Financial Solutions Home Loans, Inc.
Reverse Mortgage Division
Financial Solutions Home Loans, Inc.
Reverse Mortgage Division
Jeri Skipper
Reverse Mortgage Consultant
Please Call For A free Reverse Mortgage Evaluation
Direct: 831.818.0299
Email: JSkipper@JeriSkipper.com
Let’s Have A Conversation About Funding Your Retirement Goals
Please Contact Me Today!
Jeri Skipper
(831) 818-0299
FAQ's ~ What Is a Reverse Mortgage?
A reverse mortgage can be a powerful financial tool to unlock home equity and help seniors supplement their retirement income. These loans let qualified homeowners ages 62 and older take cash from their home’s equity while still living in the house. The lender pays the homeowner in a monthly payment, in a lump sum, as a line of credit, or a combination of the three.
Borrowers are required to meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and hazard insurance. And the borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
Many people continue to have misconceptions about these loans. Reverse mortgages have evolved over the past decade. Now, certain safeguards are in place to protect consumers. Members of the National Reverse Mortgage Lenders Association (NRMLA) are required to adhere to a strict code of ethics and pledge to serve borrowers with integrity.
Also, the U.S. Department of Housing and Urban Development (HUD) requires borrowers who are interested in a home equity conversion mortgage, or HECM (pronounced “heckum”), to go through an approved counseling agency to ensure they fully understand the process, the loan terms, and what all their options are before they apply.
How Does a Reverse Mortgages Work?
A reverse mortgage lets the borrower convert part of their home’s equity into cash without selling the house or making monthly mortgage payments. Typically, when you’re older, you may not owe that much on your home, and you may have built up a lot of equity, in which case you may be able to pull more money out of it.
Unlike a conventional mortgage, where you make monthly payments to the lender, in this case, the reverse mortgage lender pays loan proceeds to you. You will be required to pay for things like property taxes, homeowner’s insurance, the upkeep of the property, and other obligations outlined in the terms of your loan agreement.
A reverse mortgage lets the borrower convert part of their home’s equity into cash without selling the house or making monthly mortgage payments. Typically, when you’re older, you may not owe that much on your home, and you may have built up a lot of equity, in which case you may be able to pull more money out of it.
Unlike a conventional mortgage, where you make monthly payments to the lender, in this case, the reverse mortgage lender pays loan proceeds to you. You will be required to pay for things like property taxes, homeowner’s insurance, the upkeep of the property, and other obligations outlined in the terms of your loan agreement.
What Are the Types of Reverse Mortgages?
According to the Federal Trade Commission’s Consumer Information website, there are three types of reverse mortgages. Each has a unique advantage. Here are the main types:
Home Equity Conversion Mortgages. HECMs are insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD).
Single-purpose reverse mortgages. These are the least expensive option and great for homeowners with low to moderate income. They’re offered by some state and local government agencies, as well as nonprofit organizations. But there are some limitations. They’re not available everywhere and can only be used for a single purpose designated by the lender, such as paying for home repairs, making improvements, or paying property taxes.
Proprietary reverse mortgages. These are private loans that are only backed by the companies that develop them. The advantage here is for owners of higher-valued homes. They can possibly get a bigger loan advance from a proprietary reverse mortgage. If your home has a small mortgage but appraises at a high value, you may qualify for more funding.
Who Qualifies for a Reverse Mortgage?
What Are the Requirements to Get a Reverse Mortgage?
Reverse mortgages require borrowers to meet a specific set of requirements. To be eligible to take out a reverse mortgage, you must:
What Are Reverse Mortgage Misconceptions Debunked?
There’s a lot of bad information out there about reverse mortgages. Here are the most common myths about reverse mortgages:
You won’t own your home anymore. FALSE. You are still the owner, and the title stays in your name. A reverse mortgage just gives you access to your home’s unused equity.
The lender will get your home instead of your heirs. FALSE. As the owner, you can leave your home to whomever you want. If your heirs want to keep the home, they’ll need to pay off the reverse mortgage balance or refinance it. If they don’t want to take possession of your home, either your heirs or the lender can sell it to pay back the reverse mortgage balance. If there is any remaining balance over and above what is owed, it goes to your heirs.
HECMs have prepayment penalties. FALSE. There is no prepayment penalty on a HECM.
A reverse mortgage prevents you from selling your home. FALSE. If at any time you need to sell your house, you can. The proceeds from the sale would go to pay off the remaining balance of your reverse mortgage. Whatever’s leftover is yours to keep
What Are The Costs of a Reverse Mortgage?
The cost of your reverse mortgage will depend on the type of loan you choose and the lender. There are, of course, some upfront costs. Here are some of the costs you can expect with a HECM:
Once the HECM is Established, What Are the On Going Costs?
How Do You Apply for a Reverse Mortgage?
Applying for a reverse mortgage is a straightforward process. The steps are similar to applying for a regular mortgage.
What Are The Pros and Cons of Reverse Mortgages?
Reverse mortgages are powerful financial planning and retirement funding tools. However, they aren’t for everyone, so you should understand the benefits and drawbacks of these loans.
Pros of a reverse mortgage:
Cons of a reverse mortgage:
This material is not provided by, nor was it approved by the Department of Housing & Urban Development (HUD) or by the Federal Housing Administration (FHA). It is not intended to be a substitute for legal, tax or financial advice. Consult with a qualified attorney, accountant, or financial advisor for additional legal or tax advice.
*There are some circumstances that will cause the loan to mature and the balance to become due and payable. The borrower(s) must continue to pay for property taxes and insurance and maintain the property to meet HUD standards or risk default. Credit is subject to age, minimum income guidelines, credit history, and property qualifications. Program rates, fees, terms, and conditions are not available in all states and subject to change.
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