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Understanding the Effects of Trusts and Reverse Mortgages

August 31, 2022     102 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? Reverse mortgages offer financial relief for homeowners aged 62 and up, but they don’t erase all responsibilities.  A common question is: Who pays property taxes and insurance? The short answer: You, the homeowner—unless a Life Expectancy Set-Aside (LESA) steps in. Here’s what you need to know to stay on track. The Basics: Homeowner Responsibility With a reverse mortgage, you still own your home and must pay property taxes and homeowner’s insurance.  The loan doesn’t cover these unless you qualify... 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’re planning to stay in your home but worry about your savings lasting through retirement, a reverse mortgage could help you achieve financial peace of mind.  Reverse mortgages allow you to access your home equity without making monthly payments, giving you flexibility and security in your retirement years. What Are the Types of Reverse Mortgages? The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM), insured by the Federal Housing Administration (FHA).  HECMs are available with both fixed and adjustable interest rates.  For homeowners with properties... Read Full Article

Reverse Mortgage & Going to Nursing Home? Read First!

July 25, 2022     85 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     25 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     12 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