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Reverse Mortgage Expected Rate is Key to the Principal Limit

September 12, 2022     6 comments

Many homeowners understand that when they qualify for a reverse mortgage, they're eligible for a loan amount that's a percentage of their home's value or the HUD Lending limit, whichever is lower.  This amount, commonly known as the 'Principal Limit,' is a key factor in reverse mortgages. Yet, the 'Expected Rate' is a lesser-known aspect that significantly impacts the available funds from a reverse mortgage.  Understanding how this rate influences the loan proceeds is crucial for consumers considering a reverse mortgage. Reverse Mortgage Expected Rate: Impact and... Read Full Article

2022 Reverse Mortgage Limits Raise to Record $970,800!

September 9, 2022     6 comments

BREAKING: 2023 Reverse Mortgage Limits Reach All-Time High $1,089,300! HUD just announced their high-cost limits for Alaska and Hawaii. Based on the fact that the Home Equity Conversion Mortgage (HECM) limits normally follow these States, we can safely guess that the HUD HECM limit for 2022 will also jump to $970,800 for all new applicants as of January 1, 2022 when HUD announces those changes in just a few weeks.   This is a very large increase for a single year, especially given the increases the program has seen over... Read Full Article

Reverse Mortgage Manufactured Home Requirements (2024)

September 6, 2022     64 comments

If you're the owner of a manufactured home and you're wondering about your eligibility for a reverse mortgage, here's the short answer: you may be eligible.  Now for the longer answer. As with any prospective borrower, you must be 62 or older, legally own the home, be your primary residence, and be eligible for participation in Federal Housing Administration programs. And if you have a manufactured home, yes, you can get a reverse mortgage—as long as it was built after June 15, 1976.  Why is this particular date so important? ... Read Full Article

Understanding the Effects of Trusts and Reverse Mortgages

August 31, 2022     98 comments

I have the home in a family trust.  I am unmarried but have lived with my “wife” for years.  She inherits the home by last will.  Do we qualify for a reverse mortgage? The short answer is yes.  You can have your home in a family trust with a reverse mortgage.  Firstly, as a lender, we only get so much information.  Then, we rely on the title and affidavits we receive when originating the loan. For example, we would do a title search and see that the current title... Read Full Article

Who’s Responsible for Property Taxes on a Reverse Mortgage

August 27, 2022     44 comments

Who pays property taxes and insurance on a reverse mortgage? The normal way is for the reverse mortgage homeowner to pay their own taxes and insurance EXCEPT if you do not meet the program's residual income or credit requirements. And then, instead of an automatic declination, if your income or credit does not meet the requirements like a typical loan, there is a second opportunity with a Life Expectancy Set Aside (LESA) wherein the funds are set aside to pay the taxes and insurance from the loan proceeds, and... Read Full Article

Using a Reverse Mortgage to Combat Inflation

July 30, 2022     2 comments

Have you considered a reverse mortgage but worried about inflation and rising interest rates?  I recently had a borrower tell me that he was considering one but felt that he may have missed his opportunity before rates started to increase due to recent Fed rate hikes and inflation. He stated that he probably would not benefit now, with all the uncertainty of the future. Based on everything that was going on in the economy (inflation, interest rates, etc.), he just did not think a reverse mortgage made sense for him.... Read Full Article

Which is Best? Fixed vs. Adjustable Rate Reverse Mortgages

July 26, 2022     19 comments

If you have decided to stay in your home but are still determining if your savings will last a reverse mortgage may be the solution to help you achieve that goal.  Different reverse mortgage types serve different purposes, and as with any mortgage, you must consider which program and rate options are best suited for you.  Like any other mortgage, reverse mortgages offer two interest rates: fixed and adjustable. Insured by the Federal Housing Administration (FHA), the most common reverse mortgages on the market today are Home Equity Conversion Mortgages (HECM... Read Full Article

Reverse Mortgage & Going to Nursing Home? Read First!

July 25, 2022     81 comments

My mother has a reverse mortgage and recently had to go into a nursing home as she is terminally ill.  According to the agreement, we had to notify the "said reverse mortgage company" that she was no longer living in the property.  We were told by phone (we failed to document who, what, and where) that we had six months to sell the property and possible extensions of up to a year.  Two weeks later, we received a notice that the foreclosure process had started and that the debt was... Read Full Article

Reverse Mortgage Seasoning Requirements Explained

July 25, 2022     14 comments

HUD has a new requirement that for borrowers to use reverse mortgage proceeds to pay off an existing lien on which the borrower received $500 or more, the loan must have been in effect for at least 12 months.  This includes any liens on which the borrower took out additional draws of $500 or more in the past 12 months, such as Home Equity Lines of Credit (HELOC).  This includes single or cumulative draws totaling $500 or more over 12 months. This is something that all homeowners considering reverse mortgages... Read Full Article

Reverse Mortgage Foreclosure Has No Effect on Heirs

July 13, 2022     22 comments

My MIL and FIL recently entered a reverse mortgage.  The house is in good shape and worth about $150,000.  I expect they will take a large distribution upfront as well as withdraw monthly amounts until they hit the max dictated by the lender. The large distribution up front coupled with fees, closing costs, mortgage insurance, and interest build means that if they continue to live in the house for even 15 years, I expect the loan balance to exceed the value of the home.  Glad for the non-recourse nature of... Read Full Article