Like most insurance policies, the Mortgage Insurance Premium (MIP) has two components. The Up-Front MIP, or UFMIP, is 2% of the property value or the HUD maximum lending limit, whichever is less. The current HUD maximum value is $726,525. Borrowers whose property value exceeds this limit are still capped at the same UFMIP as borrowers who have a value of $726,525 on the HUD program and borrowers whose property values are less would pay 2% of the actual value.The annual renewal is determined by the outstanding loan balance and it is .5% of the outstanding loan balance. This means that since borrowers who borrower more money and carry a larger balance are a higher risk, their annual renewal will be higher than borrowers who carry a smaller balance since the renewal is determined as a percentage of the balance owed.

Hello Joe, A reverse mortgage will only give you about half the value of the home so you would have to have more than $100,000 to be able to purchase with a reverse mortgage. Because you never have to make a payment while living there, the reverse mortgage requires a substantial down payment. The project would also have to be HUD/FHA approved in order to be eligible, I am not aware of any proprietary reverse mortgage that would accept a condo at that value currently that is not in a HUD approved project.

Hi Mary, That depends on a few issues. The youngest borrower's age, the location of the property and the costs in the area will have a big effect on those numbers. Fortunately, though, we would be very happy to go over those numbers with you or we have an online calculator that will give you real-time numbers based on your information. The All Reverse Loan Optimizer (ARLO) is available 24 hours a day and you decide if you want someone to contact you or not after you see all the numbers. You do not have to put in your personal information just to get the quote (we do need your month and year of birth for the calculations but never a social security number). If you have more questions, we are happy to answer but if you do not want anyone to contact you, we will never hassle you. Give ARLO a try at or feel free to contact us directly, whichever works best for you.

Hi Will (I hope you don't mind me using your actual name and not your pen name), You're confusing requirements for "reverse mortgages" (the loan instrument) with HUD underwriting guidelines for FHA loans in general. I can't possibly comment on what issues the lender is having on the paper trail for the funds being used for down payment because I can't review the documentation, however, the fact that your mom is using a reverse mortgage requires no different documentation than any other FHA-insured loan when it comes to documenting the funds needed for the down payment. In fact, the FHA requirements are no different than what most conventional loans require for the source of the funds being used for down payment. When you say that a reverse mortgage leaves senior citizens homeless for 9 months, and then cite what appears to be difficulty by the lender documenting the source of her down payment funds, I have no way to even know why your mom is having a difficult time. If mom sold a home 9 months ago, put the proceeds into an account and can substantiate the funds needed to close on the new purchase, there would be no issues whatsoever. We close these loans all the time whether the funds are in the account for 9 months or if the previous sale closed the day before and the proceeds were sent directly to the new escrow. The only time there is a difficulty is when the funds "disappear" and cannot be accounted for during the time period and then "magically reappear" when the borrower wants to purchase again. But this is not a reverse mortgage issue or even necessarily an FHA issue, it is a lending issue with which we lenders have always had to contend. There is no way to know that mom still has these funds 9 months later if they cannot be tracked. It all comes down to the fact that borrowers cannot use borrowed funds for the down payment on a home. Borrowers who put no money down to buy a home (i.e. use 100% borrowed funds) are much more likely to default. After all, if you have no skin in the game, there really isn't as much incentive to keep the property maintained, pay the taxes and insurance and on forward loans, make the payments if times get tough. Therefore, lenders and HUD/FNMA/FHLMC, etc., maintain rules regarding the documentation for the down payment requirements when the programs require a down payment (some programs referred to as Alt-A or Sub-Prime did not require down payments or documentation and they experienced much higher levels of default). If your mom's property closed 9 months ago, what happened to the money? If the funds went into an account that can be traced, there should be no problems. If mom has a closing statement from 9 months ago but the money has been missing in action ever since, the lender must document where the funds are coming from for down payment now, they can't just rely on a 9 month old closing statement. So Will, I wish I could address the specific issues your mom is having but I don't have enough information. The lender should have known very early on if the down payment requirements were met and what documentation would be needed if those funds were not still available. If mom provided that, there should be no problems at all now. If mom has been slow with producing the information requested or has been unable to due to the fact that she moved funds around, lent them to a family member or for any other reason they cannot be accounted for since the closing 9 months ago, the lender can't just take a closing statement from 9 months ago and just assume she still has the funds even though they cannot be documented. That would be like giving them bank account statements from 9 months ago when she had money in the bank to show the down payment even though she had a 0 balance now and expecting them to accept the fact that she had it then, so they should just take it. It doesn't work that way for any loan, reverse or otherwise. If mom does have the funds now and can account for their whereabouts for the past 90 days to prove they are not borrowed funds now, there should be no issues now so I am at a loss. Reverse mortgages don't leave seniors homeless for 9 months as you contend. If there is something about the FHA lending process as a whole that you don't understand, you need to get your arms around it so you can help mom get her loan closed but the reverse mortgage is not the villain here. I wish your mom the best and I hope you and the lender realize the actual impediment to the closing so that you can resolve the issue instead of demonizing the loan instrument.

Hi Kay,The property always belongs to your Grandmother. When she passes, then the title will pass in accordance with whatever provisions she has put into place. Whoever is her heir(s) and receives the property, will have the option of paying off the loan and keeping the property, selling it and keeping the equity or if there is no equity remaining, they may elect to let the lender sell it and they will have no further liability - regardless of how much is owed and how much the property can sell for. If the heirs wish to keep the property and the outstanding balance is higher than the property's current value, then the heirs can pay off just 95% of the current market value if that is less than the amount owed and still keep the home. They would not have to "buy it" as you grandmother never lost title to the property as such, her heirs would also already own it.

Hi Jeanne, This is a lot to cover here so let me just say that you can get a reverse mortgage to purchase a home. Due to the program though, there really isn't a lot of "prequalification" that can be done. We can run your information through the calculator and determine your benefits and can even run credit verify that you have the necessary assets to close the loan, but in the end, so much of the HUD reverse mortgage lending process will also revolve around the property you choose and the program requirements for terms of the purchase, and HUD's program parameters at the time you are ready to proceed, that the prequalification is not really completely possible. Some Realtors are not familiar with the program and so they do not present offers from reverse mortgage buyers in a very good light to sellers. Some sellers shy away from the offers because they simply don't understand the program and people naturally avoid things they don't understand. When done correctly, the loans can be closed as quickly as regular forward loans but there are many rules you have to follow that are not typical of forward loans. This does not mean that the loan is not a very good vehicle for seniors to finance the purchase of a home, it just means that there may be a lot of extra education required in the beginning. We have been able to help several buyers simply by talking with prospective selling agents and in more than one case, sellers themselves. One selling agent even became a big proponent of purchase reverse loans after he went through the entire process. You may want to try to get them to learn more about the program and process, it just might help.

The only way you could do a reverse mortgage would be if your spouse was not ever brought on title and this is something we do not recommend lightly. There can be some very high risks associated with this action as well as the fact that many lenders and secondary sources will be eliminating this option completely as of February 1, 2013.Because the loan becomes due and payable when the last borrower on the loan permanently leaves the home or passes, if the younger borrower who would not be on title or on the loan is not ready to move when this event occurs and you do not have other provisions in place beforehand to provide for this, it could create extreme hardships on the remaining spouse. This has led to the unplanned displacement of the previously under-aged spouse in many instances. This creates confusion, hardship and has been the start of recent lawsuits from borrowers who truly did not understand the ramifications of such action at the time they first received their reverse mortgages.Some provisions borrowers have informed us of that worked for them include an insurance policy that paid the mortgage off when the older borrower passed; a second property that the borrowers owned that the spouse intended to occupy after the passing of the older borrower anyway; and also the plans that the younger spouse fully intended to move to another state to be with family if and when the older spouse was no longer living anyway. Absent a clear alternative such as one of these, it would be very sad for the spouse of a reverse mortgage borrower to be uprooted from his/her home at the worst possible time if that was not in the plans simply because the loan was now being called due and payable with the passing of the borrower and the remaining borrower did not have the means to refinance the loan in his or her own name at that time. Because the reverse mortgage balance rises with no payments and the accrual of interest, it would only get harder for the previously under aged spouse to refinance the loan later in her own name. You are correct, she would own the home at the time being your heir, but that would not help her very much if she did not have the means to refinance the home in her own name at that time of your passing. If there was very little or no equity due to a rising balance she might be left looking for a place to live with no nest egg to rely on to help establish her in another location (not to mention another situation like we have just had where housing prices fell sharply). We do not recommend this action for borrowers unless they know the risks and know that they have made provisions such as the ones listed above to protect the under aged spouse.

Hi Joe,The reverse mortgage only requires that you verify the down payment, the transfer of the money and then the source of the funds. If the contract between you and the seller calls for you to deposit $170,000 at the time the contract was signed, you would have to show that you had the funds to deposit that amount at the time you made the deposit, a copy of the cancelled check showing the transfer of the funds and a minimum of three months prior statements to show that the funds were available for three months before they were given to the builder. Depending on your age and benefits under the program, you may need to verify additional funds and they would need to go through the same sourcing routine.