Reverse Mortgage General Info Q&A – Ask ARLO™

Hello West,

I am not entirely sure what loan you have. A standard HUD HECM reverse mortgage would not make such a statement to you, and before you make any final decisions, I would encourage you to sit down with your son, and maybe even an attorney, and review the loan, any additional agreements you have made with the lender since its inception, and the outstanding balance. Then compare that information to the remaining equity in the property, if any, before making any final decisions.

Did you sign any modifications with this "we will pay your taxes and insurance, but we get the house" agreement? Before you just walk away and get nothing, I would really encourage you to sit down with an attorney, possibly get a broker's price opinion from a reputable senior real estate agent in your area, and review your reverse mortgage agreement, the amount you owe, and what you might expect to receive if you sold the property.

It could very well be that it is in your best interest to walk away and let the lender dispose of the property, but the information you just relayed is a bit unusual, and I would think it is in your best interest to verify all options.

Hi Dan,

You or your estate/heirs pay back only what you borrow plus whatever interest accrues when the home is sold. In your example, the line of credit will grow on the unused portion of the loan, so in 5 years, the borrower will have more money available to use if needed. Some borrowers end up using the credit line growth later for medical needs, etc., and some never use those funds. Most properties appreciate, and it’s not a matter of coming out ahead; it’s just a matter of how much money the borrower used and how much equity they left for their heirs.

However, some properties will not appreciate as rapidly, and borrowers will use all their funds and/or credit line growth. In some instances, the amount owed will far exceed the value of the property when the property does not appreciate or, in some cases, depreciates. In those cases, the borrower comes out ahead because their credit line growth is constant, and their estate/heirs never have to pay any shortfall if the home will not sell for an amount sufficient to repay the loan's outstanding balance. In fact, if the heirs want to keep the home, they can repay the loan at the lesser of the amount owed or 95% of the current market value regardless of how much the credit line grew, the borrower was able to take out after that line growth, or how long the borrower was able to remain in the home without making a mortgage payment.

To say who comes out “ahead” based on which action in advance would depend on too many future events, including borrower longevity, property values, future interest rates, etc. It would be difficult, if not impossible, to predict so many future variables. You can look at known factors to determine how the loan will work for you and if it will achieve your goals and then consider other possibilities. But I would caution against doing anything solely because it might render one set of conclusions if all circumstances go one way.

Just remember that you control how much money you borrow when you borrow it, and if you make any repayments along the way (while there are no payments required on a reverse mortgage, you can choose to make payments at any time in any amount without penalty) and you will never control things like how quickly the property appreciates (other than how well you maintain it and any improvements you make) and you can’t control interest rates.

In other words, if you plan and are willing and able to make changes as circumstances dictate, you can still positively impact your outcome by changing things as needed. In the circumstances you describe with credit line growth and a large line of credit after many years, if the house value goes way down, maybe you want to take advantage of that credit line growth later by taking the funds and leaving other assets to heirs (always talk to your financial advisor). If the home value rises significantly and you don’t need the funds, perhaps a more sparing use of the line of credit would be better, allowing the home to further appreciate without a significantly growing balance on the loan.

Perhaps you’ll have medical expenses or care needs that will make that decision for you. The point is that you will have the option to make those decisions and the information that you need to make informed decisions.

The answer to both questions is yes, and we have made several such loans.  Are you planning to transfer the title before or after completing your reverse mortgage?  If not, until after, he will also be required to go through a lot of the paperwork and counseling.  If you change the title to just your name before the loan begins, your brother will not be required to attend counseling, but there may be other issues depending on how much money you need to buy him out.  Before you do anything else, you should contact a lender to determine the cleanest way to complete the transaction.

Hello Brian,

You must be a US Citizen or a legal permanent resident (green card holder) to be eligible for a reverse mortgage.

Hello Ellen,

It is not possible to take a reverse mortgage on only a portion of a property.  Since the loan balance grows if no payments are made and borrowers can live in the home for the rest of their lives then let their heirs take the property or even just allow the bank to sell it to repay the obligation, there would be no way for the bank to take and sell “half a house” at that point if the heirs did not wish to repay the obligation and retain or sell the home (or their half anyway).

Hello Betty,

The notary will need your identification to notarize you and other than that, the lender will let you know if there are any remaining outstanding conditions that still need to be met.  If all your conditions have been met, your only documents would be your current ID’s.

Yes you can!  As long as you are both on title and both living in the home, you can both be on the loan and have the same protections.  The loan is not limited only to married couples.

Hello Connie,

If you have a HUD HECM mortgage, you will not be affected by the bankruptcy other than the loan will be transferred to another lender/servicer.  The loan is an asset and it is insured by HUD. 

The servicing rights will be transferred or sold to another lender and your loan is insured and backed by the federal government against default so that you will always receive your funds.  Legally, the action doesn’t mean much to you at all other than you will soon have a new loan servicer.

Hello David,

Unfortunately, I have no information on Canadian lenders so I have nothing I could share with you.  I would suggest an internet search for that. 

The HUD program is only available for HUD-eligible properties which would not be the case if the property is not located within the US.  Also, to be eligible, your son would need to be 62 or over and living in the home if it were in the US to be eligible for the reverse mortgage program. 

You could not get a reverse mortgage on a property you did not own or in which you did not live.  Taxes would be another issue altogether and on that I would need to refer you to a tax specialist.

Hello Charles,

We incorporated under the name of United Southwest Mortgage Corporation, Inc. in 2004. 

We operated with the Fictitious Business Name (DBA) of All Reverse Mortgage Company until HUD changed the rules stating that your legal name needed to be on all legal documents rather than your legal DBA in 2011. 

At that time, we changed the corporate legal name to All Reverse Mortgage, Inc. since All Reverse was the name by which we were known to all our customers and under which we had been originating all loans. 

At the time we originally incorporated in 2004, we chose a program neutral name knowing we could file DBA’s for different lending avenues should we branch out and not being 100% certain at that time that we would wind up originating nothing but reverse mortgages at this company.

We have originated only reverse mortgage loans though, so the name change was the only option that made sense to us when HUD changed their rules.  We changed no ownership, no personnel, and no assets at that time. 

We even kept the same federal tax ID number. 

So to make a long story short, our senior management team has over 100 year of combined mortgage banking experience and this company has been in business for about 16 years.

Hello, 

The answer is no and yes.  No, the sisters cannot get the loan on “their part of the house” but yes, they can get the loan with the brothers consent and participation.  The loan would cover the entire property though, not just a fraction of the ownership.  The sisters cannot get the loan without the participation of all parties on title.

There are no rent payments or monthly mortgage payments if you have a reverse mortgage.  You are responsible for your own taxes and insurance though.

Hello Yvette,

If you are also on title with mom, she can get the loan with your participation. 

You would also need to attend counseling and sign some of the loan documents indicating your understanding and acceptance of the loan terms but with your approval and some participation, she can get the loan even with you also on title.

Hello Paul,

The lender can give you no information regarding the loan unless the owner had already written them an authorization to release the information to you on their behalf. 

The heirs of the owner will now need to determine what they are going to do with the property and so I would suggest that you contact them if you have any way to do so if you are interested in the property to see what you can work out. 

If the owners have heirs, they may contact you shortly and at that time you can discuss length of time you may remain in the home with them and the disposition of the property. 

If there are no heirs and the property go to foreclosure, eventually you would be served with a notice to leave the premises but that would be a minimum of 150 or more days out to complete.

Hello, 

There are a few ways to answer this and I want to be sure I understand your meaning so forgive me if I give you more information than you were looking for. 

If you mean can you sell your home and purchase another with the equity, the answer is most definitely yes.  You can even use another reverse mortgage along with your equity to purchase the next property to give you greater purchasing power.

If you mean can you use the equity in your home in the form of remaining reverse mortgage proceeds to buy another home as a second home or a rental property, that answer is also yes. 

As long as you continue to occupy the home with the reverse mortgage as your primary residence, you can purchase other property if you so desire and you can use the funds from your reverse mortgage for any purpose you choose.

Finally, if you are asking if you can get another loan behind your reverse mortgage to use to purchase another property, the answer is still technically yes as long as you continue to occupy the property with the reverse mortgage as your primary residence, but that may not be an easy task. 

Many equity lenders are hesitant to lend behind a reverse mortgage due to the fact that the balance increases if you are not making any payments on the loan and they do not know where that will end as you can live in the property for life without ever being required to make a mortgage payment on the loan. 

Therefore, the reverse mortgage will not stop you from obtaining any additional loans to enable you to purchase other property, but you may find it difficult to obtain that financing.

Hello Joe,

There is no requirement that reverse mortgage borrowers be married.  If you are both over 62 and live in the property as your primary residence, you would be eligible for the loan.

Hello Georgi,

I can only surmise from your question that you were using one lender and you have decided to switch to another and the new lender has requested the Case number to be transferred to them, is that correct? 

There is no “lapse” as the old lender does not cancel the case number with HUD, they are merely put on notice that you have cancelled your loan with them.  If they had cancelled the case number with HUD, there would be no need to transfer the number to the new lender, that lender would need to request a new number. 

The delay is probably since many lenders are a bit slow to transfer Case Numbers when requested by the new lender.  They should make the transfer quickly, but it does not always happen that way. 

The new lender cannot put out an application or order any services until it has a Case Number though so you may want to get involved and contact your old lender and request that they honor your wishes to transfer your Case Number immediately.

Hello James,

ARLO is a registered trademark for the acronym All Reverse Loan Optimizer.  Arlo is the private calculator which we developed that allows borrowers to determine which reverse mortgage program best meets their needs base on their circumstances.

Arlo is owned by All Reverse Mortgage, Inc., a licensed mortgage lender with NMLS license #13999.

You can verify lenders’ HUD approvals on the HUD lender list posted on the HUD website (printed below). 

You must be a HUD approved lender in order to offer the HUD/FHA loan programs unless you are a licensed broker and are an originator who is taking the loan to a HUD-approved lender.  All Reverse Mortgage, Inc. is a HUD-approved lender.

To verify the current license status of any company in any state, you must go to the National Mortgage Licensing System (NMLS) consumer access site at https://www.nmlsconsumeraccess.org/ to look up any company or individual to verify licensure status. 

If you know the NMLS number, that is the fastest way to search and if not, you may also search by name and address.  

So to answer your question directly, there are no federally insured reverse mortgage companies, only the HUD federally insured reverse mortgage known as the Home Equity Conversion Mortgage (HECM) and we are an approved HUD Lender, licensed to lend in Texas.

Hello Steve,

You can use the funds for whatever purpose you choose.  The funds are only available up to 60% of your available limit in the first 12 months though unless you are using the funds to pay off a mortgage or to buy the home on which you are placing the reverse mortgage. 

If you can purchase the condo with the 60% then you could purchase it right away, but you also may have to wait 12 months until you had access to 100% of your available funds.

Hello Hollis,

The good thing about a reverse mortgage is that you can continue to live in the home payment-free no matter what you owe on the property and no matter how long that may be. 

If you ever come to a point where you feel you can no longer live in the home and that you must leave the property, the lender can never look to any other assets to repay the obligation. 

No matter how long you lived in the home payment-free, no matter what money you were able to save as a result, if you cannot continue to live in the home and must leave, you have no recourse against you or your estate.

Good Morning,

Reverse mortgages do not have a 30 year time limit.  As long as you live in the home and meet the loan requirements (pay the taxes and insurance and maintain the home in a reasonable manner), the loan is still open and in good standing.  That includes 30 or more years in the future.

Hello Carol,

The loan is insured by HUD.  If the lender were ever to become insolvent, HUD steps in to guarantee that your parents always have access to the funds available to them under the terms of the loan.  There are also terms in the reverse mortgage which require lenders to pay borrowers late charges if payments are not made within the prescribed time periods.  The loans are also an asset for the lender.  If they were to experience financial difficulty, they would probably look to selling their portfolio of loans that they service to another lender before losing them to HUD for no compensation.  In any event, your parents should never see an interruption in their access to funds for as long as their reverse mortgage stays in good standing.

Hello Ana,

You really need to speak with an attorney for this.  I don’t know the terms upon which your mom bought the home and what assurances she received at the time.  When someone buys a property at a foreclosure sale, you want to be sure that it is the first lienholder who is the entity foreclosing and that the property is not subject to any other liens, but I don’t know if she did that. 

For instance, when a lender has the first lien position on a property and then forecloses, if there is also a second lien on the property, that second lienholder has the right to step in and protect their interest by paying the prior lienholder, but if they do not do so, their lien is eliminated with the foreclosure.  A reverse mortgage takes first lien position.  I don’t know the status of the lien position with the HOA or what they disclosed to your mom.

This is where title insurance really comes in handy.  When you utilize the services of a title company when you buy a property, they search for other liens as well as give you title insurance insuring that your lien is valid, and they pay a claim if something like this happens and it turns out your claim to title is not valid after they insure it.  Your mom probably never had that option at a foreclosure sale though.

I do not know what your rights are at this point or even what was presented to your mom at the time she bought, and I would suggest that she contact an attorney to sort things out for her.  Try to find her sale documents first to see if they specifically warrant the title or not, and especially if they warn of possible liens.  Either way, do not wait too long or it may be too late to protect whatever rights she may have.

Hello Morlyn,

I can only surmise that the reason you are asking this question is because you have a reverse mortgage on the property, is that correct?  If so, yes, the bank can place a lien behind your existing reverse mortgage.  Most banks/lenders do not like to place additional liens behind reverse mortgages because the loan balances grow, but there is no prohibition against it.

Hi Sandra,

You own the house now; you just have a loan against the equity.  If you want to pay off the loan, you may do so at any time without penalty.  If you are able, you can make payments in any amount to slow the accrual of interest or to begin paying off the balance, and there is never a prepayment penalty.  If you choose to sell the home, any equity remaining is also yours.

Hi Carol,

You would be listed on the new loan and it does not matter that you are not on any previous loans.  Your age and the fact that you are an owner of the property living in the home qualify you for the loan.

Hello Naomi,

You can continue to live in the home for life without making any payments on the reverse mortgage, even if you have exhausted your available funds.  Many people use all their funds at the very beginning of the loan just to purchase a property or to pay off their existing loan(s) so they can live payment-free, and there are no issues with “eviction”.  You own the home; you are not a tenant. 

There is something you should consider though.  If, when you do get to the end of your available funds, you think that you will not be able to live comfortably in the home with your other income and still be able to meet your obligations (living expenses, taxes, insurance, etc.), you really should consider other options now before it becomes dire.

There is never a prepayment penalty on a reverse mortgage, and if you still have equity in your home, you can always consider selling and downsizing to another home that might better meet your needs and finances.  None of us likes to think about moving from a home we love, but sometimes the choice is made for us by our finances, and it’s always better to do it on our own terms than to wait until we are forced to make a hasty decision. 

If you have family or close friends you can discuss the possibilities with, it’s always better I find to have the input of those you can trust to get a perspective from someone who may not be as invested as you.  At any rate, if you are comfortable without the use of the reverse mortgage line and are just concerned about the available funds being depleted, you do not need to worry; you can still live in the home for as long as you like with no mortgage payments due.

Remember, you must still pay your taxes and insurance and maintain the property in a reasonable manner to remain in compliance with the loan, but otherwise you are fine.

Good Morning,

I am not sure whether by “server” you mean “servicer” or a process server of some sort harassing you.  For the purpose of this answer, I am going to assume that you mean servicer because a server would only act at the behest and direction of a servicer or lender in the first place.  There are some things a lender/servicer can request as a condition of the loan. 

All borrowers have the right to expect to live free from harassment by their lender or its chosen servicer.  The real question here is what the action is and whether a reasonable request has been deemed harassment, or whether the servicer/lender has made an unreasonable request with which you refuse to comply and now deem to be harassment.

That distinction could be a legal one.  As such, I would suggest that you contact a reputable attorney in your area to determine whether the lender’s actions are within the scope of their rights as a lienholder or have crossed the line.  If they have, the attorney will be able to tell you what remedy you might have.  If they have not and their actions are not harassment, the attorney can also advise you, giving you an opportunity to rectify the issues with the lender. 

After all, if the lender is in the wrong, a letter from an attorney may be all it needs to stop the lender’s actions, and if the lender is acting in accordance with the rights given to them in the legal documents, wouldn’t you rather find out now than before your disagreement has a chance to progress into something more?

Hi Betty,

You can add anyone to the title you choose.  You cannot put them on title solely, as that would create a condition that would require the lender to call the loan due and payable, but as long as at least one original borrower is still on title (you), you can bring your daughter on with you, and it’s not a bad idea to do it now while you are still able.  It’s much easier now while you can still direct your desires.

You need to remember that by adding your daughter, you have resolved her title issues after you pass, but the loan will still become due and payable once you no longer live in the home as your primary residence.  Adding her will eliminate her need to change the title later, but it doesn’t eliminate her need to pay off the loan or sell the property when you pass.  She can refinance the loan with another loan in her name, pay it off with other funds available to her, or sell the home at that time, but the loan will need to be retired.

Hi Vicky,

If you are 62 or over, you are eligible for a reverse mortgage.  You can own the home with or without a current loan/lien on the property and still bet the loan, you just have to know that if your do have a loan on the property, that loan must be paid in full with the reverse mortgage proceeds.  There can be no other loans on the property when the loan closes.

Hello Donna,

If you used a reverse mortgage for purchase, you probably used all your available funds on that loan at the time you bought the house.  If there is enough equity, you could refinance and use the proceeds for any purpose you wish, but I am afraid the home would need to appreciate quite a bit before that would work. 

The reverse mortgage does not prohibit you from obtaining other loans behind it, but you may find it difficult to locate a lender willing to go into second position behind the reverse mortgage knowing that you are not making any payments on the first loan. 

However, since the flip would be a short-term proposition, you may find individuals willing to offer a shorter-term loan; I just would not know who to direct you to for such financing.  I would also advise you to be very careful about the terms of such financing.

Hello Kathleen,

Unfortunately, there is no paperwork that you can use to achieve the goal of adding your name to an existing reverse mortgage.  Once a loan has been closed, you cannot add other names to the loan. The only way to have your name on a reverse mortgage would be to close a new loan with you also included as a borrower. 

Hi Sandy,

There is no requirement for a face-to-face application for a HUD HECM reverse mortgage.  Some jumbo or proprietary loans do require a face-to-face meeting at some point, whether at application, at loan document signing, or some time during the process.  If your loan is in the FHA-insured program, you should be able to apply online unless the lender is concerned with something that I cannot foresee.  If they are adamant and so are you, you can always check with other lenders.

Hello Favian,

As long as at least one of the original borrowers remains on title, you can add anyone else to title with that borrower.  This means you can add your children, your other family or your friends if you like.  What that does not do is protect them from the loan becoming due and payable when the last original borrower on the loan is no longer living in the property (whether because they pass, move permanently to assisted living or just decide to move their residence). 

Once all original borrowers on the loan are permanently gone from the home, the loan becomes due and payable but having the title already include your child may make it easier for them to proceed with refinancing the loan or selling the home at that time so it’s not a bad idea.  I can’t give you legal advice and don’t know how this will affect any probate issues though so for that, you should consult with a licensed attorney for guidance. 

Good Afternoon, Sheila has the right to sell her home. Anyone who has a lien has the right to be paid for the bona fide lien. Therefore, Sheila can sell her property but when she does, she must pay off any liens on the property in order to transfer the title to the new owner. I assume you are saying that the outstanding charge is some sort of lien? Is it a mortgage or other lien that is recorded against the property? If so, Sheila can sell her home, she owns it, but before the title will pass to a new owner, any outstanding liens must be removed or paid off at the closing of the sale so that the new owner does not inherit Sheila’s debt.

Hi Rosalie,

You should check your closing statement from when you closed the loan, but there was nothing to “get back” once you closed the loan.  Let’s use an example.  If you had a reverse mortgage with $100,000 line but had $5,000 set aside, you only had $95,000 of the line available to you and the other $5,000 was only used as needed for the servicing fees.  If you kept the loan out for several years and used $2,000 of the set-aside fees, that $2,000 would be added to the outstanding loan balance as you used them. 

The remaining $3,000 was never borrowed, so you did not have to pay it back when you paid off your loan.  The entire $5,000 was never taken out all at once and placed into an account; it was used only as needed to pay the specific fee for which it was set aside.  The term “set aside” means you don’t have access to this portion of the loan; it isn't physically set aside in a separate account and must be repaid if not used.

If you never used them, they were never borrowed funds.  And if they were never borrowed funds (and therefore never repaid when you paid the loan off), it’s more like having a line of credit or a credit card that you didn’t use.  If you closed the account while the card has a $10,000 line available but you only used $1,000, you only have to pay off the $1,000 that you actually used.  And that doesn’t mean that you get a check for the other $9,000, which would be the same mistake if the lender sent you a check for funds they didn’t allow you access to but you also did not have to pay back when you paid off your loan balance.

Those set-aside funds were just unavailable for you to borrow but were used only as needed to pay the servicing fee and only showed as increased principal balance as each servicing fee was paid – not the entire $5,000 in the beginning.  If you paid the loan off before you needed those funds, you never borrowed them, and therefore, you did not have to repay any portion of them that were not used to pay those fees when you paid the loan off.  Therefore, there is no refund due to you for money you never borrowed and did not repay – just like the $9,000 in the credit card example above. 

Also See: https://reverse.mortgage/set-aside

Hello Nancy,

There is never a prepayment penalty on a reverse mortgage, and you can always make a payment of any amount at any time.  Many borrowers choose to make monthly, quarterly, or even annual payments, as needed or as allowed, for tax purposes or to keep the balance from rising. The great thing is that you can make any payments you want, whenever you want. Since no payment is ever required, if it is not convenient for you to make a payment in a particular month or by a specific date, it's never an issue because it wasn't due in the first place.

Hi Wendy,

The same way you would any other home with any other mortgage.  Once you have a solid purchase contract in place, have your settlement agent send in a demand request to the reverse mortgage servicer and they will fill out the beneficiary’s demand for the amount to pay the loan in full just as with any other loan.

You should have a good idea of what you owe based on your most recent statement so you know generally what the payoff will be and you will have an idea what you will have left over after the sale of the home (with interest and final costs, they are never the exact amount as what shows on the last statement but it gives you an idea).  If you have any questions, you can always contact your servicer but you don’t need any prior approval or prior notification – it’s your house and you can sell it any time you desire.

One owner of a property cannot get a reverse mortgage without the consent and  participation of the other owner. This is true with all loans. A lender can't encumber a property with a loan unless all owners agree to the loan or the lender would not be able to enforce the terms of the loan if those terms include any type of early repayment provision in the event of default.

Hello Tom,

This is not a question for us but you should probably seek legal counsel.  You see, the lender has a non-recourse loan which means that as far as the reverse mortgage loan is concerned, your property is the only collateral from which they can seek repayment of the obligation.  I cannot advise you of the rights of the HOA and whoever levied the special assessments against you.  They may still have the legal right to seek further collection efforts against you.  You should contact an attorney in the area where the property is located who is familiar with the local and state laws to determine your rights and liabilities in this matter.

Hello Grace,

If your son comes off of title and you apply as the sole title holder, there would be no problem that he was on the title or the previous loan. The reverse mortgage would not affect him in any way.

Hello Kurt,

Your family will never be burdened and can never be made to pay any shortfall.  I would strongly suggest that you contact a real estate agent to find out what they think a most likely selling price for the home would be.  After all, you may be surprised and if there is still some equity left, however small, you should receive it.

If it does not look like there is anything to be gained by proceeding with a sale, then you can contact the servicer and let them know that you must leave the property to go to assisted living and that you wish to execute a Deed in Lieu of Foreclosure.  I don’t know how long it will take them to be ready to receive the home, but I would make sure you are ready so that if they can proceed, you will not be pressed to move sooner than you are prepared to move.

At any rate, your heirs will not be burdened in any way as the lender has no recourse on the loan other than the property and cannot look to other assets to repay the obligation.

Hello April,

The way you are explaining it makes no sense but I think I know what you mean.  The reverse mortgage is a loan where the amount available to the borrower can grow over time which gives borrowers access to much more money later in the loan if they do not access their funds early on. Also, if borrowers do borrow all funds immediately, the balance owed grows as interest accrues and no payments are made by the borrower thereby increasing the loan balance over time above the starting loan amount. 

Therefore, the face amount of the documents must be greater than the amount the borrowers initially receive and HU requires that the documents are recorded at 1.5% of the property value to cover for the potential increase in the balance and amount available, even though the borrower may not borrow that much and may never owe that much.

Very similar to a Home Equity Line of Credit that is recorded for $100,000 from which you may never take more than $5,000 – it’s still recorded at the higher amount in case you do borrower more later.  In your example, the home was worth $200,000 so the Note and Deed face amount were for $300,000 to cover any growth in the amount of the loan available to mom over the years, but she only ever owes what she actually borrows plus any interest that accrues on that amount. 

That takes us to the next part of your question.  Mom didn’t have to “buy it back”.  She always owned the home, she did not need to buy anything back.  It sounds though like she had a balance owed on the loan after 2 years of $24,000. If she or the heirs want to pay off the loan at that point or mom moves out of the home or passes and the loan becomes due and payable, only the part mom owes must be repaid.

In this instance, that sounds like it would be the $24,000 outstanding balance – not the entire loan for which she was qualified but never borrowed and certainly not the face amount of the Note and Deed that she did not receive ($300,000). She or the heirs are not “buying it back”, they are merely paying off a loan that has come due at that time and the balance of the loan due is $24,000.

Hi Doug,

A reverse mortgage is just like any other loan in this regard.  If the lender has to foreclose on the loan, it can only do so through the foreclosure laws as established in the state.  In the case of a foreclosure on a Deed of Trust, the lender works through the Trustee (a third party designated in the Deed of Trust and usually a title company) who will sell the home at auction.  The initial bid at the auction is the amount owed to the lender plus any costs accrued to date.  This is the only amount the lender may bid.  In your example, even though the house is worth significantly more than the amount owed, the lender may only bid the $150,000 that is owed to them and may not make any further bids against other bidders even though it would still be profitable to do so to try to make money for the bank.  If no one bids against the lender at auction, the property becomes the lender’s for the amount owed.  If others bid (as is usually the case when there is significant equity as in your example), the lender is out of the bidding process after the first bid is received that exceeds the lender’s opening bid.

The trustee will pay off the lender with the proceeds of the sale and the remaining money is then the property of the former owner of the property.  In the case you cited, if the former owner has passed, the money would go to the estate of the former owner usually through a court action.  If the owner died with no heirs and no will directing that their estate be paid out in any certain manner, I cannot tell you for sure where the money would go in all instances but I can only assume it would escheat to the state under those circumstances.

Hi Don,

The answer is the same for any borrower aged 62 and over who is eligible for a reverse mortgage.  If the transaction is a purchase, you must occupy the home as your primary residence within 30 days after closing the loan.  If it is a refinance transaction, you must be in the home and can demonstrate that the home is your primary residence, there is no set time frame.  In other words, if you buy a home, then move in, you can apply immediately.  If you have other property that you have owned for a long time that you intend to keep that has been your primary residence or you have owned a home that has previously not been your primary residence and now you want to claim it as your primary residence and do the reverse mortgage, the lender will want to see that you have truly made this home your primary residence by taking the steps that would indicate to the lender that you have made this home a primary residence.  They will request documentation to show that it is no longer a second home or other property and may review some timeframes based on past living patterns such as living in warmer climates only during the winter, etc.  The lender will utilize a common sense approach to determine whether or not primary residency has been established with all the information they receive.

Hello Patty,

If you are both on title and both occupy the home as your primary residence, you can both be on the reverse mortgage loan.  There is no requirement that you both be on the previous loan in order to get a reverse mortgage now with both your names on the new loan.

Hello Alice,

A Deed conveys title and a Mortgage is a lien on title.  They are two different instruments that perform two different functions and so neither of them “over-ride” the other.  The lender should only grant a loan to the individuals on title at the time or have some agreement in place from someone else on title who would not be on the loan (such as a non-borrowing spouse) that they allow the lien to be placed on the home.  The lender would not grant a loan to someone who does not own the home though and that is the whole reason for title searches and title insurance as part of the lending process.

Hello Mike,

The timeframe for receipt of fund requests depends on the way you set the account up with the company in the beginning.  The servicer will have a payment out to you within 5 days of receipt of a bona fide request (providing there are no defaults on the loan at the time and there is still money available).  The payment will either be a check or a direct deposit into your account, depending on how you set it up at the close of the loan.  If you requested checks, then you have to wait for the company to draw the checks through their accounting department and the mail times as well.  If you requested an auto-deposit into your account, it’s just like a wire and usually hits your account the same day the transfer is done by the servicer.  Most borrowers report that they receive their deposits within 48 – 72 hours of request with the direct deposit.

Good Afternoon,

If the lender discovered that the borrower did not or no longer occupied the property as their primary residence for any reason (i.e. the borrower passed, the couple split up or the borrower was forced to permanently move to an assisted care facility), the loan would become due and payable.  As soon as the lender became aware of the situation, the lender would call the Note leaving the borrower or the resident with a short amount of time to pay the loan off.  If the individual in the home was unable to pay the loan at that time, the lender would have to begin foreclosure proceedings due to the breach in the loan terms. 

For this reason, we strongly suggest all borrowers become familiar with the obligations of the reverse mortgage.  If you cannot or do not intend to abide by them, this is not the right loan for you.  If your circumstances change, you are much better off to take positive steps to refinance the loan or sell the home before the lender is forced to begin a foreclosure action which will cost you more money and can severely limit your options once a foreclosure has begun.

Hello Angela,

If both borrowers are on the loan (for example, both are over 62 and are borrowers listed in the documents), then the initial disbursement will either be wired to an account where both borrowers are listed or will be in the form of a check made payable to both borrowers – the lender and the title company will not issue separate checks to each spouse.  Once received, the spouses can do with the money as they wish.  If, however, one borrower is not on the loan, as would be the case with a non-borrowing spouse, the check would be made payable only to the borrowing spouse.

Hello Steven,

The death certificate should be all the servicer requires.

The house and the equity always belong to him.  If he passes, the loan becomes due and payable but he only owes what he actually borrowed, any costs he put into the loan to start and any interest that accrued on it.  The heirs can choose to pay the loan off and keep the house, sell the house or whatever they choose to do but they just need to know that the loan will be due at that time so they will need to make a decision.

Hi Syd,

Are you telling me that you closed the loan and have a monthly payment that you didn’t receive or that you received loan approval but that they have not closed the loan yet and so you do not have your money from the loan at all?  You do have remedy if there is a monthly payment that is not paid on time but if the loan is not yet closed, it would really depend on what the reason was for the delay.  The lender may be waiting on documentation from you, the title company or the appraiser so I would be very hesitant to comment on a loan that has not yet closed as to what may be causing a delay.

If the loan was closed and you still didn’t get your funds, that would be extremely odd and you should check with the title company and your lender to determine why you have not received your disbursement.  If you requested a wire, it should have been in your account the same day and if you requested a check, it would take a little longer but again, I don’t know what status you’re in (approved, recently closed or waiting on subsequent monthly payments) so I would suggest the first thing would be to contact your lender and just ask them what is happening and go from there. 

Hi Victoria,

HUD has some rules for the payoff of a second lien.  If the loan was taken out less than 12 months ago and you received cash out of the loan, in other words, you took cash out of your home for any reason (to pay off debt, to put money in your pocket, to buy a car, anything), then the reverse mortgage cannot pay off this loan until it has the required 12 months of seasoning.  If the loan was not used to take cash out of the home (it was part of the purchase of the house, it paid off a previous 2^nd that was 5 years old and was not itself a cash-out second with less than 12 months of seasoning), then there is no problem paying the second off with the reverse mortgage. 

The loan must be paid in full with the reverse mortgage; it cannot remain on the property and still get the reverse mortgage, so knowing when it originated and whether it was a cash-out transaction is important.  

Good Afternoon,

Let me make sure I answer this clearly because by the way the question is asked, it sounds like you already have the loan.  Your brother cannot be added to an existing loan that he was not on at the time the loan was closed, no one can be added to an existing, closed loan.  If you want to add someone to title and do a loan in both your names, you would have to refinance the existing reverse mortgage with a new loan that takes both of your ages, income and credit into account and determines eligibility based on today’s parameters.

However, if you are referring to a new loan that you intend to close at some point in the future, yes, your brother can also be a borrower on the loan as long as you add him to your title, he lives in the home as his primary residence and he is also at least 62 years of age.  If he meets all of this criteria, he would also be able to stay in the home for life without having to make a mortgage payment, even if something happened to you or you were forced to move to assisted living, etc.  Others who are also on title who do not meet all the other requirements are considered “non-eligible” coborrowers and while you would still be able to do the loan, the loan would be called due and payable once you no longer lived in the home (if you passed or moved to another location).

Hi Kayla,
 

The payments depend on the program you choose. If you choose the tenure option, the payments continue for as long as you live in your home. If you choose a term option, the payment can run out at some point after all funds are used. If the payment were to cease, you can still live in the home payment-free for as long as you occupy it as your primary residence.  And the lender is repaid after you leave the home and the property is sold or an heir decides to keep the home and repays the obligation, usually in that case with a refinance in their name with a new loan.

Hi Margie,

There is not a hard a firm rule about having to wait a year to be able to use the current appraised value. HUD allows lenders to use reasonable values so I would encourage you to start with by running our calculator here. I can't promise that we can use any particular value but we can sure look at recent sales and let you know what we see!

Hi Colleen,

I would certainly suggest you compare your monthly statement to what a real estate professional tells you they can sell the home for first.  You may find that there is remaining equity that you can keep and that would keep you in good standing with HUD in the off-chance you ever need another government loan again in the future.  If there is absolutely nothing you can do, the loan is non-recourse and you can leave without having to pay any additional money but it’s not the most advantageous decision when you are not forced to leave the home due to death, illness, etc.

Hello Carla,

You do not have to remove your name from the title in order for mom to get a reverse mortgage.  Prior to HUD issuing its Final Rule last year, this would have been the case, and you would have had to come off title, but now you can remain on title.  There are several documents you will still have to sign, even though you are not a borrower on the loan, acknowledging the terms of the mortgage and allowing the loan to be placed on the property.

You also need to remember that once Mom no longer lives in the home as her primary residence, the loan will become due and payable.  In other words, you need to have a plan in place for what you will do when mom either has to move or passes so that you are ready to extinguish the reverse mortgage at that time which would include 1) paying off the loan with money available to you, 2) you refinancing the loan into a new loan that would pay off the reverse mortgage, or 3) selling the property at that time.

Hi Susan,

Great question!  This whole issue changed with HUD’s Final Rule that they issued just last year.  Just to answer your question, though, the seasoning is moot once the loan is over 12 months old, so you can pay off the loan with your new reverse mortgage now.  Under the final rule, HUD now allows loans with no seasoning to be paid off if the payoff is at or below the 60% that HUD allows borrowers to take as straight cash-out on any transaction.  In other words, in your example, if the payoff of $68,000 represented 60% or less than the amount available to you under the reverse mortgage Principal Limit, which, depending on your age and the interest rate, it sounds like it would be on a value of $320,000, then there is no seasoning required anyway.  If it represents 60% or less of the Principal Limit, you could have taken out the loan yesterday, and it still would have been okay with no seasoning.  You are out of the woods already either way!

Hi Steve,

You really need to discuss this with an attorney.  This is a legal question that has nothing to do with the reverse mortgage and everything to do with property rights of spouses in the state in which you live.  I’m sorry, I can’t advise you on such matters.

Hi Morton,

I’m sorry but I really am a bit baffled.  Why would your reverse mortgage “fall due” on October 19, 2019?  As long as you remain living in the home and keep your taxes and insurance payments current, there would not be an end date on the loan at that time.  There might be a date on which payments end if you chose a payment option on which you would exhaust the availability of funds, but that does not mean you have to move out.  In that event you just would not receive any more payments but could still live in the home.  Do you have more information you can supply?

Hi Bob,

Any money that has not been drawn is money “unborrowed” and therefore not owed.  For example, suppose you have a line of credit for $100,000 but you only used $80,000 of it.  The $20,000 that you never used is not owed and therefore is not part of the balance.  If you were going to try to use the remaining $20,000 to pay down the line, you would have to first borrow it which raises your balance and so that would get you right back to the same point.  Instead of the $80,000, you would borrow another $20,000 and so you would now owe $100,000 and when you used the $20,000 to pay back the loan, you would be at the same balance of $80,000 that you had before you borrowed more money just to pay it off.

When the property is sold or the heirs decide they want to pay off the loan and stay in the house, they only have to pay off what you owed – not the entire line amount if the amount owed is less.  So in this example, if the house is worth $200,000, instead of having to pay off $100,000, they only have the balance of $80,000 they have to repay and so even though there is no cash available to them, there is a benefit to the heirs of a lower balance owing at the time.

Hello Delores,

Unless there has been a huge depreciation on the home, there is probably still equity left and has not all been used in just 4 years.  I would suggest that you contact a real estate professional and find out what the home would most likely sell for before you consider just turning it in.  If there is still equity in the property, you should consider selling the home and keeping your equity when you move.

If you do have to move without selling the home, the reverse mortgage is a non-recourse loan.  In other words, the lender can look to no other assets for repayment of the loan.  I still believe that after just 4 years though, you should check to see if you could get money with a sale rather than what you might be liable for.

Hi Ellen,

Unfortunately, I can’t give you a yes-or-no answer to this question.  HUD does require borrowers to meet financial assessment guidelines, which include income qualification and consideration of the debts they must pay each month.  With the information here, I can’t tell you whether your friend would qualify.  He would have to have a minimum amount of money, as required by HUD for his family size, remaining each month after paying all debts, including all home costs and any other debts, such as the Parent Plus loan monthly payment.  If you have him spend just a couple of minutes on my calculator at https://reverse.mortgage/calculator, I would be happy to show him what he can get, let him enter his information, and show him whether his income and liabilities would allow him to qualify without the hassle or any costs.

Hi Robert,

Yes, any amounts you draw from the line of credit, whether it be a portion of the line or all of the available Principal Limit is added to the current loan balance at the time the funds are drawn by you. 

Hello Ali,

All owners of a property must agree to the mortgage and must meet the eligibility requirements.

Hi John,

You can get a reverse mortgage on homes on which the existing mortgages have been paid in full or if there is still a balance owed.  If the house if paid off, then all funds available under the reverse mortgage (minus any costs) are yours to use as you wish.  If you still owe any money on a loan, that loan would have to be paid with the proceeds first and then any remaining funds would be yours to use as you wish.  Borrowers with paid off houses do qualify for and receive reverse mortgages regularly.

Hi Teresa,

You do not have to take any draw on the line of credit when you open the loan, so the minimum on the line would just be whatever your costs were at the time.  You could also make a payment at any time to later further reduce this amount if you so choose.  Just remember, the reverse mortgage is not a credit card that you can keep a 0 balance on and still keep the line open.  If you ever pay the line off in full, then the loan would be closed.  I usually caution folks to keep a minimum balance of $200 - $500 on the line just to keep from accidentally overpaying the balance and closing the loan but that is entirely up to you.

Hi Angela,

The reverse mortgage has no “end date”.  You can maintain the loan as long as you live in the home and continue to pay your taxes and insurance.  Unlike a HELOC, there is no reset period and no opportunity for the lender to change their mind about being in the business and closing out your line.  As long as you have money left on the line of credit, it will continue to grow and will be available to you, providing you live in the home as your primary residence and you continue to meet the terms (you pay the taxes and insurance and maintain the home in a reasonable manner).  There are some other special provisions for things that could impair the lender’s security such as if you declare bankruptcy while you have a reverse mortgage, but even that does not close your loan, but could interrupt your access to the line of credit for some time.  The best part though is the fact that you don’t have to worry about your payment doubling or tripling in 10 years when it hits a reset and then facing foreclosure when the payments are too high because you never have to make a mortgage payment for as long as you live in your home (you are responsible to make payments of taxes, insurance and any other home assessments such as HOA dues).

Hi Jorge,

The reverse mortgage is a loan just like any other loan.  Your parents can pay it off at any time with no prepayment penalty.  That means if you were just looking to put another loan on the property without the rising balance, you can easily just determine what the monthly payment amount would be with an amortization calculator and make those payments and save yourself the cost of the refinance.  If you have the funds available and didn’t plan to use other borrowed funds, they can just pay off the loan at any time without penalty.  The choice is entirely theirs.

Hello,

No, you would not be able to get the reverse mortgage on just a portion of a property.  In order to obtain a reverse mortgage loan, the lender must have all owners of the property agree to the transaction or they would not be able to enforce the terms of the loan.  And all owners would have to be at least 62 years of age to be eligible under the HUD rules for the program. 

Hi Karen,

I honestly cannot determine your qualifications from the information provided, but I can provide a tool to help you see where you stand at any given time.  We have developed an online calculator that will tell you what you would expect to receive. It allows you to input items like assets and income, and it automatically calculates real-time costs in your area.  The All Reverse Loan Optimizer (ARLO) will allow you to run scenarios and see what works for you.  Also, you said, “When you turn 62.”  One of the factors that determines your benefits with a reverse mortgage is current interest rates.  If you are still more than just a month or two away from your 62nd birthday, this could make a big difference in a rising rate market.  You may want to check back several times, especially as you get closer to your 62nd birthday if that is not really close.  You can check out our free reverse mortgage calculator at https://reverse.mortgage/calculator. 

Hi Barbara,

You do not need to have a current loan on your property.  Your benefit is determined by your age(s), and the property value or the HUD lending limit (whichever is less).  Any loan(s) you have on the property must be paid first but if there are none, then you have full access to all the available funds.

Hi Morris,

That is one of the safeguards of the loan.  You can always continue to live in the home with no mortgage payments.  Even if the balance is higher than the value, if you have additional funds available to you on your line of credit you will still have access to your line and the loan is non-recourse which means that when you pass, your heirs will never have to pay more than the property is worth if they want to keep the home (actually, 95% of the current market value or the balance on the loan, whichever is less) or they can walk away with no issues and the lender will take the property and can look to no other assets for repayment of the loan.

Hi Lynn,

Your Bother in Law has to use the funds first to retire any debts he had on the home and any money left over can be used for any purpose he wishes.  The HUD rules may restrict when he can access the funds and how much he can receive though so I could not begin to comment on whether or not sufficient funds are available in this case to pay any certain amount.

Good Afternoon,

It would work just the same as any other refinance transaction.  You would close on the reverse mortgage loan and the lender would wire the loan proceeds to the title company who would pay off any liens of record so that they could insure the title  of no prior liens and then your loan or record would be the reverse mortgage.  The difference being that the reverse mortgage requires no monthly payments for as long as you live in the home (but you do have to continue to pay your taxes, insurance and any other property charges like homeowners association dues). 

If your eligible reverse Principal Limit (the loan amount for which you qualify) is higher than the amount you owe, you may choose to take cash out with the payoff of your existing loan, you may choose to leave the funds in a line of credit you can access when you wish or have a monthly payment made to you.  There are many options for receipt of your funds.  As I mentioned, you don’t have to make a monthly payment on the reverse mortgage but while you don’t “have” to, you can still choose to at any time and in any amount.  There is no prepayment penalty so many borrowers choose to make payments monthly, quarterly or annually to keep the balance on their loan from growing (the payments of interest that you do not have to make monthly are added to the balance to be paid in full when you reach a maturity event).  The maturity events are things like the passing of the last reverse mortgage borrower, the last borrower is no longer living in the home, or the property is sold.  Another thing you must keep in mind, like any loan secured by real property, the loan requires borrowers to maintain adequate insurance and to pay the real estate taxes as failure to do so would hurt the security for the loan and the lender could call the loan due and payable if the borrowers fail to pay these expenses.

Hello,

The second would also have to be paid in full at closing. Also, if the second was a cash out loan and that means you received any money at the closing of the loan (including cash to pay debts other than an existing mortgage) then you cannot use the reverse mortgage proceeds to pay off the second, you would have to use your own cash to pay off that loan.  

Hi Jan,

A reverse mortgage is just like any other home loan – it is a loan that is secured by your property.  You can repay the loan at any time, and you can certainly sell the property if you wish.  You still own the home, so you would still answer yes if asked: “Do you own your home?” (if you feel you need to answer the question at all). Servicing is a different issue.  Just because the entity that services your loan has a different name than your lender, it doesn’t necessarily mean that the lender sold the loan.  They could have a contractual arrangement with that company to provide servicing.  If the loan is sold, lenders are required to notify you of that fact.  On the other hand, loans held by lenders are assets.  They can be sold at any time, whether that is soon after closing or years from then.  Some lenders will tout that they are not selling their servicing as part of their sales pitch, but that could just be a current situation. 

I can’t tell you how far back you need to go for certain at this point, but I do know it is probably less than 5 years and you will see that every lender prior to that time who was a #1 lender and retained servicing prior to that time has since either closed their doors and stopped originating reverse mortgage loans, or sold their servicing for other reasons.  Financial Freedom, Wells Fargo, and MetLife Bank were all #1 at one point; none still originate today, and most of their servicing is handled by other companies now – but they did not sell servicing while they were originating.  Markets and plans change, and no one knows the future.  Other companies in the industry today may or may not be in business in the future or may sell their entire companies to others with different plans, or just their servicing at some point even if they don’t do so today.  If someone tells you they don’t sell their servicing, they are talking about a current situation; that is not a promise for all time contained in the loan documents! 

The point?  If you get the HUD HECM reverse mortgage loan, they are all FHA insured loans, and they all give you the same guarantees, so make sure you get the best for you and your family at the time of your loan closing.  No one can promise you what will or will not happen in the future, except as written in your loan documents, which are the legal agreement between you and the lender. 

Also See: https://reverse.mortgage/servicing-setting-record-straight

Hello Niece,

I can’t tell you what the amounts will be, as costs vary by region.  Some states and areas do have significantly higher costs, and I don’t want to give you the wrong information, but I’ll tell you what I can do.  We have our own mortgage loan pricing calculator, the All Reverse Loan Optimizer (ARLO), an online tool you can use to determine real-time costs and benefits available to you based on your age, property value, and local costs.  ARLO doesn’t need any really personal information and never anything like a Social Security number to give you the information you are looking for.  We don’t believe that a reverse mortgage is right for all people either, so the information is given to you without obligation, and you will never get a high-pressure sales pitch.  Give ARLO a try and see if the numbers work for you!

Good Afternoon Wes,

To my knowledge, there are no conversations at this time to lower the minimum age requirement for the reverse mortgage.  You may want to check HUD.gov to see if there are other programs in your area though that would better meet your needs.

Hi Carol,

If you are talking about a force-placed policy, you really need to talk to the lender and the insurance company to see what is included and excluded from the coverage.  It will depend on the coverage and the extent of the damage.

Hi Lucille,

It does not disqualify you, but it does mean that if you did this loan in the last 12 months, you cannot use the reverse mortgage loan to pay it off.  HUD changed that rule just a few years ago, and so when you received the money on the refinance of the other mortgage, it just means that you either had to wait for 12 months before you could pay the new loan off with a reverse mortgage, or you can pay off that loan with other funds that you have and then get a reverse mortgage to pay yourself back.  However, you cannot pay off a loan that resulted in a cash-out of the home at the close of the transaction with a new reverse mortgage within 12 months of that cash-out loan closing.

Hi Richard,

If you are 62 or over and you have sufficient equity in your home, you can consider the reverse mortgage.  To see if it works for you is very easy.  Simply go to our website and ask ARLO™ (All Reverse Loan Optimizer)!  Arlo is our own, real-time reverse mortgage tool that allows borrowers to see what they can expect to receive based on their information without any hassle or giving us all your personal information and your first born!  Give Arlo a try here ARLO, you’ll be amazed at how easy and accurate Arlo is (and how eager to please he is)!

Hi Gustavo,

If you and the property meet the HUD qualifications, then yes, you can get a lump sum payment, a line of credit from which you can draw as long as the line still has money available or a monthly payment.  You can also choose to receive a combination of these features such as a lump sum at closing, a line of credit set aside for expenses and monthly payments with the remainder of the funds.  You should visit our website and request a proposal so that we can show you what is available to you.

Hi Sara,

It's no more difficult than any other loan in that you never really know when all your services will be complete or if anything will arise in any of the steps that would create a delay.  A good example of this is when a previous lender or lienholder never filed a reconveyance on a paid in full loan, a new lien the pops up at the last minute, especially if it is not yours and we have to track down the lienholder to verify they have the wrong person or if something comes up on the appraisal that might require repairs. 

The closing statement is prepared by the closing agent and the lender's funding department just prior to the loan closing.  The closing agent should be able to give you a pre-closing statement in plenty of time for you to wire money on a purchase and then this is usually with a small pad so that they will have sufficient funds if any last minute expenses come it.  On a refinance, you will see all the numbers at your signing and then you still have a 3 day right to rescind the transaction that does not include the day you sign or Sundays/holidays so that actually runs to 4 days or more that you have the opportunity to review the numbers before the loan is funded be the lender and closed.

Hi Philip,

The minimum age for a borrower for the HUD HECM reverse mortgage is 62 years of age.  There were some proprietary or private programs several years back that have long since cease to exist that did allow for borrowers down to the age of 60 but I have not seen any of these programs since 2009 or 2010.  

Hi Anthony,

I am not a licensed financial planner and I would suggest you speak with one.  He/she will determine the benefits vs the costs of the actions you describe and also consider any penalties you might incur with such an action.  

Hi Pam,

Absolutely.  There is no limit as to the number of homes you can own just because you have a reverse mortgage on your primary residence.  

Hi William,

There is no waiting period but the lender may want to use the original purchase price or the appraised value, whichever is less, if the purchase price is much less than the current appraised value, you purchased very recently and there is no evidence of massive improvements to indicate the value increase was a result of your investment in the home.

Hello Alfredo,

I can't say for certain without seeing everything, but I believe you will need to wait for the 12 months.  Just living there for so long does not get you anything necessarily unless you paid above fair market rents while living there and had a written agreement.  Otherwise you are best to wait the 12 months and do the refinance at that time.

Hi Faith,

Nothing you have me would lead me to believe you would not be able to get a reverse mortgage. The legal description of the project would determine if it is an actual townhome or a condominium though and condos have to be approved by HUD at this time. All properties have to have adequate sales of similar properties available for the appraisal bit other than that, everything sounds good so far.

Hi Maureen,

I would contact the Loan Officer one more time and give him/her another chance to answer these questions to your satisfaction. If he/she does not take the time to do so, there is a good possibility you have not chosen the right company for the loan.  We have written about most of these subjects on our blogs and have covered each of these topics, but you should be able to get a straight answer to your questions because you do have rights, and no, you are not legally required to sign away your interest in the property and should know what you are doing and why.

Perhaps you and your husband should get proposals from other companies and compare the costs and their willingness to answer your questions IF you are unable to get satisfactory answers.  Besides, it is never a bad idea to compare the closing costs and get more than one proposal anyway!

Hello Harry,

The only restriction on a reverse mortgage is that it will not pay off a loan on a property that is less than one year old.  If your loan for the purchase of a solar system is over 12 months old, then not only can the reverse mortgage pay it off, it would have to do so in order to take the first lien position and ensure that no other liens remain on the property at the time the reverse mortgage closes.

Also See: https://reverse.mortgage/solar

Hi Carol,

I can only assume you have a reverse mortgage on the home you are asking about selling, correct?  In that case, when you sell the home, the reverse mortgage would be paid in full with the sale.  At that time it would not matter to whom or for what reason you sold and yes, as long as you complied with the terms of the first loan (you paid your taxes and insurance on time, etc), you would be eligible for another reverse mortgage loan.

Hi Ralph,

Chances are good that there will be enough to pay off your existing loan but that's not for certain, it would depend on the age(s) of the borrower(s).  But even if it would pay off your mortgage balance, only you can make the decision of the costs are too high based on the benefit.  Let me explain that.

Many of the costs are fixed and depending on where you live, you might have as much as $5,000 or more in loan costs to pay off an $18,000 mortgage which may or may not leave you any money, depending on the age of the youngest borrower (or non-borrowing spouse) to be considered for the loan.  And if the youngest borrower or non-borrowing spouse is 62 or younger, you might even have to bring in a little bit of money just to close the loan.  Only you would be able to decide if it would be worth it under those circumstances to proceed with the only benefit being the elimination of the $18,000 mortgage.  With possible costs of close to 30% of your existing mortgage though, I certainly would not recommend the loan for your circumstances.

Hi Clover,

HUD does not allow the use of borrowed funds.  They do, however, allow you to use gift funds from a friend or relative.  Also, depending on how short you are, have you checked to make sure you are getting the best possible deal and paying the fewest possible fees?  I would certainly make sure you are getting the absolute most out of your loan by getting another bid to be certain there is not more the lender can help you with. We have many programs available that can cover some, if not all, of your closing costs, bringing that shortfall to a minimum. Please request your free quote here. 

You always own your home.  Every Deed of Trust contains an "Assignment of Rents" should the lender need to foreclose but absent such an event, the rents still go to you.

Good Morning,

I don't know how you were conducting your search, but if you go to the HUD website (HUD.gov) and in the search box in the upper right hand corner type in "approved lender list", you will have the opportunity to type in the names you wish to search.  I just did so and typed in All Reverse Mortgage and these were the results I obtained:  As you can see, all three of our branches do show as approved lenders but I really don't know what you search or did differently so I can't comment on why they didn't show on your search.  We are there and are an approved lender though and it does show when I do the search so I would just say try again, maybe there was a glitch when you last attempted or possibly a misspelling?

Hi Steve,

There are some things that the title company will have to do in order to insure the title now with the change but if you supply the necessary documentation to the title company in conjunction with your loan, they can take care of that for you while completing the loan process.

Hi Jim,

If you mean by making money available the day the loan funds, a lot of that depends on you and your location.  We cannot begin processing your loan until you have completed the HUD-required counseling.  In some states (like CA), there is a waiting period after the counseling before we can do anything on the loan other than just send out the application.  In California, that wait is 7 days.  In some other states and in rural areas, appraisals take much longer than in metropolitan and suburban areas.  Colorado, Washington, and Oregon have notoriously long appraisal turn times, and in rural areas of the country, the same can be true in any state.

But assuming you have your counseling done and you do not live in an area where appraisals take longer to complete, we count the time from the date the completed and signed loan application is returned to this office and that can usually be completed in 35 - 40 days assuming no appraisal or title issues that we have to resolve (and then the delay can be just a day or longer depending on the issue and how quickly it can be resolved).  The loan will close after the federally mandated 3-day right of rescission, which does not count the day you sign your loan documents; that is a minimum of 4 working days, which do not count Saturdays or holidays.  Then your proceeds are wired to your account.  If you take extra time to return documents or the signed loan package, that time would not be included in this timeframe, which is why this answer started with "a lot of that depends on you and where you live"... 

Good Afternoon,

There is no waiver process and the benefit amounts and payouts are not flexible outside of the HUD prescribed availabilities.  Unfortunately, there is no third tier to determine and price additional payout options/risks and so the maximum payouts are not negotiable outside of the already flexible parameters offered under the HUD programs.

Hi Dean,

There's absolutely no issues with you taking on another second mortgage as long as the lending institution agrees to go behind the reverse mortgage which would actually be in third position since the reverse mortgage lender and HUD take both first and second positions against the property.

The home equity conversion mortgage program will allow for subordinate financing. Having said that you may want to double check on that offer I have never seen a bank or anyone offer an equity line of credit behind a reverse mortgage loan due to it negative amortization nature. 

Hi Virginia,

There is a 3 day right of rescission that actually runs for 4 days or more since you cannot count the day you signed, Sundays or holidays that you can still cancel the transaction just by notifying the lender.  If this is your intent, do not let the time pass though because they will fund the loan after the rescission period if you have not cancelled by then.

Hi Kay,

There is never a prepayment penalty on a reverse mortgage so you can certainly pay the loan off in any timeframe you desire.  The Payment amount required to pay a loan in the amount of $75,000 off in full would depend on the timeframe in which you wanted to be able to pay the loan off.  Since I don't know your intended timeframe, I can't tell you how much you need to pay monthly.

But you can use just about any amortization schedule online and plug in different timeframes or payment amounts to make this determination.  We also have an amortization schedule we have developed that requires your computer to have the Excel program to run. 

Link to our free calculator: https://reverse.mortgage/amortization-calculator

There is no requirement that there is an existing loan on a property in order to obtain a reverse mortgage, only that if there is a loan, it must be paid off first with the proceeds and then the borrowers can use the remaining reverse mortgage proceeds for any purpose they choose.  If there is no current loan, there is nothing to pay off and borrowers have full use of all proceeds in accordance with HUD payout provisions.

Hi Don,

A reverse mortgage line of credit is very similar to a Home Equity Line of Credit (HELOC) in many ways, but differs in some key areas.  It is similar in that your limit is established based on the lending criteria, and you can draw on it as you need the funds.  You do not accrue interest on any funds you are not using and if you decide to sell the home and move, you only pay back the portion of the line that you actually used plus any interest that accrued (which could be a very small amount of the line or all of it depending on your needs and wants).

Those are the similarities, but there are also some significant differences.  The loan can never be closed at the whim of the lender; if they decide they are no longer in the business of originating credit line loans, they may feel your value has fallen or that your income has changed, as many people experienced when the credit market changed dramatically around 2010.  Unlike the many borrowers who suddenly had their credit lines frozen or closed, the reverse mortgage line of credit is backed by the full faith and credit of the federal government, and you never have to worry about losing your available line when you need it most.

There are no payments due with a reverse mortgage line of credit.  Unlike a HELOC where your payment amount may increase, and sometimes sharply if you end an interest-only period and begin the repayment period, the reverse mortgage line of credit has no payment due for as long as you live in your home.  However, even though there is never a payment due, there is never a prepayment penalty, so you can make a payment of any amount at any time, up to and including payment in full, without penalty.  This means that if you want to make a payment to keep your balance from growing, you can.  It's entirely your choice, though, so there is never a late charge or a concern about credit implications if you can't make a payment in any given month, or if you want to reduce the amount you pay because there is nothing due in the first place.  This gives borrowers flexibility and freedom from credit concerns.

Another phenomenal feature of the reverse mortgage line of credit is its growth feature.  The reverse mortgage line grows on the unused portion, so that each year you have remaining funds you do not use, the line of credit available to you grows.  Instead of having your line cut or frozen by the bank, your line is growing every year on the unused portion of the line by an amount equal to the interest accrual rate plus the MIP accrual rate which is currently anywhere from approximately 5 - 6% per year.  This is not interest anyone is paying to you; it is simply an increase in the line available, and if you do end up borrowing it, you will accrue interest on it, but on a $100,000 line of credit that is not used for 5 years, that would give the borrower a line of credit available of over $132,500 at current rates!  Some borrowers with higher values start with lines at or above $375,000, and their lines, with the same 5 years of growth, can exceed $500,000 with even the slightest interest rate increase.  It's not hard to see how the reverse mortgage line of credit has become an extremely viable retirement tool, especially for younger borrowers who don't plan to utilize their line for 10 years or more. 

The only other real difference is that you don't get a card or a checkbook, and you request the funds from the line when you want them from your loan servicer.  This is done to protect you as much as anyone else so that others may not "spend" on your account; it requires you to make a withdrawal from your line.  Once you do, though, the funds are wired to your chosen bank account, and you have them within a couple of days. With a wire, you don't have to wait for the checks to arrive in the mail or clear before you can use them, regardless of the amount.  Now that HUD limits the amount borrowers can receive in the first 12 months based on mandatory obligations to be paid (existing loans to be retired and costs to obtain the loan), the line-of-credit reverse mortgage has become by far the most popular option for reverse mortgage borrowers.

Also see: Why a Reverse Mortgage is SMARTER than a HELOC

Hi Douglas,

A reverse mortgage is a loan, and just like any loan, the lender has only the rights you grant in the legal documents.  I would suggest that you get a copy of the legal instruments that set the rules between you and the lender - the Note, the Deed of Trust or Mortgage, and the Loan Agreement and then not only read them yourself but also have them reviewed by your legal advisor.  There are specific sections that address the "Grounds for Acceleration of Debt," which outline the circumstances under which the lender can call the loan due and payable. 

Failure to pay the taxes and insurance and any other property charges are covered; one original borrower must still live in the home as their principal residence; the borrowers may not have sold or transferred all of their interest in the home without at least one original borrower still retaining their title; at least one borrower fails to reside in the home for a period of 12 consecutive months or more; the borrower may not commit waste or destroy damage or substantially change the property (turn it into a hotel for example) or allow the property to deteriorate beyond reasonable wear and tear. 

All the terms are contained in the legal documents and are clear and pretty straightforward.  And as I started out by saying, no lender has any rights that you do not grant to them as the property owner, so take the time to review the legal documents in advance to make sure you are comfortable with the promises you will have to make to procure the loan.

Hi Dee,

Many people use the reverse mortgage to do exactly what you ask - pay off their existing loans and become payment-free.  Some people use the loan to access additional cash, but for many, eliminating the mortgage payment they have been paying month in and month out gives them access to the additional cash they need simply by having that money available.

Hi Jim,

You appraisal is good for 120 days before the appraisal becomes expired.  If your home was appraised in September, the appraisal is either expired by now or is about to become expired at which time the case number has to be cancelled and a new loan must be started at that time.  Only the lender who ordered the Case Number with HUD can cancel it so if you transfer it now, the new lender would need the cooperation of the existing lender to cancel the old Case Number (either now or as soon as the appraisal expired) so that the new lender could proceed with the loan.

We have taken many Case Transfers from borrowers who just decided it was time to move, but unlike some originators who encourage borrowers to move just because they want the loan, we think you should not do anything unless it makes the most sense for you!   I have to believe if the loan has taken this long, there is something that is impeding the progress and you really should find out what that is.  That last thing you want to do is to order another appraisal, wait for weeks or months again only to find out that there is some issue that the lender cannot resolve that might be an issue for any new lender as well.

If your loan officer is not communicating with you, I would suggest a call to the manager or higher until you get your answers.  We would be happy to help you, but I would never suggest that you do anything that would make it even tougher for you and it just could be that communication with someone may let you know what the holdup has been.  It does not take that long to close a reverse mortgage so it would be really beneficial to know why it has been delayed before you incur additional costs and delays.  If that still doesn't work, give us a call!

Hi Paul,

Borrowers may apply for and receive a reverse mortgage if you have a current mortgage that needs to be paid off, multiple mortgages or no mortgages at all.  Your benefit amount or reverse mortgage loan amount is determined by your age (or the age of the youngest spouse or borrower to be on the loan), the value of the home or HUD's maximum lending limit of $636,150 (whichever is less) and interest rates in effect at the time.  They all go into the HUD calculator and the benefit amount is determined based on this criteria.  From the loan amount or what is referred to as the Principal Limit, all fees and existing loans/liens must be paid and then the remaining funds are yours to use at your discretion, just like a forward refinance loan.  If you have no loans on the home, you may use the money for any purpose you choose.

Hi Carmen, We service all of Florida and 15 other states, in fact we are one of the highest rated reverse mortgage lenders in all of Florida. We are able to pass a significant savings along to our customers by working with you from our headquarters in Southern. I assure you our pricing is the best and service to match.

When you apply we overnight the application with a prepaid UPS envelope for return. We will then send out a local FHA qualified appraiser who knows and understands your market so that you receive a fair appraisal and when it's time for your closing we send a traveling notary to your homes you don't have to go anywhere. If you'd like to compare our offer to any company I think you will find that you will get more money from your equity. You can request your quote here and I would be happy to email you back complete analysis by email. 

Hi Ruth,

Yes, you most certainly can sell your home if you have a reverse mortgage and it works just like any other loan.  You own the home at all times and just like a borrower with a forward or traditional loan, you can sell your home at any time.  There are no special requirements and the payoff is handled through the escrow, just like any other transaction.  The escrow/title officer/attorney (whoever is handling the closing of the transaction) will contact your current lender and obtain a Beneficiary's Demand for Pay Off from which the loan can be paid in full at closing.

You receive a monthly statement so although that is not a payoff statement (just like forward loans, there are always some additional fees at payoff and interest that accrues after the time of the statement) but this will give you an idea of the amount owed on the home for calculation purposes.  It may not be as accurate as the Demand that the closing agent receives, but it will give you a general idea of the amount that will be required to pay the loan off and therefore you can determine how much you will have left over after you pay any real estate fees/commissions and other costs to sell the home so you can determine how much cash you will have at the close of the transaction at any given sale price.  Your real estate agent can probably help you with this as well.

Hello Mr. Reinhart,

Physically, our corporate office is located in Southern California, but we are licensed in multiple states (over 15 and growing).

Locality really means nothing these days, as technology allows lenders to operate nationally. We can overnight you an application, and once it's returned, we send out a local, qualified FHA-approved appraiser who knows your market. When it is time to close your loan, we will send out a traveling notary to your home with your final loan documents.

Our process is streamlined, and the cost savings to you are worth your while compared with any local broker or loan officer.

Request a formal quote here or feel free to call our experts at 1-800-565-1722. 

Hi William,

It is true that borrowers who have used the reverse mortgage program do only pay their taxes and insurance and the maintenance and upkeep on their homes, they have no monthly mortgage payments.  However, to get the loan in the first place, you have to have a strong equity position in the home because you are allowed to stay there for the rest of your life without making any payments.

So while the loan does allow you to make no more payments for as long as you live in the home, you would not be able to pay off existing liens that exceeded the value of the home.  You can see exactly what amount for which you would qualify based on the value of the home and the ages of the borrowers by visiting our mortgage calculator at https://reverse.mortgage/calculator. 

Hi Jackie,

If the home has a lien on it now, that lien would have to be removed to close the reverse mortgage; otherwise, it would have to be paid in full from the reverse mortgage proceeds.  That leads you to another issue.  If you have a current loan on the property, HUD allows you to take up to 100% of the benefits to which you are entitled if you are paying off existing liens or other "mandatory obligations" (I won't get into the entire HUD calculation here) but if you have no liens on the property, HUD will only allow you up to 60% of the Principal Limit or your benefit amount of the reverse mortgage at closing or in the first 12 months of the loan.

To better understand the amounts available to you and when, you should request a proposal, and you will see what you can expect to receive based on your age, property value, and existing liens and the timing of the payouts.  It may or may not work for you if you want to buy other property with the proceeds or you may have to wait for 12 months before you have access to adequate funds to do what you are seeking.

Hello Lupe,

Yes, you will always own your home, provided that you live in it as your primary residence and pay property taxes and homeowners insurance. The reverse mortgage is nothing more than a loan against your home equity that must be repaid at a later date. You are welcome to make any interest repayment if you would like, or choose to defer the interest until the loan is paid off later through either a sale or a refinance.

You are still responsible for maintaining the property taxes and homeowners insurance. Your heirs will receive your home as you have your estate set up, and they would be required to refinance within 6 months, or, by filing extensions, have up to 12 months to sell the home after your death.

You can read more about how the reverse mortgage works in this guide. 

Hello Todd,

The HECM line of credit growth rate will always match your total interest rate charges to your outstanding loan balance. You will need add the note rate plus the 1.25% insurance rate to determine the monthly charges to your balance as well as the growth rate for that given month.

If another lender is quoting you a 4% monthly growth which also must include the 1.25 insurance they would likely be quoting you a monthly adjustable loan which also comes with a very high lifetime cap (10% over the current interest rate).

If you are looking to a cumulate interest right now at the lowest rate possible the monthly adjustable might accomplish that but if you are looking for the largest line of credit growth currently available today might take a look at our annual adjustable rate plan with a minimum monthly growth rate at a current 6.27%

If you would like a direct comparison just request a quote and we would be happy to return you line of credit analysis.

I've also written an article around this topic you may find helpful here https://reverse.mortgage/line-of-credit/

Hi Shirley,

It's a misconception that you must have a free and clear home to get this type of loan . As long as there is sufficient equity in your home for us to pay off the mortgage in place, you would be able to obtain a reverse mortgage. The amount of funds available depends on your age and the property's value. Feel free to request your quote here, and we would be happy to return your qualifications. 

Hello Linda,

There is never a prepayment penalty on a reverse mortgage loan, and you are welcome to repay the interest monthly or in full by selling or refinancing. (It's treated like any other mortgage in that respect) We will send you a monthly statement so you always know what is going on activity-wise on your reverse mortgage balance, and it's entirely up to you whether you decide to repay the interest or allow it to defer.

The line of credit will not be set up for monthly payments to you, but you can certainly draw from your line of credit any available amount as often as you would like, without any servicing fees. We would wire the funds requested, typically within 24 to 48 hours of your withdrawal request. Depending on your situation, the line of credit may be a better option than the Tenure payment plan given its automatic growth rate and flexible payment withdrawals. You can learn more about the differences between LOC and Tenure here, or feel free to call us toll-free at 1-800-565-1722. 

Hi Michael,

As long as you still have money remaining in your line of credit, you may access it at any time, for any reason, as long as you still live in the property and you are meeting the program requirements.  You should read your legal documents as a new bankruptcy, tax default, or failure to pay the insurance on the property could result in an interruption in the access to available funds.

Hi Luis,

If you are referring to the purchase program or to a borrower having to bring cash in to close, HUD does require the same seasoning and source of funds verification as they do for any other loan.  We would need to have 3 months' bank statements with the funds in the account and no large deposits or the deposits would have to be sourced (sale of a property, etc).  

Hello Susana, 

We don't deal with any financial products other than the actual mortgage.  I would typically recommend utilizing the line of credit growth to ensure funds are available for future needs but without knowing the borrower(s)' age(s), the property value and potential long term care needs, I really can't say how much money the loan would supply and what would be available in relation to what the borrower(s)' needs are.  I would definitely advise to consider the line of credit option where the line grows on the unused portion and interest does not accrue on any funds you do not borrow thus leaving the most possible money for heirs as opposed to the single draw, lump sum option that leaves no funds to grow in the line of credit and begins to accrue interest on the entire amount from the beginning.  To be certain though, I would recommend you seek counsel from a financial planner who can run all the different scenarios for you.

Hi Rebecca,

Your parents signed an agreement with the lender, you signed nothing!  The loan is a non-recourse loan meaning the lender cannot seek repayment from any other assets.  If the lender is forced to take title to the property to repay the obligation, they cannot look to you to repay them for any other costs as a result of doing so.

Hi David,

All Line of Credit loans are variable interest rates; HUD and GNMA ("Ginnie Mae," which is the Government National Mortgage Association, which is the agency that issues the bonds backed by government loans, of which the FHA-insured reverse mortgage is one) will not allow any lender to do a fixed-rate line of credit loan.  At one point, a few lenders tried to introduce them, but their efforts were very short-lived.  Because the line of credit grows on the unused portion over time, a fixed rate would pose too great a risk at later dates if rates were to rise suddenly and borrowers chose to borrow at rates against credit lines that were well below the funds available.  HUD and GNMA moved swiftly to eliminate the possibility for fixed-rate lines of credit; therefore, no lender offers them.

Regarding your open request for rates, I encourage you to contact our office for a free, no-obligation rate quote.  Rates change weekly at a minimum, and there are often different options available for borrowers that change the best program for them.  A higher margin will accrue more interest on borrowed funds, but will also have a higher growth rate on the unborrowed line.  There are also times when borrowers prefer lower fees, which can often be structured with different margin options.  And blog questions such as these stay on a website indefinitely, and rates available today may not be indicative of those in the future.  Please feel free to contact our office or request a quote here. 

The equity line would have to be paid in full and closed with the reverse mortgage proceeds and there are restrictions about the seasoning of the loan and when the last draws can be taken, but the answer is yes, you can pay off an equity line with a reverse mortgage under most circumstances but the line must be closed after it is paid in full.

Hi Arnold,

Let's start with the required documentation, because you hit it right on the head!  The benefit statements and award letters will do nicely for the income.

Keeping in mind that some areas of the country have a longer lag time, require a greater lead time for ordering appraisals, and that is a busy time for appraisers, it would be best to be sure that everything is ready to go well in advance, and then we can order the appraisal with instructions to hold off until your timeframe.  If you have not done the counseling, you need to be sure that it is also completed well in advance since California and other states impose their own waiting periods before we can start the loan (California requires us to wait for 7 days after the counseling is done before we can order any services whatsoever).

Hi Jim,

As long as the preceding reverse mortgage has been paid in full with no losses on that loan, you can absolutely get another reverse mortgage loan. In fact, there is no limit to the number of reverse mortgage loans you get as long as you get them one at a time after the previous loan has been paid in full. I wish you the best on your new home let us know if we can help!

Hi Marcia,

If you acquired your home through a traditional purchase transaction or inherited it from a family member, there is no set timeframe for how long you have to own the property in order to apply for a Reverse Mortgage.  You do, however, have to be able to show evidence that the property is your primary residence, which can take anywhere from 30 to 90 days in order to establish.  If you were deeded the property from another party, then you would be looking at 12 months being the requirement for seasoning.

You absolutely can make payments on a Reverse Mortgage Loan.  There is no prepayment penalty on a reverse mortgage so you can make payments of any amount, up to payment in full, without penalty at any time you wish.  This would also include your right to refinance the loan and pay it off at any time you desire.

Hi Joanna,

The only way for Mom to get a reverse mortgage at this time would be if you were willing to come off of title long enough for the loan to record, and then she can deed the title back to both of you shortly after the loan closes.  This would protect your title interests but it does not protect you against the loan being called due and payable if something happens to mom so you need to consider this action carefully to be sure it is what you want to do and you are ready for the ramifications.

If mom passes or no longer permanently lives in the home (has to move to a nursing facility), then the loan would become due and payable at that time.  You would be on title so you would have the rights of an owner, but there could be issues with your ability to refinance the house with mom still on title and then there is the manner of title to be concerned with if you have to sell with another owner on title if mom's interest does not revert to you or if she is still living but is incapacitated.  I would encourage you to seek legal advice to be certain that if you choose to go this route, that you have all your ducks in a row so that you are protected in the event something happens to mom and you have to sell or refinance the home.

Hi Daron,

The lien would have to be recorded and then there would be a one-year waiting period in order to be able to pay it off with HECM proceeds.

Hi Craig,

One person cannot apply for and obtain a reverse mortgage on a home owned by multiple individuals, regardless of how the title is held.

We do a full qualification with credit and income on every borrower before we order any appraisal. It doesn't take long and it makes no sense to run up your costs if there are potential  problems. 

If the appraisal is not to your liking, we have to wait for 6 months before we can order a new appraisal. HUD does not allow borrowers or lenders to engage in appraisal shopping by allowing them to merely cancel one case number and appraisal and order another. 

Hi Andy,

As long as there is no loss to HUD on the first reverse mortgage and the previous loan is paid in full, there is no limit on the number of reverse mortgages a borrower can get.  You can only have one at a time and it has to be on your principal residence, but HUD will allow you to pay one off and obtain another and there is no time limit required between the two by rule.  But, by practicality and the way the loans work, you may need a couple of days between the two in order for the HUD system to be able to verify the successful payoff of the first loan.

Good afternoon,

There are several ways to receive your reverse mortgage proceeds, and a monthly payment is one of them.  Borrowers can choose to take a lump sum of cash, a line of credit that they can access when they choose, a monthly payment for a specified amount and time period (known as a term payment), a guaranteed payment for life (known as a tenure payment), or a combination of the above.  In other words, a borrower could use a portion of the proceeds as a lump-sum payment at closing, set aside a portion as a line of credit for when needed, and use the remainder to make monthly payments. 

It's entirely their decision, and as long as there are still funds available to the borrower, the decision can be changed at any time with the remainder of the funds.  For example, a borrower can go for 5 years, using the funds as a line of credit, and then suddenly decide that the monthly payment option would work better in his case.  With a very small change fee, as long as he still has funds available, he can contact the servicer to change how he receives the remaining payments so he receives a monthly payment for the rest of his life.  So even if they are not now receiving a monthly payment, they could elect to receive one at a later date.

Hi Cathy and Dan,

Yes we are a family owned company with our senior management having almost 40 years' experience in the mortgage banking industry.  We believe in the reverse mortgage program, so much so that the first loan we originated nearly 10 years ago was for a family member!  Our team was part of the company that developed and introduced the first fixed rate jumbo reverse mortgage to the market in 2008.

We have quite a bit of information available including copyrighted calculators and amortization schedules that we developed to allow borrowers to run their own scenarios which allows them to take charge of their reverse mortgage circumstances as they best suit their needs.  We would love to send you something that would address your individual questions and concerns and will do so without requiring you to make a commitment or give us all your personal information just to get a few questions answered. 

We will not hound you day and night to push you to make a move, even if you aren't ready as some folks have found when they contact some companies.  We believe that this is a great loan product, but it's not right for everyone and only you can make that decision and you don't need us badgering you to do something that doesn't feel right.  We will do everything we can to give you the information you need to make an informed decision and then allow you the space to make that decision. 

If you would like us to send you generic information on the program itself, we would be happy to do so.  If you would like a no hassle, no pressure proposal showing you what options you would have based on your circumstances, we will gladly do that for you as well and then give you the opportunity to digest the information.  We are here to assist and to educate our customers, not to sell them something at all costs.  We believe we have the most favorable reverse mortgage terms and service and we don't need to pressure people to sign quickly before they get a chance to compare.  

Hi Leslie,

I can't give you a definitive answer without knowing how they held title or what state they lived in.  What we see most often is that husbands and wives hold title as Joint Tenants which gives rights of survivorship to the remaining spouse.  If that is how they held title and they did not live in a state with specific heirship issues, then it would be easy for mom as she would just have to get an affidavit of death for her husband as the surviving spouse and could then obtain a reverse mortgage.

However, some spouses do choose to take title specifically as Tenants in Common where there is no specific right of survivorship and each owner can will their interest to whomever they wish.  While this is not anywhere near as prevalent, it does happen. 

So what is the bottom line?  I would suggest that you have the title to your mom's home reviewed to see how the title was vested as well as the state restrictions, if any, to see if she needs any further work to do the reverse mortgage if that is her goal.  I'm not an attorney and cannot give legal advice so if there is any question at all about mom's ability to encumber the property at this time with any particular form of financing, it may not be a bad investment to make a quick call to a licensed attorney in the state in which the property is located and make a quick inquiry.  This is something that can be researched and answered very quickly and probably at a very small cost but may save a lot of heartache later.

Hi Dick,

There is never a prepayment penalty so you can pay any amount you wish up to and including payment in full at any time you wish without penalty.  So you can make a small payment, a partial pre-payment or payment in full at any time, whether you sell the home, refinance the loan with other financing or whatever and there will be penalty for paying the loan off early.

Hi Sue,

All Reverse Mortgage borrowers under the HUD Home Equity Conversion Mortgage (HECM or "Heck-um") reverse mortgage program must be a minimum of 62 years of age.  There have been proprietary or private programs in the past that have gone down lower in the past (I was involved in creating the first fixed rate program and it went down to the age of 60) but I am not aware of such a program at this time.  HUD does have provisions for spouses when one spouse is 62 or older but the other is not, but even then the spouse who is not yet 62 is not on the reverse mortgage loan and is considered a "non-borrowing spouse" with conditional rights to remain in the home if something happens to the older spouse.  The non-borrowing spouse is not on the loan though and cannot access any of the loan proceeds, even if funds would have still been available in the line of credit to the older spouse.

Disability is not a waiver for the age requirement.  Again, if you say that "one of the owners is under the 62 year old requirement" if the other owner is the spouse and over 62, the older spouse still can still get the reverse mortgage but I urge you to make sure it is the right move for you.  With the new safeguards the younger spouse would not have to leave the home if something happened to the older spouse, but there are still considerations to make before proceeding with this option. 

With regard to the last part of your question, I'm sorry, I am not sure what you mean by using consideration of a pending law suit to help secure payment so I do not know how to answer the question.  I would be happy to answer your question, if I can, if you would like to contact us with a bit more information but I just don't think I have enough information at this point to give you a valid answer.

Hi Jessica,

I'm not familiar with the particular program which you reference and all their rules but I can answer the following.  All liens must be paid in order to get a reverse mortgage.  That would include the first and subordinate liens showing on the property at this time.

Also, many housing and finance programs contain provisions which dictate to whom the property may be sold and some of the selling terms (maximum income, selling price, etc).  If this program places limitations that remain with the property that would affect future sales of the home, it would not be eligible for a reverse mortgage.   Again though, I cannot say whether or not your property has such provisions without an examination of the title restrictions on the property but that is also something to keep in mind.

Hi Bob,

Yes, you can, but you have to remember two things.  You must pay off and close the loan with the proceeds of the reverse mortgage; you cannot keep the loan open after it is paid to a zero balance. 

Also, HUD recently changed some of the rules of the reverse mortgage program, and one of them is that you cannot pay off a loan that was obtained within the last 12 months with reverse mortgage proceeds if that loan was used to withdraw equity from the property, and that includes Home Equity Lines of Credit.  In other words, if the loan was not a purchase money loan (it was a refinance or an equity line that was not used to purchase the home) and you drew more than $500 from the home with the loan, you cannot use the reverse mortgage to pay off the loan if it is less than 12 months old.  Borrowers who refinanced a loan but took no money out of the transaction will not be affected by this rule, but if you took out the equity line within the last 12 months and your cumulative draws in that 12-month period exceed $500, the reverse mortgage could not be used to pay the loan off.

Source: New Reverse Mortgage Seasoning Rule Starts 12/15/2014

Hi Karen,   

You are correct.  There is no repayment required as long as you live in the property and abide by the terms of the loan agreement, which include paying taxes as they come due, maintaining adequate hazard insurance, and keeping the property in good condition. 

Hi Sharon,

I must admit, I'm really not sure where to go with this one.  I'm afraid that any answer I give you to a question like this would be construed as "legal advice" which I am not licensed nor am I qualified to give.  There have also been different reverse mortgages available throughout the years and not knowing what loan this individual has, I could not even render an opinion as to what conditions may appear in the security agreement or the Note and Deed of Trust. 

I can tell you this though.  The Deed of Trust is a recorded document and your attorney can pull a copy from public records and if the loan is the HUD Home Equity Conversion Mortgage (HECM), then it would be easy enough for him or her to get a sample set of the loan documents and then render a legal opinion on this question.  I hope this helps.

Hi Kerry,

If I'm reading your question right, I think I have to disagree with both of you.  I'm not sure what you mean by "lost to the lender" but if you mean forfeited and the lender gets to keep the money from your line, that is not the case.  I can tell you that it does not go toward paying down the principal balance either though.  But I think I can explain this to your satisfaction.

Firstly,  you and your wife have a line of credit that does not accrue any interest until you actually use the money.  In other words, the line of credit is available to you but until you actually borrow the funds, it's like a credit card that you have a $20,000 limit but you only spent $500 on it.  There is nothing to forfeit or pay down with the available credit if you decide to get rid of that card, you just pay off the $500 and you never used the other $19,500 so you just don't have to repay it.  The reverse mortgage line of credit is the same way. 

If you have a line of credit in the amount of $200,000 available to you and something happens to you but you only ever spent $50,000 of the money, then your heirs only have to pay back the amount that you spent plus any interest that accrued on that amount.  Nothing is forfeited to the bank and nothing is credited to the amount owed from the unused line, the line is simply frozen at the amount you used and that is all that must be repaid when your heirs take over the property. 

Remember, you always own the property and then your heirs after you.  All equity in the property always belongs to you or your heirs as you designate.  The bank has no method by which it can just take ownership of the property so you and your heirs always have the choice and decision of what the final disposition will be (i.e. sale of the property, one of the heirs moves in and refinances with a loan of their own, they pay off the loan other funds available to them and keep the home, etc).  Any remaining amount left on the line of credit is just money un-borrowed and therefore not to be repaid.

I hope this clears up the debate but if there is anything else I left out, or if any of this is unclear, please let us know.

Hi Donna,

I certainly understand, unfortunately I'm afraid the help I am limited to being able to give you is information about reverse mortgages.  The program currently gives borrowers a little over 50% benefit (52.5%) at age 62 after the last cutback in in September of last year.  After the costs of the loan, even if we could still do the loan without an origination fee as we can now, the amount available to you after the HUD mortgage insurance and third party fees would be just about 50% of the value of the home.  Based on the numbers you have given me ($330,000 mortgage and $175,000 equity), I can assume a value of $505,000.  Based on those assumptions, you would not receive enough money available to you to pay off your existing loan and would have to bring in about $79,000 just to close the reverse mortgage, even with no origination fee at current HUD parameters.

Having said that, I do not know what the lending limits will be in November.  We are currently under a temporary increase in the Lending Limit to $625,500 that has been in effect since 2009 and we have not received word that HUD will extend this increase again this year as of this time.  If they do not, we could revert to the permanent lending limit of $417,000 at the end of September to begin HUD's new fiscal year on October 1, 2014.  If this does happen, then your benefit amount would be based on the value of your property or the HUD lending limit, whichever is less and you would be almost $123,000 short to close a reverse mortgage loan based on a current mortgage owing of $330,000.

The bottom line is that if you do not have $79,000 to bring in to close the loan or possibly $123,000 if the loan limits change by November, then a reverse mortgage may not be the saving grace for which you are hoping.  My recommendation to you would be to contact a HUD approved counseling company in your area now to see what alternatives may be available to you before the time comes when a decision must be made hastily.  There may be other programs of which you are not aware that they can recommend.  I wish I could be of more help but at least you have the information you need to make an informed decision and can plan accordingly.  I wish you the best.

Hi Donna,

You have a couple of issues you need to address but let's start with the title.  If you have been on title all along, then removing a second party is easy and I would suggest that you do this right now.  If the second party changes his mind later or does not get off of title early enough, it can cause delays not to mention that he would be required later to go through counseling if he is on title at the time you started your application.  It would be much cleaner and easier for all if a Deed could be signed and recorded through a title company now.

Secondly is the timing.  You can begin your application up to 60 days before your 62 birthday.  The counseling can be done at any time, but the certificate is only good for 6 months so I would wait and schedule the counseling session for some time about a week or two before that 60 day period so that you are not in danger of letting your certificate expire in the process.  I would also advise you to contact a seasoned reverse mortgage originator and go through an initial discussion about your property about 3 months before your 62nd birthday.  You can review the current HUD guidelines at that time (HUD is going to roll out the Financial Assessment requirements sometime this summer) as well as this would give the originator a chance to discuss your property and review recent sales in the area.  If you are aware of any deferred maintenance or if there are any other concerns, this gives you both a chance to discuss opportunities, alternatives and requirements before you spend money on an appraisal. 

If there are no issues that would prevent the mortgage, there are plenty of recent sales and everything comes together as it usually does, then you can start your application 60 days prior to your 62nd birthday and close the loan (sign your final loan documents) as soon as you have had your birthday.  There is a 3 day Right of Rescission period that all borrowers who are refinancing their primary residence are given after they sign their loan documents as a final  chance to think about the transaction to decide if they want to cancel.  With the 3 day right of rescission that is required by law, you would not be able to count the day you signed or Sundays or holidays as a rescission day but then you would receive your money after that time period expired and the loan recorded.  It's best to figure about 5 days after signing before you actually have the funds wired to your account.

Hello Carlos,

NO, not all reverse mortgage programs are part of the HUD Home Equity Conversion Mortgage (HECM or "Heck-um") program.  There have been many proprietary programs that were not affiliated with HUD in any way and did not carry the FHA insurance.  The "jumbo" programs that were once much more readily available were not FHA-insured loans.  FNMA also had a program known as the Homekeeper that they discontinued December 31, 2008 with the signing into law of the Housing and Economic Recovery Act that eliminated county by county limits on the HUD HECM. 

With the meltdown of the mortgage market in 2008/2009, most of the proprietary loans disappeared for a while and the American Recovery and Reinvestment Act of 2009 raised the Maximum Claim Amount on the program to $625,500 for a temporary time period where it still remains today (the permanent maximum is $417,000).  Because the new HUD limits allowed more high dollar properties to utilize the HECM program at lower costs and the market appetite for non-insured product dried up, the HUD HECM became just about the sole product available for several years. 

There are many sources talking again now of the resurgence of proprietary programs but still no new strong programs available in the market.  So while not all reverse mortgages are backed by FHA, the HECM loans are certainly the overwhelming majority of reverse mortgage loans available at this particular time.

Hello Kathleen, 

The benefits for a reverse mortgage continue to get larger for each year additional year of age of the borrowers, except when you hit the maximum at 90 years old when you no longer receive any higher benefits for additional years of age.  Up until 90, every year older will raise the benefit to the borrower and if you are within 6 months of your next birthday by the time the loan closes, you will receive the benefit for the next higher age.  In the case of loans with two people, the benefits are determined by the age of the younger borrower.  So in your example above, the benefits will be determined by the younger borrower turning 67, not the borrower turning 70.  If you were closing the loan this month, even though your husband is still 66, you would receive the higher benefit of a 67 year old because his birthday falls within the next 6 months. 

So if I understand your question correctly, there is no magic change to the formula if one or both of the borrowers are 70 years of age that should make borrowers use this age as a benchmark.  The younger spouse would have to be 70 before that age would even drive the benefit calculation.  The calculations do have some "steps" that allow for a slightly larger increases along the way, but the difference for the most part is nominal.  In the case of a 69 or 70 year old borrower, in today's market with an expected rate still below 5%, the difference in the Principal Limit on a $300,000 home would be $1200 in benefits. 

Interest rates affect the amount of money the borrower will receive far more than a year or two of age.  Now that we are very quickly approaching rates that will take us above the HUD floor, in the example I used above ($300,000 home with a 70 year old borrower), an effective rate just .085% above the floor of 5% (less than one eighth of one percent) will cost the borrower over $5,000 in available benefits.  At 5.210% or .210% over the floor, that same borrower would receive over $12,000 less.  If rates rise just another quarter percent, the borrower would receive almost $19,000 less under the program.  So while waiting for several months may get some borrowers a few hundred dollars more in benefits due to age, in times like these with rising interest rates, waiting could end up costing them thousands!

Hi Carol,

There are many ways to hold title and some allow you to still obtain a reverse mortgage and some do not.  if the property is not fee simple, in other words, you do not own the property outright whether there are liens due to mortgages or not, then HUD will allow lenders to accept some forms of ownership provided the method of ownership extends beyond any timeframe that would endanger the reverse mortgage.  For example, with leased land or a borrower who has a title based on a life estate, the term of the lease or estate must be renewable for 99 years or run at least 50 years beyond the youngest borrower's 150th birthday.

The only way to know if your particular title is or can be made acceptable would be to allow a reverse mortgage lender to review the title from a title report.  They can tell you if your particular method of holding title is acceptable, or can be made acceptable.  We have had some borrowers who have had good luck in renegotiating terms of leases, etc. to enable them to obtain a reverse mortgage and some methods that did not qualify and could not be altered.  You just never know until you try.

That would not be the case.   The reverse mortgage is designed to allow you to live in your home for the rest of your life and not have to make any mortgage payments and it does have the safeguard that when you pass or are forced to permanently leave the home, you and your heirs can never be made to pay more than the home is worth.  However, as I stated in my first response, the reverse mortgage is a lot like every other loan in many respects and this is one of them.  If you choose to sell your home, that is, you make a voluntary decision to move, you would be responsible to pay off the entire mortgage, not just the realtors cost of sale, or there would be possible negative ramifications.

Let me explain.  If you passed while you had a reverse mortgage and the balance exceeded the value and your heirs did not wish to purchase the home, the lender would obtain the home from the heirs through either a Deed in Lieu of Foreclosure or through the Foreclosure process if the heirs were not cooperative or there were no heirs.  There would be no negative impact on the borrower since there are no credit concerns at this point and the lender would not even have any reason to report such a credit incident to a reporting agency due to the passing of the borrower.  However, the loan is meant to allow you to remain in your home for the rest of your life without having to make a payment.  If you choose to leave the home at an earlier time and there is a deficiency balance, it is true that the lender cannot seek judgment against the borrower but they can report the foreclosure on the borrower's credit.  This action would also make the borrower ineligible for any HUD financing in the future until any deficiency had been repaid.

Again, depending on the reason for early departure, this may have no impact on the borrower whatsoever.  Borrowers leaving their home due to the fact that they can no longer care for themselves would not be affected by this as they would not be in the market to purchase again in the future and would no longer have credit concerns.   The loan provides for borrowers to be able to remain in the home no matter how far upside down it may go, so if a borrower simply chooses to move at some point, guaranteeing a loss to HUD's insurance, it's still considered a mortgage default.

Hello Mr. Gibbons,

In this respect, the reverse mortgage is just a loan like any other loan.  The differences in how you receive your funds and when you must repay them do not affect your homeownership or your property rights or obligations.  You still own your home and are responsible for payment of all property taxes, insurance and maintenance of the home.  If you decide to sell the home and not live in it for the rest of your life as the mortgage allows, you certainly have that option.  You are correct that, just as you would with any other loan, you would be responsible for any costs to sell your home and then the reverse mortgage would be paid from the proceeds of the sale...again, just like any other loan.  You also would then retain all equity in the home.  In other words, if the house sold for $200,000 and the amount owed on the reverse mortgage at the time was $125,000, the $75,000 equity is solely yours. 

You receive a monthly statement with a reverse mortgage just as you would with any other loan.  You can track your loan balance and contrary to what many borrowers believe, while you are never required to make a monthly payment with a reverse mortgage, you have the option to pay any portion at any time to minimize the growing balance if you desire.  Many borrowers do choose to make monthly, quarterly or even annual payments of some amount due to their situation and their goals which is certainly allowable under reverse mortgages (while not required).  Therefore, if your goals are to sell in a set period of time and you wish to keep your balance under a certain level, you can always make provisions in advance to do so, knowing that the equity you retain belongs to you or your heirs. 

So the bottom line is that when considering a reverse mortgage, you can figure future costs of marketing, sales, etc. just as you would if you had any other type of home loan.

Hi Jack,

When a reverse mortgage is closed, there are two Notes and two Deeds for the loan.  The second is to FHA so that if they ever have to advance any funds to the borrower, they are protected under this Note and Deed.  The amount of the Deeds recorded should have been 150% of the appraised value at the time the loan was placed.  Therefore, if the Deed was recorded for $529,000, that would indicate a value of about $352,650 at the time the loan closed.  The reason for the 150% is that the loan grows over time; therefore, they have to set a higher limit on the recorded loan amount, or your mother may lose access to funds she would otherwise have.  HUD's rules state that no dollar amount is required on the Deed unless the state requires it, and that 150% of the property value must be used.  Most states do require a dollar amount to be included.

With regard to the date, the loan becomes due and payable when your mom either permanently moves out of the home or passes away.  Since there is no way to know when that will occur and the documents require a firm date, the date on the documents is set 50 years beyond the borrower's 100th birthday. 

But as you noted, just like any other loan, your mom only owes what she borrowed and any fees/interest that accrues on that amount.  So if the balance is $200,000 and your mom wanted to sell her house today, $200,000 is what she would owe.  Many reverse mortgage borrowers choose to make some repayments monthly, quarterly, or annually to keep their balances lower, even though no monthly payments are required.  We have a calculator on our site that lets borrowers see how different payment amounts would affect their balance over time, if they would like to run scenarios.

Hi Diane,

We have an article here noting that there are two Deeds of Trust or Mortgages (depending on the state in which you live) recorded with a reverse mortgage.  In a nutshell, the reason is that money can be advanced by both the lender and HUD on a reverse mortgage, and each Deed or Mortgage secures funds advanced by each entity.  Your HELOC lender would be correct that any instrument recorded behind those Deeds/Mortgages would be in third position.

The Reverse Mortgage is a non-recourse loan. That means that the lender can only look to the property to repay the obligation, regardless of other assets. There is no telling what the value will do between now and the time your father ultimately leaves the property but you are correct in that any money in your father's checking account would not be subject to forfeiture in order to repay the reverse mortgage balance.

HUD says the HECM Saver program is available for all transaction types and payment plans offered under the Standard HECM programs. The HECM Standard does not currently allow a line of credit under the fixed-rate program. Therefore, the Saver program does not allow it either.

The line of credit is an "open-ended" mortgage. In other words, you can continue to go back for multiple draws. The fixed rate currently cannot accommodate an open-ended security instrument. Until the HECM Standard Fixed Rate loan is available as a line of credit, it cannot be offered as a Saver product either. I'm sorry; we would love to offer the line of credit in both the Standard and Saver programs at a fixed rate, but it just isn't available.

Please feel free to have her give us a call. Our toll-free number is 800-565-1722, or, if she prefers, we will be more than happy to contact her. We serve many borrowers in the Bay Area and have procedures in place so she will never have to leave her home. We would be more than happy to ensure she receives excellent service for the reverse mortgage program that best suits her needs.