Reverse Mortgage 101: Taking the mystery out of reverse mortgage loans

What is a reverse mortgage?

In a study conducted by the AARP in 2006, 93 percent of reverse mortgage borrowers said their loan had a mostly positive effect on their lives. Three percent said the effect was mostly negative. But what are these reverse mortgages, in a nutshell?

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Reverse Mortgage 101: Taking the mystery out of reverse mortgage loans

What is a reverse mortgage?

In a study conducted by the AARP in 2006, 93 percent of reverse mortgage borrowers said their loan had a mostly positive effect on their lives. Three percent said the effect was mostly negative. But what are these reverse mortgages, in a nutshell?

(more…)

It is fairly easy to qualify for a reverse mortgage, but be aware of hurdles that can pop up in the approval process

One of the great things about reverse mortgages is that seniors don’t need income or high credit scores to qualify. However, there are possible issues like those discussed below that homeowners may want to think about to avoid any surprises and disappointment in the loan approval process. (more…)

It is fairly easy to qualify for a reverse mortgage, but be aware of hurdles that can pop up in the approval process

One of the great things about reverse mortgages is that seniors don’t need income or high credit scores to qualify. However, there are possible issues like those discussed below that homeowners may want to think about to avoid any surprises and disappointment in the loan approval process. (more…)

What happens to a reverse mortgage and the home after the borrowers pass away?

Reverse mortgages can be confusing because they are so unique. First off, repayment during the life of the borrowers is never a requirement. Seniors can and occasionally do choose to make payments towards the principal and interest during their lifetimes, but this is voluntary. The loan proceeds and interest are not due until the last of the borrowers permanently leaves the home. As with any home loan, borrowers must continue to pay the property taxes and home insurance and maintain their homes, but then how is the loan balance repaid?

(more…)

What happens to a reverse mortgage and the home after the borrowers pass away?

Reverse mortgages can be confusing because they are so unique. First off, repayment during the life of the borrowers is never a requirement. Seniors can and occasionally do choose to make payments towards the principal and interest during their lifetimes, but this is voluntary. The loan proceeds and interest are not due until the last of the borrowers permanently leaves the home. As with any home loan, borrowers must continue to pay the property taxes and home insurance and maintain their homes, but then how is the loan balance repaid?

(more…)

One of the qualifications for a Home Equity Conversion Mortgage (HECM) (the most common type of reverse mortgage in the U.S.) is that the borrower(s) live in the home as their primary residence for the life of the reverse mortgage loan. It is clear then, that seniors cannot carry a reverse mortgage on rental property they do not occupy, but what does this mean for borrowers who wish to take extended vacations, live part of the year in a second home, or have to go to the hospital for an extended period of time or move to a retirement home? There are no hard and fast rules under all circumstances, but there are some general guidelines seniors can follow. (more…)

One of the qualifications for a Home Equity Conversion Mortgage (HECM) (the most common type of reverse mortgage in the U.S.) is that the borrower(s) live in the home as their primary residence for the life of the reverse mortgage loan. It is clear then, that seniors cannot carry a reverse mortgage on rental property they do not occupy, but what does this mean for borrowers who wish to take extended vacations, live part of the year in a second home, or have to go to the hospital for an extended period of time or move to a retirement home? There are no hard and fast rules under all circumstances, but there are some general guidelines seniors can follow. (more…)

When taking out conventional (or Forward) home loans, people generally view fixed interest rates as being safer than adjustable rates because fixed rates provide certainty. However, in the world of reverse mortgages, the considerations are different and adjustable and fixed rate plans each have their pros and cons. Unlike with conventional adjustable rate home loans where borrowers worry about the potential for increases in their monthly payment obligations, reverse mortgage borrowers do not make monthly payments so they do not have this same concern.

(more…)

When taking out conventional (or Forward) home loans, people generally view fixed interest rates as being safer than adjustable rates because fixed rates provide certainty. However, in the world of reverse mortgages, the considerations are different and adjustable and fixed rate plans each have their pros and cons. Unlike with conventional adjustable rate home loans where borrowers worry about the potential for increases in their monthly payment obligations, reverse mortgage borrowers do not make monthly payments so they do not have this same concern.

(more…)

HUD says heirs wishing to purchase home under reverse mortgage will not pay more than home value even if loan amount was greater

The Department of Housing and Urban Development (HUD) released FAQs this week stating that heirs who purchase property carrying a HECM reverse mortgage after the borrower has left the home or passed away will not pay more than the home value even if the amount paid to the borrower under the loan exceeded the homes value. This action follows a recently dismissed suit by the AARP against HUD for a short-lived policy change by HUD in this regard. (more…)

HUD says heirs wishing to purchase home under reverse mortgage will not pay more than home value even if loan amount was greater

The Department of Housing and Urban Development (HUD) released FAQs this week stating that heirs who purchase property carrying a HECM reverse mortgage after the borrower has left the home or passed away will not pay more than the home value even if the amount paid to the borrower under the loan exceeded the homes value. This action follows a recently dismissed suit by the AARP against HUD for a short-lived policy change by HUD in this regard. (more…)