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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

How to Purchase a Home That Has a Reverse Mortgage

July 13, 2022     100 comments

We were looking to buy a home and signed a contract for sale for $730,000.  The house appraised for just over that amount.  Afterward, we learned that the seller owes more than that ($760,000) on a reverse mortgage.  Does HUD/FHA need to approve the sales price before we can close?  The seller can complete the transaction because the sales price is within 95% of the amount owed.  Does HUD/the lender get to keep the difference between what is owed and the sales price? Are you sure that it... Read Full Article

Skip the Reverse Mortgage Tenure and Go For Growth!

June 13, 2022     10 comments

If you're considering taking out a reverse mortgage, it's important to understand its unique features.  Did you know that the federally-insured home equity conversion mortgage (HECM) program has a loan payment option that grows over time, increasing your borrowing capacity? The HECM program allows homeowners aged 62 and older to access the home equity they've built up in the form of a non-recourse loan.  As a borrower, you can spend your loan proceeds however you see fit, but you are required to stay current on your homeowner's insurance and property... Read Full Article

Here’s How Much Time is Allowed to Pay Back a Reverse Mortgage

May 10, 2022     2 comments

Hello ARLO, My stepmother is in her 80's, has dementia, and is the sole Trustee of a Family Trust set up by my father years ago. My brother and I are the beneficiaries. A few years back her neighbors advised and assisted her in placing the house (which had been assigned to the Trust and is in the name of the Trust) into a Reverse Mortgage without consulting or notifying either myself or my brother beforehand. As sole Trustee, she has never provided required accountings and generally does not understand... Read Full Article

How to Get a Reverse Mortgage if You Still Owe on Your Home

May 2, 2022     24 comments

In this article, you’ll learn: How to eliminate your monthly forward mortgage payment with a reverse mortgage What expenses will you still be accountable for after eliminating your mortgage payment How can you still make payments whenever you choose How to get the best deal & highest principal lending limit The ability to tap into the value of your home by turning its equity into cash can be a powerful tool for someone trying to find a way to expand their financial options for a whole host of reasons. This... Read Full Article

10 Reasons Why Someone Would Get a Reverse Mortgage

May 1, 2022     no comments

Unlock the value in your home with the federally-insured Home Equity Conversion Mortgage (HECM) program, designed specifically for homeowners aged 62 and older.  This non-recourse loan offers a secure way to access your home's equity without the obligation of monthly payments. While reverse mortgages may not be the perfect fit for everyone, they hold powerful benefits for certain individuals.  Here are 10 compelling reasons why a reverse mortgage could be a wise financial strategy for those who qualify. 1.  Budget breathing room/peace of mind Older adults live on... Read Full Article

This Little-Known LESA Growth Feature Is a Game Changer

April 21, 2022     2 comments

This Little-Known Reverse Mortgage Feature Could Be a Game Changer Qualifying for a reverse mortgage is tougher for some people today than it has been in the past. That’s because new underwriting standards have been developed in the past year to ensure that these loan products are safer for the borrowers who use them. As of April 27, 2015, all prospective reverse mortgage borrowers are subject to a Financial Assessment, in which a lender will analyze a loan applicant’s financial history to determine if a reverse mortgage is suitable for... Read Full Article

Avoid These 3 Common Reverse Mortgage Mistakes to Protect Your Retirement

April 20, 2022     1 comment

Reverse mortgages can be a lifeline for homeowners aged 62 and older, offering much-needed financial flexibility during retirement.  However, like any financial product, their effectiveness depends on how wisely they are used. For retirees, a reverse mortgage converts a portion of your home equity into tax-free loan proceeds. These funds can be used for essential expenses, such as covering medical bills, funding in-home care, or making home improvements to age in place.  Unlike traditional income, reverse mortgage proceeds aren’t subject to state or federal income taxes, giving homeowners added peace... Read Full Article

How Reverse Mortgages Have Become Safer: Essential Protections Explained

April 15, 2022     6 comments

For years, reverse mortgages were plagued by misconceptions, making many older homeowners hesitant to consider them. Concerns about high fees, the risk of losing your home, or being taken advantage of by predatory lenders have often overshadowed the benefits these loans can provide.  But the truth is that reverse mortgages have undergone significant reforms, making them safer than ever before. Thanks to new regulations, federal insurance, and industry-wide transparency, reverse mortgages now provide older Americans with a secure way to access their home’s equity. These improvements ensure borrowers are well-informed,... Read Full Article