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Reverse Mortgage Eligibility
Expert Answers You Can Trust!
Your reverse mortgage questions are answered by All Reverse Mortgage, Inc. CEO & industry expert Michael G. Branson, with over 40 years of experience in the mortgage banking industry.
Answered By Our Experts
The program allows you to remain in your home for the rest of your life without having to make a payment on the mortgage.
For this reason, the balance owed rises. You could choose to make payments if you desire which would keep the balance from rising or even pay the same as you would on a regular loan and the balance would go down as it would on any other loan.
If you had the line of credit loan, the amount available to you would then be higher, not only based on what you paid, but also on the growth of the line (the line of credit grows on the unpaid principal balance).
You can also refinance in the future in the home’s value rises and you would be eligible for a higher loan amount under HUD’s guidelines at that time.
Generally speaking, the loans are underwritten the same but there are some specifics that may change based on state laws and HUD residual income requirements. For example, Texas will not allow a non-borrowing spouse so you cannot do a reverse mortgage unless both spouses are over 62 years of age whereas HUD has no such restriction, and many states will allow it.
Texas law also dictates when the counseling certificate will expire which is a bit stricter than many other states. California has a 7-day waiting period for borrowers after they do their counseling during which lenders cannot begin their loan which many states do not impose which could delay the start for an additional week if you just received your counseling and thought you would begin your loan process immediately.
HUD does use regional requirements for residual income (the amount of money you need to have left over after all debts are paid monthly to qualify) that vary depending on how expensive the area is in which you live and borrowers who live in the expensive areas of the country do require a little more income to qualify than those who live in areas where the cost of living is lower.
So, while the loan amounts, ages (with the exception of the non-borrowing spouse mentioned) and programs are all the same, some states do interject some small differences. If you are unsure about a specific requirement a lender is quoting to you, you can always shop with other lenders to verify that they all are asking for the same thing.
If it is a lender requirement and not a state or HUD mandate, you can almost always find a different lender who does not have the same requirement. If it is state law or HUD requires something for the loan to be insurable, all lenders will need to comply.
Yes, you can but there is a caveat to this answer. If you are not using the money to buy a home or to pay existing property charges (existing liens on the home), HUD limits you to 60% at the closing or in the first 12 months; or 60% and then up to 10% of the remaining funds if 60% is too little to pay off your loan and still give you some funds at closing.
In other words, HUD will limit the amount of money you can get at the close of the loan if you do not need all the money just to pay off your current loan plus any other property expenses such as liens or to purchase a home. If the 60% of the reverse mortgage amount is adequate for your needs in a lump sum, you can take that at closing and then the remaining 40% of the loan would be available to you after 12 months.
For example, if you are eligible for a reverse mortgage of $200,000 but you do not owe anything on your home, you would only be able to draw $120,000 (minus the costs to get the loan) at closing or in the first 12 months of the loan.
You can take all the available funds ($120,000 minus costs) at closing in a lump sum if you want and the remaining $80,000 is available to you after one year as a lump sum as well but you cannot take the entire $200,000 at the close of the loan.
If you owe $200,000 on your existing liens and need the money just to pay off current loans, then the entire loan is available from the start. This is also true if you are buying a new home with a reverse mortgage, and you need the funds to purchase that home.
You can get a reverse mortgage on a home that you received as a result of a familial inheritance or gift but there have been problems in the past with homes being transferred to an older family member just to try to get around the age requirements of the reverse mortgage.
The lender would be very careful to be certain that the transfer was not just a bailout for the family member for the purposes of obtaining a reverse mortgage.
You may wish to consult with a reverse mortgage specialist to review your circumstances before you begin any transfer of ownership process to be certain you will not have any issues.
There is no minimum time required that you must own the home to get the reverse mortgage.
In fact, there are even purchase reverse mortgage loans available you could use to purchase the home if you so choose.
If the first loan is closed and there was no loss to HUD on that loan, you can get a second reverse mortgage with no waiting period.
Interest rates are definitely lower right now and I would suggest that you visit our online calculator to see what you might expect from a new loan given your circumstances.
Keep in mind that with a refinance of an existing reverse mortgage you are not required to pay any Up-Front Mortgage Insurance Premium that you already paid so that will bring the costs down considerably.
But that will give you an idea of how close you are to qualifying for the loan based on today’s parameters and if it might be beneficial for you to apply.
Yes, you can. And as a matter of fact, this is a more common occurrence that you might think.
Many times a home is left to more than one sibling and most siblings either do not want to share a home at this stage of their lives or each may already have their own living arrangements so that it only makes sense for one to desire to move into a property.
The reverse mortgage works well in many instances to allow for the sibling occupying the home to buy out the other sibling(s) interest in the property.
You may want to visit our calculator to see what you might expect from a reverse mortgage to see if it would work for you.
Use the amount you would need to pay your siblings as an existing lien to give you a better idea on the amounts available at the start of the loan.
The property ownership is fine as it is. But only the two siblings who live in the property as their primary residence are eligible to be on the loan.
The third sibling could remain on title as well and this would require him/her to take some active part in the reverse mortgage due to the fact that he/she would need to allow the loan to be placed on a property on which he/she had ownership interest.
The non-occupant sibling would need to attend the counseling and there would be documents he/she would need to sign but this sibling would not be a borrower on the loan itself.
The minimum age to be eligible to be on the loan is 62 so if your statement about all being over retirement age means that all siblings are over 62, you are covered there as well. When none of the original borrowers are still living in the property, the loan would become due and payable.
This means that if the two living in the home should pass before the sibling who does not live in the property, the sibling not living in the home would need to pay off the loan (with finds available or with a refinance of the loan) or sell the property at that time to pay off the loan.
The remaining sibling could also choose to allow the lender to just take the home as well if there was no equity remaining and he/she did not want to go to the effort to sell the home but that would be their choice at the time.
The loan is a non-recourse loan and the lender can seek repayment from no other assets than the home so if the remaining sibling chose not to sell the home or refinance the loan and let the lender take the property, the lender could not seek any further repayment from this sibling even if there was a shortfall as a result of the transaction.
I cannot answer your question just from the information provided but I can tell you that nothing you have said so far would prevent you from getter a reverse mortgage. You may very well be a candidate for the loan and I would suggest that if you are interested, first visit our online calculator and after you review the options available based on your information, you can decide if you want to proceed.
If your mom is on title and lives in the home, you can get a reverse mortgage on the property. I want to give you advance warning though. You are not eligible for the loan yet though (you must be at least 62 years of age) and since you are not a married couple, you would also not be considered an eligible non-borrowing spouse.
The result of this is that if you do the loan in mom’s name and mom leaves the property (passes or has to move to assisted living), the loan would become due and payable and you would need to repay the loan or sell the property.
Failure to do so at that time would result in the lender ultimately foreclosing on the loan.
Reverse mortgages are different from standard or forward loans in that they do not use traditional loan to value ratios and maximum loan amounts.
Instead, HUD uses a Maximum Lending Limit from which they determine your Principal Limit or loan benefits (loan amount). And then your loan amount is determined on a formula that considers your property value or the maximum lending limit, whichever is less, the age of the youngest borrower or spouse, and interest rates at the time.
There are also Proprietary or Jumbo loans available that will allow for more expensive homes and higher loan amounts when properties exceed the HUD Maximum Lending Limit of $765,600.
So how do you know what you can borrow for your circumstances? The best way is to visit an online calculator like the one we offer on our website at https://reverse.mortgage/calculator.
Because not only are the amounts determined by the factors I mentioned, but there are different rules for when you can access the funds and how you can take them.
You may want a lump sum of all amount to pay off an existing loan, you may want a line of credit to access as needed, you may want a monthly payment to augment your income or you may want a combination of these options.
By visiting our online calculator, you can see what is available to you based on your circumstances and decide if you want to go any further or need any more information. There is never any pressure and it is free to access.
To be able to do a reverse mortgage, you need approximately 45% equity in your home. 10% equity or 90% existing liens would not work under any of the existing programs because you make no payments and the balance grows on the loan and you would quickly be over 100% loan to value.
The HELOC is a lien on the home and therefore is handled the same way any other loan/mortgage on the property is handled. The loan must be closed at the time the reverse mortgage is closed so if there is a balance on the line, it would have to be paid in full at that time and closed or just closed if there is no balance owing.
Just as with any property inherited by anyone with loans and liens, she can choose to sell the property and keep any equity in the home or she can make the decision on the reverse mortgage to simply walk away and the only recourse the lender has is to foreclose on the property. I would strongly suggest that she contact an estate attorney though if this is her plan to determine if there are any other ramifications for this action with the other liens owed by the family member, especially if there are other estate assets that may be affected.
Please feel free to use our calculator at https://reverse.mortgage/calculator and in the space provided for your phone number, insert ours! Use 800-565-1722 and no one will call you. You have the complete option of opting into messages such as emails, calls, or text messages based on your preference. And if you opt into any of these modes of communication today, you can always opt out at any time. We try to make it as easy for you to receive the information you request but never want to make it a burden that you wish you had never started! For this reason, it is not required to accept the contacts in order to see your available options.
I think you are asking me will the lender consider a “future value” for lending purposes and the answer to that would be no. HUD and the lender both will consider all lending decisions based on the value of the home at the time of the appraisal.
Any shortfall can be paid by the borrower if they still want to do the loan and the loan will not be sufficient to pay off the entire balance owing on existing liens, but any loans must be paid in full and the money to pay that balance must be money from the borrower or a bona fide gift from an eligible family member, they cannot use borrowed funds.
The loan amount they would receive is based on the value of the home, interest rates and the age of the youngest borrower, If they owe almost half of the value of the home, they will not come away with a lot of cash in their pocket at the onset of the loan unless they are in their upper 70’s or older (the older the borrower, the higher the benefit under the loan).
Their biggest benefit is that they would eliminate any mortgage payments that they currently have under this scenario so if just the elimination of their monthly mortgage payment is not enough in their case to allow them to live in the home comfortably, they may want to look at other options.
They may find that possibly downsizing and using a reverse mortgage to purchase another, less expensive property might help them find a home that suits their needs even better than their current property and the less expensive property might leave them with extra cash. Something to think about if the terms of the reverse mortgage on their current home just doesn’t quite get them where they need to be.
Like any loan, if there are other owners of the property, they would also have to be involved in the loan process for the loan to be valid. A lender could not enforce the terms of the loan if the title was not clear or all parties on title did not agree to the terms of the loan.
Yes, you can. But you need to remember that HUD has restrictions on the amount of funds you can receive in the first 12 months if you are not using the money to pay off a seasoned debt on the property.
In other words, if the home equity loan has been on the property for more than 12 months without a large recent withdrawal, you may pay off the entire loan with the proceeds of your reverse mortgage up to the entire available principal limit of the loan (your full loan amount after all costs).
However, if the loan is less than 12 months’ old or you recently took a very large draw on the line, you would be limited to just 60% of your available funds under the terms of the reverse mortgage at closing or in the first 12 months. If this is adequate to pay off the entire line, that would still work but if not, you may be required to bring cash in from another source to close the loan.
At the end of 12 months, the entire line from the reverse mortgage would be available to you if you are limited to the 60% initial draw.
There are several options available and to receive a loan amount of that size, your property would have to be worth a much greater amount. If your home is worth $750,000, then your reverse mortgage would be for a lower amount as the loan is never for the full property value.
Depending on whether you are talking about a home valued at $750,000 or one valued over $1,500,000 for a loan of $750,000, the options would be different because one is the HUD HECM program and the other is a jumbo or proprietary loan.
Who is or is not on the current mortgage has no bearing on the new loan? You can get the reverse mortgage, but your wife would be considered an “eligible non-borrowing spouse” because she is not yet 62 and therefore cannot be a borrower on a reverse mortgage loan.
What this means is that she can be on title, but she would not be on the loan itself. She can live in the property for life under the terms of the loan, even if something happens to you and you leave the property (death, forced to move to assisted living, etc.) but since she is not on the loan, if you do leave the property, she would not have access to any remaining funds on the loan after you no longer live in the home as your primary residence.
This would have no impact whatsoever if you used all the funds from the start to buy a home or to pay off an existing mortgage or if you used all the available funds before you left the home. But it would mean that if you chose the payment for life option, she could find herself suddenly without payments if you pass before her. The same could be true if you had a line of credit with funds remaining on the line that she could no longer access.
So, the answer is yes, you can get the loan but be educated in what option you choose if you determine that it is the right choice for your circumstances as you consider the long-term possibilities.
It sounds like you may have a case or “chicken of the egg” syndrome. There can be no liens on the property and the property must be in your name to close the reverse mortgage and if I am understanding your comments correctly, it sounds like you are saying you would like to get the reverse mortgage in order to allow you to pay off the liens and put the property in your name – is that correct?
The liens on the home can be paid with the reverse mortgage proceeds so that is not a problem, but the title is. You must own the home in order to get the loan. I am not familiar with the process with which you must follow to transfer ownership that you describe but I would suggest that you contact an estate attorney in the area to determine if there is a way to transfer the ownership of the home now, debts and all.
If so, you can begin the reverse mortgage process with no waiting period on a property you inherit. You could even talk to a lender prior to doing anything on the change of title if you have any concerns about the eligibility of the home, credit concerns or other questions just to be sure you won’t have any surprises after you start the title change.
I am afraid I can’t tell you from the information you have given me here. The reverse mortgage would be dependent on a number or items including the program you chose, the ages of the borrowers, the amount owed, interest rates etc. I would encourage you to visit our online calculator at https://reverse.mortgage/calculator where you can get a real-time quote of the amount available at any time.
There are a couple of things I read that I am not sure about here and just want to clarify though, Firstly, you must live in the property as your primary residence. If you are not currently living in the home, you would have to be living in it before you would be eligible. Secondly, if your father just sold you the home in a family transfer at less than market value, the lender will probably use the price paid or the appraised value, whichever is less, to determine your loan amount.
In other words, if you bought the home last week for $135,000 and you are saying the home is worth $200,000, the lender will use the $135,000 in the familial transfer as the basis for the loan, not the $200,000. If the sale was 12 months or longer ago, it would not matter what you paid for the home, they would use only the current appraised value.
I am not aware of any program that would be beneficial for you at this time down to 60 years of age. That would take a proprietary or jumbo program and those programs are not beneficial for borrowers with values under the HUD maximum lending limit of $726,525 when they are available to borrowers under 62 years of age at all. At this time, I would have to say that the HECM loan available to you at age 62 is your best bet.
HUD has no requirement and you literally can get the loan the next day. But you are not looking at a HUD or FHA-insured reverse mortgage and the pools for the securities are much smaller and the rules are different. Jumbo loan parameters, which is what your loan would be, require that the home must be off the market for a minimum of 6 months before they are eligible to be considered for the jumbo programs. The investors who offer the jumbo products must include the loans in securities and potential buyers of those securities would not be interested in those investments if there was a propensity for payoff in the first 6 months.
There is always a possibility of circumstances beyond the borrower’s control that might cause an early payoff but if the property is listed for sale at the time the loan is originated, it is already established that the intent is to sell soon. This early repayment hurts the investor who brought the program to market, the investor who bought the securities backed by the loans and even the future borrowers who may not have a program available to them if the returns make the product unsustainable for future borrowers.
I say this not because I think you are looking at doing any of this, but to explain why the investors have a rule for a waiting period after a home has been listed for sale. They are trying to be sure the program is available to future borrowers as well as current borrowers and not halted due to investors finding their expectations not being met due to early repayment due to factors that could have been reasonably foreseen.
If you owned the property prior to the title becoming solely yours with the Quit Claim, you have no times you must wait. However, if the new owner was not previously on title, since the manner of title acquisition is via Quit Claim Deed, the lender may have questions regarding the transaction.
There have been times when we have seen instances wherein family members Quit Claim a property to one family member who is 62 and has never lived in a home or previously been on title to the property solely to try to obtain a reverse mortgage to avoid foreclosure, etc. That would not be allowed.
Typically Quit Claim Deeds are used to remove an interest one may have in a property and property received via Quit Claim would most likely require more information to determine that the transaction is an acceptable “arms-length” transaction. But there is no prescribed waiting period before a reverse mortgage can be completed if the circumstances are within lender and HUD acceptable parameters.
They cannot lower your life expectancy; the calculator uses just one set of factors for the age of the borrower and no other factors (aside from the actual monetary amounts). Otherwise, if HUD allowed the scales to move based on the borrower, they could require lower benefits for borrowers when considering factors such as female vs male, married vs single, areas of the country, and other factors when those borrowers tend to live longer.
Still other borrowers who smoke, have regularly consumed alcohol or worked in some industries could also try to use actuarial tables to show that they should receive more money on their loans due to the tables that reflect lower life expectancies for their circumstances. The only way HUD can be “fair” to all is to grant no exceptions.
But I might be able to offer another suggestion that could potentially help you. Have you considered checking with another company to see if they feel as strongly about the need for the set aside in the first place? I will admit that usually if you are delinquent on taxes or insurance, it is pretty much assured that you will be required to obtain a LESA or life expectancy set aside for the payment of taxes and insurance. And yes, that amount will be determined by your age.
BUT, if you were not seriously delinquent, you have always paid these payments on time in the past and the single delinquency truly correlates directly to times of medical issues such as you have outlined and you can support that with verification of past payments on time and documentation that the medical issues were truly the cause of the recent issues and they were beyond your control, there is a possibility that you might be able to get the LESA waived.
You would have to also demonstrate that the reverse mortgage is going to enable you to comfortably meet all future obligations and therefore, late or unpaid taxes are no longer a concern, but it certainly would not hurt to check with another lender to see if they feel as strongly as your current lender that the LESA is absolutely required. This is a huge issue for HUD right now, but it never hurts to ask!
I hate to be the bearer of bad news, but you are not anywhere near the equity position you need to be in to be able to utilize the reverse mortgage program. With just a little over 3% equity in the home, you are not near the 50% or more equity required of reverse mortgage borrowers. In order to consider a reverse mortgage on a property valued at $310,000, depending on the ages of the owners, you would have to have no more existing debt than about +/-$145,000 on the property at this time.
I hear this same scenario from homeowners often. They were able to get equity loans and equity lines of credit; the cost of the credit was inexpensive for many years and the payments were low for a while when the loans were in an interest only period of repayment. But then the loan hits a reset period when the payments increase, sometimes as much as two or three times what they were before, and borrowers suddenly find they are no longer capable of making the new payments. And because these loans are not reverse mortgages, if they are capped at the amount they can receive or they cannot make the payments, they face foreclosure and often with little or no equity left (as you find yourself now).
In fact, a few years back, we had a loan officer from a bank on our site who was trash-talking reverse mortgages and extolling the virtues of the HELOC his bank offered instead. We responded with actual cases of borrowers just like yourself who ran out of equity, whose payments increased and then found they could not make the new payments. These individuals had nothing, came to us for relief and sadly, we were unable to assist them due to the lack of equity in the home.
We pointed out that with a reverse mortgage, there are no payments to make and that the lender can never freeze the line if they later think the borrower’s income might have changed or if values have changed in the market, and that if the borrower does use all their funds, they can still stay in the home payment-free for life with never a fear of increasing payments that exceed their ability to pay. I just wish we could have spoken with you earlier and given you this same assurance.
I sincerely wish I had a good piece of advice for you at this time. Unfortunately, I do not know of any lending product that will help you with the parameters you outline.
Until very recently they did not, but they do now! There are different rules and they don’t work the same, but they still fill a huge void for some borrowers of higher valued homes. I would invite you to visit our on-line calculator to see what is available for your circumstances. It’s free, there is no obligation and never any pressure. Check out what you can expect over at our new Jumbo Reverse Mortgage Line of Credit post.
Homeowners with and without home loans can get a reverse mortgage. There is no requirement that the house be paid off or that it has a current loan on the property to qualify. The only thing you need to know in that regard is that if there is a current loan, it must be paid in full with the reverse mortgage proceeds or with other funds available to the owner if the reverse mortgage is not adequate to pay the loan in full at the close of the transaction, there can be no other loans on the property at the time the reverse mortgage closes.
Since you have no loans at all, this would not be an issue for you. You could choose to receive your reverse mortgage as a lump sum at closing, a monthly payment to you, a line of credit you could draw from as you needed or a combination of those options if you and your home qualify under the HUD guidelines.
The program always takes the youngest borrower’s age into consideration when determining benefits. Because all borrowers, not just the oldest, can remain in the home for life without having to make a payment, the program bases the benefits from the youngest borrower. We offer an instant calculation on your eligibility you can retreive here.
The best I can tell you is that we live in a time when people are very litigious, and legislators believe they are helping you by making lenders disclose EVERYTHING! The hope is that you will read everything and if you have questions, you will ask and that between the HUD, state and federal lending law disclosures, you will have a very good understanding of the transaction.
Borrowers have sued lenders and HUD over the years claiming they were never told some things and so as many things as possible are now in writing and borrowers must acknowledge (sign) that they received and read the disclosures. Even if you don’t read them all in the very beginning, I urge borrowers to go back and read all the forms over the next week or two while the loan is being processed and make notes where needed so you can get answers to all your questions.
People mishear, misunderstand and sometimes misstate things so if you take the time to read the documents, you will never be surprised when something is not what you thought it was later if you had it in writing all along. Even the final documents come with a right of rescission which allow you to cancel the transaction if the terms are not what you were expecting. Plus, you get a copy in the initial package which gives you a chance to review the documents in advance to approve the format and terms (minus the final figures).
Whether or not you would be able to receive additional funds now under HUD’s current guidelines will also depend on your age or the age of the youngest borrower if you are married, and the costs in your area. I would suggest you go onto our online calculator to see what may be available to you for your circumstances.
We do not require your personal information to give you the numbers you need to determine if a refinance is right for you. All we need is the month and year you were born and your zip code (do not even need the actual birth date) and then some information from your most recent reverse mortgage statement. After that, you determine if the loan is right for you and if you want to be contacted.
Give it a try, it doesn’t cost a thing to find out and all the numbers reflect actual costs in your area. The website is https://reverse.mortgage/calculator.
There is no minimum time period. If you would like to see how much you would qualify considering how much you still owe, please feel free to visit our Texas Reverse Mortgage Guide. We offer a free quote and you don't need to supply personal information to see how the loan would work for you.
To determine how much money you would receive from a reverse mortgage, we also need your home value, the program you think you might choose (fixed or adjustable rate line of credit), the amount you owe (if any) on existing loans, the zip code in which you live so we can compute the local costs and also the month you will turn 69 (if you are within 180 days of your next birthday, your benefits are higher).
The best way to determine what you would receive would be to visit our online calculator. The All Reverse Loan Optimizer (ARLO) gives you real-time information and does not require you to put in any sensitive or private information (such as social security numbers, etc). ARLO will let you see what the loan can do for you and give you the option of whether you would like to speak with someone after you see the numbers so there is never any pressure put on you to do something you decide isn’t right for you. Give ARLO at try at https://reverse.mortgage/calculator.
Any existing mortgages/liens would have to be paid in full with the reverse mortgage so that the reverse mortgage was the only remaining loan on the property after the loan closed and when it recorded. Otherwise, yes, there can be a loan on the home at the time you obtain your loan as long as it is paid in full with the proceeds and then you can use the remaining proceeds as you wish.
There is a brand new program in the market that just came out that is currently only available in CA but it is a jumbo or proprietary reverse mortgage, it is a line of credit that requires a minimum of 25% draw of the line at closing and if it is like most new private programs, will probably spread to other states as well as it is approved.
The program is called the Jumbo Select and has no Mortgage Insurance and still offers a growth rate on the unused line of 5% per year. The maximum loan amount is $4,000,000 and it is also a non-recourse loan. Contact us today if you think this would work for you.
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.
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.
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.
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.
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.
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.
Yes you can. But remember, you have to qualify for the lawn based on the current program parameters and at your age.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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!
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.
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.
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.
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.
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.
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.
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
We most certainly do! If you'd like a quote please run your info through my calculator here and we will send back a written propoal today which includes your eligibility and interest rate options.
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.
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.
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.
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.
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
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.
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.