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Why Reverse Mortgages Have 2 Notes & 2 Trust Deeds

February 19, 2024     57 comments

Borrowers often encounter confusion as they approach the crucial moment of signing their final documents for a reverse mortgage.  They are introduced to a First and Second Trust Deed Note and Two Deeds of Trust (or mortgage, depending on the state laws applicable to the property). Compounding the complexity, the amounts specified on the Note and Deed of Trust can be substantially higher than the sum the borrowers agreed to borrow.  This discrepancy has led some borrowers to hesitate or even refuse to sign the documents at closing, primarily because... Read Full Article

Reverse Mortgage Closing Costs & Fees Explained

February 18, 2024     6 comments

When considering a reverse mortgage, it's important to understand the various costs involved.  These expenses can differ significantly, not just between different lenders but also based on your home's location. To ensure you're getting the best possible deal, it's smart to shop around and compare lenders.  Among the costs, the origination fees (which cover the setup of your loan) and the lender's margin (determining your loan's interest rate) are particularly important to pay attention to. Interest rates are another important factor.  They represent the cost of borrowing money and will... Read Full Article

3 Advantages of Making Payments on a Reverse Mortgage

February 15, 2024     34 comments

A reverse mortgage allows you to receive payments from your home equity rather than make a monthly payment to repay the obligation. One little-known fact, for example, is that you can get a reverse mortgage and can make payments on it when that meets your goals and if you want to.  Or, you can turn it into an interest-only mortgage, meaning you don't pay toward the principal of the loan, just the interest that's accruing. Why make repayments on a reverse mortgage loan? 1.  Easier to qualify compared to... Read Full Article

HECM: A Simple Guide to Home Equity Conversion Mortgages

February 14, 2024     10 comments

While many people are familiar with the concept of a reverse mortgage, fewer know the ins and outs of HUD's reverse mortgage program, the Home Equity Conversion Mortgage (HECM).  This type of reverse mortgage comprises the vast majority of reverse mortgages closed in the U.S., is insured by the Federal Housing Administration, and follows the rules and regulations set by the Department of Housing and Urban Development (HUD). While some states have specific rules that apply to reverse mortgages beyond what the HECM program requires, the program is offered nationally,... Read Full Article

2024 Reverse Mortgage Age Requirements

February 6, 2024     16 comments

Reverse mortgages are valuable tools for older Americans.  They allow you to access the equity in your home without making monthly mortgage payments. The most well-known option is the Home Equity Conversion Mortgage (HECM), a program backed by the Department of Housing and Urban Development (HUD).  This program offers a secure method for seniors to borrow against their home equity. In addition to HECM, proprietary reverse mortgages are available for those as young as 55.  These private loans increase the availability of reverse mortgages, offering more homeowners a chance to... Read Full Article

Appraisers Use the Sales Comparison Approach (Not Zillow etc.)

February 5, 2024     2 comments

Here is where Appraisals are not updated and correct. Zillow and others use sales per sq ft for cookie-cutter homes. They omit custom built homes in comparable homes because of lack of construction knowledge and insurance coverage? Costs of replacement coverage and appraisals would place a 5000 sq ft total home cost at $800,000-min w/o lot? Go Figure how you could be insulted at $600k on a no-nothing Appraisal. You just hit the nail squarely on the head, but from an angle you didn't mean to go.  Appraisers don't... Read Full Article

6 Questions to Ask Your Reverse Mortgage Loan Officer

February 5, 2024     4 comments

You've made the decision to pursue a reverse mortgage, and now you're meeting with a loan officer for the first time.  Though you may understand the basics of a reverse mortgage, there are certain questions you may want to bring with you for your first meeting to clarify some of the details that could potentially catch you off guard down the road. Here are 6 questions to address in your first meeting with your reverse mortgage loan officer: 1.  How do I get counseling? Scheduling your counseling... Read Full Article

How Occupancy Fraud Threatens the Reverse Mortgage Program

February 3, 2024     26 comments

Because of health issues, I've moved my Mom in with me, and at some point, I will most likely have to move her to a nursing home. Her granddaughter lived there until a couple of weeks ago. She has wrecked the house. The monthly statement has the house at way more than I could ever sell the place for to pay it back. What are my options? ~Jan Reverse mortgages are designed as non-recourse loans, offering a significant safety net for borrowers and their estates. In situations where the property's... Read Full Article

Credit Requirements for a Reverse Mortgage in 2024

January 31, 2024     64 comments

An important part of qualifying for a reverse mortgage is evaluating a borrower’s credit history.  This article explains the credit qualifications necessary for a reverse mortgage in 2024, highlighting key factors such as payment history, satisfactory credit, and additional considerations that underwriters will evaluate in the loan approval process. How will my credit history be examined for a reverse mortgage? Your lender will evaluate your credit history as part of the financial assessment and will require a credit report for all borrowers to document that history. ... Read Full Article

How Reverse Mortgage Appraisal Laws & Appeals Work

January 31, 2024     6 comments

One thing you should know if you are contemplating a reverse mortgage is that your home will have to undergo an appraisal by an FHA-approved appraiser. This will be a very extensive appraisal in which the appraiser should inspect your entire property, do a head and shoulders inspection of the attic (pop their head up and look around), measure the home, and be responsible for checking many items. The physical inspection is only a portion of the actual appraisal.  The appraiser will usually have done a lot of research on... Read Full Article