, 1 2 3 4 5 year, and also put some money in another fund, and this has been great. My friend is happy and secure. Was able to do things to her home (new kitchen and bath) and bought a nice new car, and I feel she is much healthier mentally and physically without the worry of how to pay her bills...
I did another for my cousin whose home was not worth much 400K and they gave her 180k (she also had no mortgage) and this allowed her to stay in her house and to keep up with the taxes and bills.
So I say a reverse mortgage is the way to go but you have to know who is behind the mortgage and do your homework.
I would not recommend it for people that do not have at least 50 percent equity in their home, but that is just my opinion.

[Hedwig]

I'm glad my input was useful!! Thanks.

[ilovemydogs]

Originally Posted by Hedwig

I'm glad my input was useful!! Thanks.

Yes it was. I thanked you before, hadn't I?
If not, my apologies as it was not meant to be ignored.
I don't like it when I help someone and they don't thank me, or we never hear from them again.

ILMD

[Hedwig]

You probably did, I just don't remember. I try to help everyone, and after a while it all merges together.