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Reverse Mortgage Eligibility

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Answered By Our Experts

Question From GIlda on 11/08/2018

I would like to know if we qualify for reverse mortgage.We don't have a mortgage loan anymore but we took an equity line of credit and we cannot afford to pay it anymore

Expert Answer

Hello Gilda,

Many borrowers who have taken Home Equity Lines of Credit are surprised when the interest rates adjust, or they hit their repayment period and their payments increase.  Sometimes, this increase can be as much as two or three times the amount of the old payment when borrowers enter the repayment period of the loan. 

This is a great time for many to consider a reverse mortgage because quite often, these borrowers no longer qualify for traditional financing.  I urge borrowers to investigate their lines of credit, so they do not wait until they are hit with the large increases and fall behind on payments before they start their inquiries making the reverse mortgage harder to obtain.

To find out if you qualify, please feel free to visit our calculator and there you will find our no hassle, no obligation calculator that will give you real time results.  You don’t have to put in any personal information such as social security numbers (we do a need a month and year of birth to determine your benefits under the program, but you don’t have to give us the exact date). 

From there, it is entirely up to you if you want more information or if you feel the program is not right for your needs.  We won’t hound you or “robocall” you and it doesn’t cost a thing to find out if this is a viable option for your circumstances.

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Question From Denise S. on 11/08/2018

We do not own our home. Its valued at $285,000 however, we still owe $190,000. can we take out a reverse for remodeling? we do not have any heirs to our estate. I'm 65 and my husband is 78. thank you.

Expert Answer

Hello Denise,

When you say you do not own your home, I assume you mean free and clear and that there is still a loan on the property, but you do have title to the property?  If so, you do own the home, you have a loan against it, but it is yours and you do own it which does make you eligible under the program parameters. 

If you do not own it, meaning there is someone else on title and you are in some sort of lease to own program where you are not yet the owner until you pay off the lien, then you are not eligible for a reverse mortgage until you have title to the property.

Now that we have that portion of the question resolved, there is the debt position that we need to discuss.  If you do own the property, you still must meet the HUD eligibility requirements for income, credit and equity in the home.  I cannot comment from the information here as to your income and credit situation, but I can tell you that based on the youngest borrower’s age of 65, you would not be able to get enough money to both pay off your existing mortgage of $190,000 and take out money to do the remodeling you desire. 

You must remember that the benefits are determined by age and the younger the borrower, the less you receive under the program.  The program uses the age of the youngest borrower because that borrower, statistically, will be the one living in the home longest and will determine how much interest will accrue over the life of the loan.  And the reverse mortgage requires that you pay off any existing loans with the available proceeds first and then you can use whatever money is left for whatever purpose you wish.

At 65 years old, even with a very low margin, the best Principal Limit will only be about 47.4% of the value of the home and you currently owe about 67% of the value of the home on the current mortgage.  Even at your husband’s age if you didn’t have to consider your age (which you do), he would be eligible for about 55.7% of the value of the home which still would not pay off the existing mortgage – let alone the mortgage and any costs of the new loan.

I didn’t mean to go into so much detail just to say “no” but I wanted you to know that this really is not an option for you and why and also so that others reading can make the same determination if they also currently have higher loans to value on their property. 

We have a calculator on our website that is free to use and requires very little information, none of it personal.  We don’t even need an exact birthdate (month and year are necessary to compute the benefits, but you can insert any day) and we never ask for a social security number.  You can check your benefits instantly, with no hassle or obligation.  If the numbers work, we will be happy to send you further information at your request.

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Question From Kate N. on 10/31/2018

I bought a house 2 months ago for cash am I qualified for the reverse mortgage?

Expert Answer

Hi Kate,

You did not give me enough information that I can tell you for certain whether or not you qualify for a reverse mortgage, but I can tell you that what you did tell me does not disqualify you for the loan!  There is no minimum time you must own the home in order to be eligible for a reverse mortgage so as long as you meet HUD’s other criteria, you can get a reverse mortgage on the home you just purchased for cash 2 months ago.

Many borrowers in your situation choose to do exactly that in order to recoup some of their available cash and to be able to make any needed improvements or changes to the home.  To be able to know what that loan might look like, please feel free to visit our no hassle, real-time calculator and let us show you what you might expect from a reverse mortgage on your new home to help with your planning.

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Question From D. Walker on 10/17/2018

My brother is 92 and not in the best shape. Having said that, however he is driving himself to the store, doctor and has all his marbles! He wishes to know how much he can qualify for (his house is valued at $650,000 by real estate agent a month ago and the house 2 doors away just sold for $725,000. Same house style and size. He has 2 children ages 60 and 70 to which the house has been willed to and the 60-year-old is his POA. His pension covers the taxes and all the other expenses such as lawn care, snow removal and any repairs. Recent new roof, furnace, air conditioner, but he would like to buy a motor home about $150-$220,000 and hire a driver to drive it. Could you explain if a reverse mortgage is a viable option, or perhaps you could suggest something else. Could he, for instance sell the house privately and rent it back for the remainder of his life?? Yours sincerely D Walker.

Expert Answer

Good Morning,

Let’s start by going backwards.  Of course he can always sell the home.  His ability to rent back the property would depend on the buyers willingness to rent it back to him.  In other words, there is nothing that would stop him from selling the home and renting it back other than possibly finding a buyer willing to purchase it on such an arrangement.  I can’t begin to comment on the rental market in an area with which I am not familiar (and quite frankly has not even been identified in your question) as to the viability of this type of arrangement but there is nothing that I can see that would preclude him from doing this other than finding the right buyer.

Based on the sale you cite as an indicator of value, your brother should be eligible for a Principal Limit or loan amount of about $480,512 at current interest rates.  From that amount, he would have to pay off any existing loans on the property and costs to get the reverse mortgage.  Also HUD will not allow him to take all the money at one time but assuming he has no mortgage to pay off, he should be eligible to have somewhere in the neighborhood of $266,500 available to him at closing or in the first 12 months (which would certainly cover the cost of the $150,000 to $220,000 motorhome.

Then after 12 months he would have another $192,205 available to him to spend as he pleases – perhaps traveling in his new motorhome!  If he used just $150,000 for the motorhome, he would still have about $302,700 in a line of credit available to him to use as he pleases but he would still be under the same restriction that only $266,500 is available to him in the first 12 months with the remaining funds available any time thereafter.  How much he would have available to travel with in the first 12 months would depend on whether or not he has any loans to pay off and how much he paid for the motorhome.

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Question From Patricia H. on 10/10/2018

I am 83 years old and contemplating a reverse mortgage. My 62 year son lives with me and will continue to live in the home after I die. He is on the deed to the property as joint tenants with right of survivor-ship. We have looked into some facts and find that the younger the requester for the mortgage is, the less he will get. My question is: If I get the reverse mortgage in my name only (and will that be allowed), will he be allowed to stay on in the home after I die? I'm trying to get enough money to help him financially when I die. And, even if the mortgage company will allow me to do this?

Expert Answer

Hi Patricia,

Unfortunately, you have to choose and can’t have it both ways.  Because he is just 62 years old, the benefit or loan amount for which he is eligible is less than an 83 year old borrower because he has a much longer time that he can expect to live in the home.  If he Deeds the property to you so that you can do the loan in just your name, it is true that you will get more money in the loan and you can Deed him back onto title after the loan closes, but then he would not be able to stay in the home under the terms of the existing loan once you no longer lived in the home.  Since you would be getting a reverse mortgage for an 83 year old borrower in that case, chances are very good he would not be able to refinance the loan with a new reverse mortgage at some point in the future without having to bring in a substantial amount of cash to pay down the balance.

On the other hand, if you leave him on title and you both get the loan now, you will get less of a benefit amount at his younger age, but he will also be able to stay in the home for life.  He would not have to sell the home or be concerned about what he was going to do once you no longer lived in the home but that would give you less money now.  Unfortunately, you can’t have it both ways and you do have to choose which makes the most sense for the two of you and your circumstances – the higher payout now or the longer eligibility.

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Question From Nickole on 10/08/2018

I'm 56 and my wife is 45. Our house is at least worth 1.25M and we'd like to take out a lump sum of 250K. Other than credit card debt worth less than 30K we also have 900K is retirement investment funds. Can we get a reverse mortgage? We are looking for a 10 year mortgage more or less without an additional monthly expenditure.

Expert Answer

Hello Nickole,

I am not aware of a reverse mortgage program available at this time that will allow for the oldest borrower’s age of 56.  There may be other programs available with shared equity or perhaps a line of credit would work for you.  I have heard of programs going down to age 60, but I just don’t have a suggestion for a true reverse mortgage program for borrowers who are still in their 40’s and 50’s at this time.

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Question From Lynn S. on 9/29/2018

My mom has a reverse mortgage and the title will pass to me when she dies. Can I get a reverse mortgage to pay off her loan?

Expert Answer

Hi Lynn,

Yes you can.  But remember, you have to qualify for the lawn based on the current program parameters and at your age. 

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Question From Patricia H. on 9/22/2018

Can I obtain a reverse mortgage with my son, 62, and daughter, 64 as co-owners? I am 83 year old. They are both on the deed with me.

Expert Answer

Hello Patricia,

As long as they both also live in the property, you sure can!  And as long as they also live in the home as their primary residence, the loan would not become due and payable until the last of the 3 of you no longer lived in the home as your primary residence.  If they do not live in the home, you can still get a reverse mortgage with them being non-eligible co-borrowers but in that instance, the loan would become due and payable when you no longer live in the property as your primary residence. 

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Question From Lisa H. on 9/17/2018

Mom has a reverse mortgage am 60 if mom passes after I turn 62 do I automatically qualify for reverse mortgage do I need to apply for a loan myself or I continue hers without having to qualify I have only social security by then, thank you!

Expert Answer

Hello Lisa,

Every reverse mortgage is a loan unto itself and each borrower must qualify for their own loan based on the merits of their property and their case.  Your mom’s loan was based on her age, property value, etc. at the time she applied for and received her loan.  If you were to get a reverse mortgage, it would be based on your age, your property value, etc.  If you inherit mom’s home and wish to obtain a reverse mortgage on the home, you certainly could do so but would have to pay off the old loan and would have to qualify for the loan based on the then current mortgage guidelines.

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Question From Loyd H. on 9/07/2018

How old do I have to be to do a reverse mortgage?

Expert Answer

Hi Lloyd,

To be eligible for a reverse mortgage, borrowers must be 62 years of age or older.  Now this is true for the HUD Home Equity Conversion Mortgage (HECM or "Heck-um").  Private programs set their own rules.

There have been private programs, which are known as proprietary jumbo programs, in the past that went down to 60 years of age and it is always possible that one could come out at any time that allows for younger borrowers than the HECM program. If they do, the amount borrowers receive as a percentage of the home's value will be lower than the HECM program (at least on property valued up to the HUD maximum of $679,650).  For higher valued homes, you have to compare.

It would be a matter of searching to see if such a program was available if you are under 62 and really want to proceed.  The loan amount may be as low or even lower than 20% of the property value though so It may be better if you are a year or two short of 62 if you could get a home equity line of credit or other short term solution then get the HECM reverse after you turn 62 even if you can find one if you are within the lending limit stated above. At least it doesn't hurt to check both ways - if you get the chance.

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Question From Wayne on 9/05/2018

My townhouse is apprised at $261,500.00. We own 105,000.00. If we obtain an reverse mortgage do I have an enough equity in this homes so that I don't have to pay mortgage payments?

Expert Answer

Hello Wayne,

I can’t answer this question with 100% certainty.  While the numbers you give would certainly indicate that you probably would receive enough in the reverse mortgage to pay off your entire loan and never have to make another mortgage payment and possibly still have some money left over in a line of credit, there could be other things that might affect your proceeds. For instance. If one of the spouses was under the age of 62 the proceeds would be less and we have seen some instances where much younger spouses did greatly affect that amount.

Also, if your credit or the payment of taxes, insurance or other current home obligations over the past 2 years has not been made timely, it could require the lender to place funds from the reverse mortgage into a Life Expectancy Set Aside under the provisions of the HUD Financial Assessment Rules.  If this were the case, that would leave you less money to pay your obligations and could leave you short of the required funds to pay off your current mortgage.

The only way to know for sure would be to first visit our online calculator to determine what your benefit amount would be based on your property value and the ages for you and your spouse.  If you know you have no late payments on any credit items (especially your mortgage, taxes or insurance on your home), then you would not have to worry about a possible LESA account.

If you are aware of issues that you have had and would like to discuss them to see if we can work with you to avoid the LESA under the parameters allowed under the program, please don’t hesitate to let us show you what you might expect from the program.  There is no cost to use the calculator, no hassle and we don’t run your credit or need any personal information.  You decide if you want to take it any further after that.

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Question From Bruce S. on 8/21/2018

Can you take a reverse mortgage less than the value of the home and how would that effect the estate?

Expert Answer

Hi Bruce,

Every reverse mortgage is for less than the value of the home so your beginning loan balance will be considerably less than the value of your home.  Where you go from there depends on how much you borrow and how quickly, the appreciation in your home and whether or not you choose to make any principal reductions. 

The total Principal Limit or loan amount available to borrowers depends on the age of the youngest borrower or spouse, the interest rates in effect at the time and the value of the home as compared to the maximum HUD lending limit.  Borrowers have many options to limit the effect on heirs as well if they don’t need the full amount available to them under the program.  Borrowers can elect a line of credit and only withdraw funds as needed which would keep their balance lower.  They can choose a monthly payment  in lieu of drawing large sums of cash that would also keep the balance down.

And in the case where borrowers need a large initial sum to pay off existing loans, even though it is never a requirement, borrowers can elect to make any payments (monthly, quarterly or annually) they can and choose to make in order to keep the interest from accruing on the loan if they so desire. 

There is never a prepayment penalty on a reverse mortgage so you have total control over how the loan affects the estate you leave to heirs to the extent of how much of the loan proceeds you need to augment your income and your ability to repay.  But there is no minimum requirement that you take each month and you can just access the line as needed if that is your choice and some borrowers go years without drawing on the line at all. 

Our online calculator will allow you to see an amortization schedule that will show you what your loan balance will do and your projected equity based on various rates of appreciation and if you want to see how making payments will affect that schedule, we have also designed our own amortization schedule that would allow you to factor in payments as well and you can check any different option you choose.  When you visit our site we would be happy to let you view any scenario you wish.

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Question From Richard A. on 8/20/2018

I have a home that needs repairs in order to get home owners insurance. Home is under water? Can I get reverse mortgage?

Expert Answer

Hi Richard,

A reverse mortgage requires you to have a fairly sizable amount of equity due to the fact that you make no payments and your balance grows as the interest accrues.  I am afraid it would not work if you were already upside down on the value and the fact that you have not been current with your homeowner’s insurance would mean that if you could get the loan otherwise, even less money would be available to you due to the fact that funds would be set aside to pay the taxes and insurance in the future.

Also, the home would have to meet minimum property reuirements which means that depending on the repairs, they would probably have to be completed prior to the close of the loan.  And you would need to have the home insured at the time of the loan and also keep it insured as a condition of the loan as is the case for all loans.  In fact, I am surprised your current lender has not stepped in to require you to obtain insurance or force-placed a policy by now which is never to the borrowers’ benefit.

Force-placed insurance is very expensive and covers only the dwelling, none of the contents.  When lenders have to place a policy on the property to protect their interest, the cost is added to the amount you owe and it does not protect you or any of your belongings while costing you more than regular insurance you buy on your own.  I truly wish I had better news for you, but based on what you are telling me, I do not believe your chances of success are very good.  However, the only way to know for sure would be to go onto our online calculator and put your information in to see how you fare.  It’s free and takes very little time to see if it would be possible for you to bring in the funds it sounds like you would need to close.

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Question From Bill E. on 8/15/2018

Can i sell a property that has a reverse mortgage on it and move into another property and take out a reverse mortgage to pay the loan balance on the other property? The other property will be my primary residence after moving.

Expert Answer

Hi Bill,

Borrowers can only have one reverse mortgage at a time on their primary residence, but as long as the loan is paid in full with no shortfalls/defaults, you can always get another reverse mortgage after that on the same property or on another one after you sell a property. 

In other words, you could refinance the home you are in if the current terms would qualify you for a loan at today’s rates and program parameters and pay off one reverse mortgage with another.  Or, if you sell the home, you can pay off the reverse mortgage on the current property and then obtain a reverse mortgage on the new property.  

When purchasing the new home, you can even use the reverse mortgage to purchase the new home as long as the existing home is sold and the current reverse mortgage will be paid in full prior to the close on the new home.  Since you can’t have more than one reverse mortgage at a time, you could not move into the new home with the reverse mortgage on your old property still in tact and get another reverse mortgage though.

In fact, if you did vacate a property that had a reverse mortgage against it without paying off the reverse mortgage, that loan would be called due and payable.  If I understand you correctly, it is your plan to sell the home that currently has the reverse mortgage first which would mean that loan would be paid in full at the close of escrow.  In this case, as long as there was no default or outstanding shortfall on the first loan, you would be fine and could use a reverse mortgage to purchase your next home or any time thereafter to refinance a conventional loan if that is what you used to purchase the property for some reason.

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Question From Sue Elen R. on 8/13/2018

I don't want to borrow the maximum amount of money available due to my equity. I want an equity line of credit which will enable me to make some home repairs. I am still employed but don't have savings to make much needed repairs. AT some point in the future I will need to sell my home to completely retire.

Expert Answer

Hi Sue Elen,

Sounds like a lot of folks we work with.  The line of credit and maybe even a modified tenure which is a line of credit with a monthly payment for life might be a good choice for you.  You may find that the line of credit lets you make the repairs you need while the monthly payment gives you the added income you need to supplement your income which allows you to retire and stay in your home.  Or, if you still decide you want to sell at some point in the future you can always do so.  With any of the reverse mortgage choices, you can repay the loan at any time and you only repay the amount you actually borrow plus any accrued interest (plus any financed fees and MIP) but never a prepayment penalty and you do not repay what you did not borrow. 

Please feel free to visit our website at https://reverse.mortgage/calculator to see what options are available to you for both the line of credit and the modified tenure with the line of credit combined with the monthly payment to see if these will work for you.

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Question From John on 8/11/2018

I am 63 and want to do a reverse mortgage. My sister is 62 and lives with me in the home for the last 8 years. When I do the reverse mortgage can I add my sister to the loan?

Expert Answer

Hi John,

You are both 62 or over and both living in the home so if you don’t mind adding her to title, she can certainly be on the reverse mortgage as well which would allow her to remain in the home if something should happen to you.

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Question From S Samuels on 8/09/2018

I live in California. My 3 siblings and I are on the title; we are all over 62 years old. I live in my own home while my 3 siblings live in the other home and wish to get a reverse mortgage. So I am a non-borrower. How much should I be involved in the reverse mortgage procedure. Ho much of my personal business (re MY house, my credit report etc) should be involved!! Do I have any legal obligations.

Expert Answer

Good Afternoon,

HUD recently changed the rules with their “Final Rule” for non-borrowing owners wishing to stay on title but who do not occupy the home and will not be on the loan.  You can now remain on title with your siblings, whereas prior to the change, if you were not going to be on the loan or were ineligible for any reason, HUD would have required that you come off the title prior to the close of the loan.

Because you don’t live in the home you are not eligible to be a borrower on the loan but since you do have ownership interest in the home, As a joint title holder, there are some things you will have to do.  You would have to attend the counseling session to be certain you understand the full ramifications of the loan program and how your title is affected (can be in person or over the phone) and there are several documents you would have to sign as a non-borrowing owner, however, you would not have to supply any financial information due to the fact that you will not be a borrower on the loan.

Your existing home would also not be part of the transaction and would not be affected.  You also must understand that as a non-borrower, the loan will be called due and payable when the last of the three borrowing siblings is no longer living in the home as their primary residence. 

With regard to legal obligations, I can’t give you legal advice and would certainly suggest you contact an attorney for such if you have any questions with any of the documentation you receive or are requested to sign.  If you are not signing a Promissory Note, then you have made no promise to repay the loan and the loan itself is a non-recourse loan meaning the lender has only the property to look to in the event of default but I can’t begin to tell you what other obligations or liability you may run into as a co-owner of the property.  Just being co-owner in the property with your siblings may result in legal obligations or liability of which I have no knowledge so again, I would encourage you to consult with legal counsel.

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Question From Sherlene F. on 8/01/2018

We froze our taxes at age 65. If we build a new home with a reverse mortgage will we be able to freeze the property taxes. If the home we build is valued at $200,000 what % would we pay. What would our closing costs be?

Expert Answer

Hello Sherlene,

There are some tax programs available for older borrowers to delay payment but unfortunately, if you choose to obtain a reverse mortgage, you will not be able to use these programs.  You would not have to make a payment on the home loan for as long as you live in the property so HUD does require that you keep your taxes and insurance paid current while on a reverse mortgage and not defer payment of the taxes as well.  As far as the costs and program availability, you should visit our website to see what the costs are in your area.

Different parts of the country carry different closing costs depending on the state and local taxes, the cost of title insurance in those areas and any other costs incidental to the specific market.  Your actual ages and more specifically, month and year of birth of each borrower will also come into play when determining the reverse mortgage benefit. 

For these reasons, I would invite you to take advantage of our online calculator where you can get an accurate, instantaneous figure based on your information and the area where the property is located.  We don’t need any really personal information (just month and year of birth, not even an exact birthdate) and never a social security number to run the numbers for you.  There is no obligation and no hassle or pressure to find out what you can expect to receive or if the loan would be right for you.  Come visit us online and see if the reverse mortgage purchase would work for your needs.

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Question From Betsy B. on 7/31/2018

Reverse Mortgage lender should belong to two organizations. One is NRMLA. I can't find the name of the other one. Can you please help me?

Expert Answer

Hi Betsy,

There is one national trade association that stands for ethical lending in the reverse mortgage industry and that is the one you mention the National Reverse Mortgage Lender’s Association (NRMLA or “Ner-maluh”).  If the originator is a lender, they must also be Department of Housing and Urban Development (HUD) approved to originate the government-insured Home Equity Conversion Mortgage (HECM or “Heck-um”) reverse mortgage loans but if they are a broker, they may not have a HUD approval.  Brokers can originate the loans but must submit them to a HUD-approved lender for closing. 

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Question From Sherry H. on 7/31/2018

My husband is 65 and we want to buy a home near our kids. After we buy the home how long do we have to wait to do a reverse mortgage on it?

Expert Answer

Hi Sherry,

There is no waiting period.  If fact, you can use a reverse mortgage to purchase the home and eliminate the need to pay duplicate closing costs on two separate loan closings.  Please feel free to visit our calculator to see for how much house you would qualify and what the costs would be.  The calculator has real time costs in all parts of the country and it will allow you to determine how much money you would need for down payment using a reverse mortgage to purchase for your circumstances with no hassle and no obligation.

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Question From Yvonne on 7/29/2018

Can you still make a decent income and get reverse mortgage?

Expert Answer

Hello Yvonne,

There is no income cap for eligibility for a reverse mortgage.  HUD has minimum residual income requirements but no maximum.  In other words, you can make as much as you are capable of making but must at least be able to live comfortably after the payment of all debts and property expenses.  If you have a little more than that or even a whole lot more left over after paying your required obligations, more power to you!

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Question From Randy on 7/27/2018

Is there a minimum value on home and property to qualify for reverse mortgage consideration?

Expert Answer

Hi Randy,

Many of the costs get to a point where the loan just doesn’t make sense when the value is too low.  And that point is different for different people.  Because the program only allows you a percentage of the home’s value and HUD limits the amount you can receive at times based on the amount you owe, if your costs start to get as high as the amount you would receive, it just doesn’t make sense for many borrowers to do the loan.  That’s why we recommend you visit our calculator to see if the numbers work for you. 

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Question From Jason P. on 7/26/2018

So my mother got a reverse mortgage she got one payment and was told she would get the other in a year, year went by and she was told she had to wait 18 months before she could get the rest of it? Well the 18 months are here and now they told her she cant have it that they are going to use it to pay her insurance and taxes with the rest? is this legal this isn't what she signed up for?

Expert Answer

Hi Jason,

It’s a little hard to completely discuss the situation without knowing all the circumstances, but I think I can take a guess at what is happening.  HUD only allows a certain amount of the payout to take place at the closing of the loan or in the first 12 months of the loan if all the proceeds are not being used to pay off existing liens against the property.  This is all laid out and disclosed in writing to all applicants both by the lender and the reverse mortgage counselor long before the borrowers ever get to closing.  That could explain the amount that mom received and then expected access to more funds after another year.

The 18 months has me somewhat puzzled though.  The only thing that would allow the lender to withhold funds at that point would be if mom had filed for a bankruptcy that was not yet completed or if mom had defaulted on her taxes and/or insurance that the lender had to step in and start paying.  The provisions in the loan documents allow the lender to stop making payments to borrowers until after a BK proceeding has been finalized but I don’t know if that was what accounted for the 18 month delay.  I surmise that mom defaulted on the taxes and or the insurance payments and that would be why they are now requiring the taxes and insurance to be paid with the remaining reverse mortgage funds and the borrower agrees to allow the lender to do so in the event of a default. 

Now if I do not have any of this correct and mom has paid all of the taxes and insurance on time and has never filed for bankruptcy, a HUD approved reverse mortgage lender would have no reason to withhold any funds due to her from the reverse mortgage.  Mom should have the correspondence from the lender stating why they are taking the actions they have and if she is unable to locate their letters, you may want to assist her with a call to the servicer to see what has happened – it’s possible she is not aware that she missed the obligations.

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Question From Peggy on 7/25/2018

Do you offer the single purpose reverse mortgage product?

Expert Answer

Hi Peggy,

No, we do not.  The single purpose reverse mortgage programs allow borrowers to use the loan for just one thing, such as for the maintenance of the property, to pay taxes and insurance, etc.  Because of the restrictive nature of the loans, they are typically very difficult to find and usually offered by government agencies and non-profit organizations.  Most lenders, like ourselves, offer borrowers both the HUD reverse mortgages and private or proprietary jumbo programs that allow borrowers who qualify to use the funds for any purpose they desire.

We do not place a restriction on the way the borrowers use the funds they obtain and as a lender, do not wish to become involved in the governance of borrowers and on what they spend they spend their money.  Being that we do not desire to administer borrowers’ ability to use their funds, we have never even explored the possibility of offering a single purpose program and could not honestly even tell you if it would be possible for us to do so in the future even if that were to change.   

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Question From Sandy B. on 7/19/2018

I have all the paperwork into Home Equity for a reverse mortgage. They said everything is fine but it is taking a long time for approval. If I change to your company can you get all the paperwork from them or do we have to redo everything again

Expert Answer

Hi Sandy,

Unlike some  companies, we do not advocate making a change after you are well into the loan just due to timing.  The only thing we could use from the first company (and in fact are required to use) would be the appraisal and then they will require the appraisal to be paid before they would transfer it to a new lender.

Many times it would go faster to close the loan where it is rather than start a brand new loan, assuming they are not at a standstill.  Loan Officers who try to talk you into making a move at or near the end of the process are not helping you in most instances and this loan is all about you and your needs.

Now having said that, what is the reason for the delay?  If the lender had to resolve an appraisal or a title issue and it’s now done, they should be able to close the loan quickly and there is no reason to move.  If they are unable to tell you what the hold up is, then there may be deeper problems and you need to know that.

If you would like us to review your circumstances and give you an opinion of the timeframe required, we would be happy to do so but if it looks like it was just an issue they had to work through and now should have it completed, for your sake, we would advise you to get the loan closed if all other things were equal (rates, pricing, money to you, etc).  Let us know if you would like us to take a look.

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Question From Rod G. on 7/17/2018

Whats the advantage or disadvantage of getting your money in one payment?

Expert Answer

Hi Rod,

I think it all depends on your goals and needs.  If you need the money to pay off an existing mortgage or for other purposes, then you may need to take the funds at one time at the start.  However, if you don’t have a need for the funds right away, there is no sense in taking all the money and accruing interest at a higher rate than you would be able to make on the money if you put the loan proceeds in the bank for example.

Borrowers who borrow all the money only to put the funds into a bank account making less than one percent interest while accruing much more interest on the borrowed funds quickly find that is a losing proposition.  If you leave the funds in the reverse mortgage, you do not accrue interest on the money you have not yet borrowed and your line of credit grows on the unpaid balance.  This is not interest available to you, but is more money available to you later when you might have a bigger need and you can pull funds to use as you need them.

Some borrowers really need the money from the beginning for other purposes.  Some use the funds for medical expenses, other debts that are much higher rates that they want to pay off.  Some want to just lower their monthly payments to give themselves the breathing room or so that they can finally travel if that is their desire.  Some borrowers have expressed the desire to give gifts to family members (children and grandchildren) and wanted to see them use it while they can still enjoy seeing the family using the fruits of their labor so they didn’t have to wait until they had passed.  Some also use the money to fund family educations.

These are just some of the reasons borrowers choose to use reverse mortgage proceeds even though they don’t always have to use the funds right away, but they want to.  Still other borrowers use the reverse mortgage to purchase a home that better suits their needs or to be closer to family members and the purchase reverse is used in one payment initially.  It all depends on your goals and what you are attempting to achieve with the loan.

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Question From Jeanne B. on 7/17/2018

OK. A Reverse Mortgage lender told my husband we have to many liens on our home and that the home is to expensive to qualify?

Expert Answer

Hi Jeanne,

Firstly, there is no limit to the amount of the liens you can have on your home.  There is however a limit to the amount that any reverse mortgage will give you based on the value of the home, the interest rates in effect at the time and the ages of the borrowers.  They may have been trying to tell you that the amount for which you will qualify would not be sufficient to pay off the existing liens or loans on the home.

In this instance, you still have the option of bringing in your own cash to close the loan if you are able to do so if that is your wish in order to eliminate your loan payments.  For example, if you owed $400,000 and your maximum benefit amount is $375,000, you can bring the other $25,000 in from savings to close the loan.  The only requirement is that the proceeds may not be borrowed funds.  You must be able to show that you had the funds to bring in or that they are a bona fide gift from a close family member and they can source that they had the funds to give you (as well as the transfer of the funds).  This would not be a fee, it would be you paying down your loan an the new loan would start with a lower balance.

As far as the home being too expensive, I can only assume you mean that the house is valued over $679,650.  This is the HUD maximum lending limit and properties exceeding this value receive no higher loan amount than properties at this value.  In other words, a property for any borrower with the same interest rate would qualify for the same Principal Limit (loan amount) under the HUD program as a property for that same borrower valued at $1,000,000.  Any added value above the HUD maximum of $679,650 brings no more loan amount to the borrower.  But, that may not be the last word on the subject because there are jumbo programs available that have loan amounts that exceed the HUD limits.

These programs typically have lower lending percentages than the HUD program (especially for borrowers under the age of 70) so the property value has to be more than just a little above the HUD maximum before they make sense for most borrowers, but if your home is worth over $1,000,000, you should certainly see if the program would be a benefit to you.  You can check our free, no hassle, real-time calculator to see if this would benefit you..  I look forward to seeing if I can be of any assistance.

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Question From Nina on 7/11/2018

We live in Santa Barbara, CA, and have lived in this home for more than 30 years. It is appraised in the current market to be worth $1,100,000-$1,200,000. We owe about $260,000. There's a home for sale in another town we like for $995,000. If we sold our home, can we pay $600,000 towards purchase of new home and get a reverse mortgage for the remaining $395,000?

Expert Answer

Hi Nina,

I can’t tell you from the information provided what your reverse mortgage benefits would be but you can certainly go onto our website, put your information into the calculator and it will tell you exactly what you can and can’t expect from a reverse mortgage for your circumstances and in your chosen market!  It’s easy, there is no hassle and no obligation.  We don’t need any really personal information and depending on the closing costs, your ages and interest rates when you are ready to move on the sale and purchase, you may really like the results.

If you prefer to speak to one of our specialists please give us a call at (800) 565-1722

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Question From John B. on 2/12/2018

I purchased a house in 12/17. I was 65 years old at the time and my domestic partner was 64. There is approx. $30k in equity Are we eligible for a reverse mortgage?

Expert Answer

Hi John,

HUD determines the amount of the loan based on the borrowers ages and based on interest rates.  At 64 for the youngest borrower, the Principal Limit which is the amount of the loan before any costs to obtain the loan or pay off any existing liens, will be about 46% at today’s rates.  You need to determine the value of your home and multiply by 46% and then subtract $30,000 from the amount of any liens and see if this works for you.  Based on these formulas, today’s rates and typical costs, with $30,000 equity as the benchmark, it looks like the highest value that you could own and still do a reverse mortgage loan would be a $45,000 home with a $15,000 existing lien.  Any higher value would also have higher existing loan amounts to keep the equity position at $30,000 and that would put you short to close the reverse mortgage.

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Question From Alan O. on 11/30/2017

My house has been appreciating over 6%/year in Ca. I'm wondering if I used a monthly stream from my equity that was less over a year than the market value appreciation, what my equity would be at the end of a year? If I used 6.4% of my equity in the first year of having a reverse mortgage and market appreciation was 6%, would my equity be reduced by .4% over that first year? Or put another way, what would my equity be at the end of the first year? Also what fees are involved in acquiring a reverse mortgage and how much do those fees cost?

Expert Answer

Hi Alan,

The best way for you to answer questions like this is to get a proposal with breakdown of all costs and an amortization schedule.  We have a calculator on line known as ARLO (All Reverse Loan Optimizer) that will also allow you to run different scenarios at: https://reverse.mortgage/calculator.

ARLO does not make you supply your personal information to run different calculations and “he” will give you real-time numbers with the actual costs for your area.  Check him out.

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Question From Mary Ellen R. on 9/01/2017

I am 67. How much equity must I have in home to qualify for reverse mortgage?

Expert Answer

Hi Mary Ellen,

There is so much more involved now that I really can't just give you a pat answer anymore.  If your home is valued over the HUD maximum lending limit, it will change the percentage.  Different parts of the country vary by quite a bit as well on some of the closing costs.  If you have had any credit problems it could require a set aside to pay taxes and insurance and that amount would depend on the ages of the borrowers and the amounts of the taxes and insurance.  The best I can offer you is a free, no obligation quote that you can receive from our website at reverse.mortgage or feel free to give us a call at 800-565-1722 and we can go over the numbers with you as they relate to your circumstances.  No pressure and we don't need any real personal information to do it (just a month and year of birth for the youngest borrower in addition to the location of the property - don't even need the actual birth date).  We would be happy to give you a proposal that shows you what you might expect that would be so much more beneficial than an arbitrary number that can change with so many factors.

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Question From Richard D. on 2/19/2017

Several Questions: (1) Is mortgage interest on a Reverse Mtg. ("RM")accrued on the entire approved credit limit or only on the actual amount advanced (paid out)? Example. If the approved credit limit is $300,000 but only $100,000 has been paid out (advanced), mortgage interest is accrued on what dollar amount? Is it on the $100,000 advanced or the entire $300,000 credit line? (2) Can borrower make periodic partial principal payments, against the outstanding principal balance, and thereby reduce the actual amount of mortgage interest accrual? (3) How and when is a refinance of an existing RM allowed with a brand new RM? And at what expense to borrower on any refinancing? And what are the restrictions, if any? (4) When using the RM approved credit limit for the purchase of a new home (purchase money), is the entire(100.0%) approved credit line available for this purpose? Or, is there some restriction on the amount that can be advanced in the first 12-month period? If there is a restricted sum, what is the limit and secondly why the limit? A final note. I am anticipating purchasing a newly constructed home, from a production builder, at a price of about $550,000. I am wanting to know what dollar sum I can expect from a RM so that I can determine how much of my own funds I will need to bring to the closing table. I am 75 years old and my wife will be 69. I look forward to your answers. RD

Expert Answer

Hi Richard,

Since you numbered your questions, I will answer them in the same manner to keep it straight.

1) Interest only accrues on the portion of the line that you use.  If you only borrow a portion of your line then you only pay interest on the outstanding balance, not the total amount available to you if that is higher (such as in your example). Learn more about the line of credit and interest charges here

2) There is never a payment due but also never a prepayment penalty on a reverse mortgage so you can make a payment of any amount at any time, up to and including payment in full, without penalty.  Since there is no payment due and no due date, anything you choose to pay may be paid at any time you choose.  Any funds you repay may be re-borrowed at some point in the future if you desire but if at any time your balance reaches 0, unlike a home equity line of credit, your loan would be paid in full and closed.

3) Yes you can "technically" refinance your reverse mortgage loan any time after 18 months.  I say technically because you have to meet a 5 times benefit to do so.  In other words, you must be able to attain at least 5 times more benefit from the new Principal Limit than from the old Principal Limit (not the current balance) as it costs for the new loan.  The costs are typically the third party costs in your area which include any state and local fees (this can be as low as $2500 for a property valued at $550,000 to as high as $5500 in some states).  HUD will credit any Initial Mortgage Insurance Premium you paid on the first transaction so the additional cost would only be incurred if the property increased in value - but then again, a pretty substantial increase in value is usually the only way the 5 times benefit will happen.  That's why I say that technically you can refinance the loan, but many borrowers find that the required increase in value does not allow them to do so in many cases except for during times of rapid appreciation.  I advise borrowers not to plan on a refinance and then if it is possible later, it is a unexpected bonus.

4) HUD allows borrowers 100% usage of the line under 2 scenarios - when the funds are going to pay off current liens/mortgages on the home and for a purchase transaction.  You would not have to wait for access to any funds and could receive 100% of your benefit amount to purchase a home on either the line of credit or the fixed rate reverse mortgage.

5) I would encourage you to contact our office for a proposal on the purchase.  We do not require you to provide a lot of personal information and we do not hound you to complete the transaction - we are not a high pressure company.  The reason being that on a purchase loan, some states have even higher purchase costs (such as mortgage taxes, intangible taxes, etc) and I do not know which state you are writing from.  I would also like to send you a brochure we authored that gives potential purchase borrowers some additional information and you said you were considering a new construction home.  There is an additional HUD requirement at this time that on new construction, we cannot even take a loan application until after the Certificate of Occupancy has been issued by the county or city where the property is located.  Many builders will not accept this limitation as they want to close the loan right after the C of O is issued, not start the loan at that time.  We are hoping that HUD may change this and other purchase requirements, but as of today, that is the rule under which we have to operate and there are other restrictions that all purchase borrowers should know as well. You are also welcome to use our reverse mortgage for purchase calculator to gather estimates anytime. 

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Question From Lynda H. on 9/23/2016

How much equity do you need to keep in your house mortgage to qualify for the reverse mortgage?

Expert Answer

Hi Linda,

The benefit amount that borrowers receive is determined by a number of things.  Borrowers' ages, interest rates, HUD Lending Limits and new qualification guidelines that require some borrowers to set money aside to pay taxes and insurance make this question one that is impossible to give a generic answer.  The best thing for anyone to do is to go to our website and request a quote that is specific to your circumstances.  There is no obligation and no cost to obtain a quote but be sure to let us know if you have had any credit problems in the past with special attention to your current mortgage/rent and taxes and insurance on your home.

Feel free to use our online calculator which will estimate how much you're eligible for: https://reverse.mortgage/calculator or call us (800) 565-1722

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Question From John K on 4/13/2016

How much equity must I have on my house in order to obtain a reverse mortgage? say I have a 300,000 house with half the principle paid.

Expert Answer

Hi John,

There are several factors that determine how much money you can receive from a reverse mortgage. Your age, property value, and interest rates will determine how much you will receive as a percentage of the property. HUD has also changed the program in recent years to limit the amount borrowers can take in the first 12 months if they are not paying off an existing mortgage.

The minimum age a borrower must be to obtain a reverse mortgage is 62 years of age. The amount that a borrower receives in benefit at 62 years of age is approximately 52% when interest rates are at or below 5% (which they are now). Then depending on where you are in the country any cost to get the loan would be deducted from that benefit amount. Some areas of the country the costs are higher because the state these such as intangible tax, other mortgage taxes and the title fees run higher than other parts of the country. It also pays to compare lender costs from one lender to another.

So when you say half the principal is half paid, if you are telling me that you owe $150,000 on a home valued at $300,000, the chances are very good that you will be able to get a reverse mortgage without having to come out of pocket to pay fees if you live in an area of the country where the fees are not too high and if you are older than 62 years of age. If you just turned 62, and you live in one of the areas where the costs are the highest, you can still get the loan but it may be tougher to do so without having to put a little bit of cash into the transaction to close.

Your best bet is to go onto a website such as ours and obtain a free quote. There is no obligation, we do not require you to give us a lot of personal information, and we will not hit you with a lot of high pressure sales just to find out.

If yo9u would like a quick estimate feel free to use our online calculator or call us Toll Free (800) 565-1722

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Question From Rhonda on 8/11/2014

I am 48 years old. Is there a way to pre assess my future eligibility, for the purpose of determining my retirement needs/options?

Expert Answer

Hi Rhonda,   The factors that go into the reverse mortgage calculations are the value of the property, the amount owed, your age, interest rates at the time, current HUD Lending Limits and the HUD program parameters.  You could look at what a 62 year old borrower receives today and it may not look anything like that in 14 years.  I'm sorry, I don't know of any way to tell you what the rates will be, home valut HUD will have done with their program by that time.

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Question From David on 2/23/2012

Based on the VA taxed assessment value of my home, and my existing amount owed on the mortgage, how much could be borrowed if I applied for a Reverse Mortgage?

Expert Answer

Well, based on those two criteria, nothing. The reason being, those are not the factors used to determine your benefit amount on a reverse mortgage. The program uses reverse mortgage calculator which takes the following factors into consideration to determine how much money you will receive:

• Property Value (as determined by an FHA appraisal, not a tax assessment) or the HUD lending limit, whichever is less

• The age of the youngest borrower on the loan

• Applicable interest rates

• The program chosen by the borrower (HUD has both Standard and Saver programs that give borrowers different benefit amounts in return for different insurance costs)

• Any fees being charged up-front or ongoing (such as mortgage insurance premiums, loan origination fees, closing costs and servicing fees, if any, etc)

• And your existing mortgage would have to be paid from the proceeds or funds you brought in from a verified source

The amount you would receive would be the amount of your benefits minus the costs to obtain the loan plus the amount to pay off existing mortgages and liens. In some instances, people do not receive enough benefit in their reverse mortgage to pay off their entire existing mortgage but choose to bring money in at closing in order to eliminate their monthly mortgage payment. The bottom line though, to determine how much you could receive is quick and simple and requires only a minimum amount of information at the link above.

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