When it comes to Reverse Mortgages, for most people, it’s a product that is new. After all, it’s
not relevant to an individual until either they are age eligible or almost 62 OR if someone has a friend or loved one that is considering a Reverse Loan. We’ll take a look at some extremely common, basic FAQ’s as well as some more complex reverse mortgage frequently asked questions. Also, there will be some questions that arise that will be added to this website over the course of time.
Let’s start with the most basic frequently asked questions:
Question; What type of property must I own?
Answer; Single family dwellings, condominium units whose HOA is approved with FHA/HUD, 2-4 unit owner occupied dwellings, HUD approved manufactured homes built after June, 1976, & Townhomes. However, when it comes to manufactured homes, they come with some extra rules. For further info, check out these two posts –> Can You Get A Reverse Mortgage On A Manufactured Home (single wide) OR Manufactured Home Reverse Mortgage (double wide).
Question; Can I get a HECM (aka Reverse Mortgage) on a coop.?
Answer; At present, coop’s and manufactured condo projects are not allowed.
Question; Can I do a Reverse Mortgage if I currently have a home loan?
Answer; You Absolutely might! Let’s say you currently owe $75,000 and you qualify to get $125,000 total. In this case, you’d first have to pay off your existing loan (the reverse loan must be the only lien on your property), thereby eliminating your monthly payment to the bank and then you’d have the other $50,000 left over (minus any applicable closing costs) to do whatever you like. Find out more about the cost of from Reverse Mortgage Loan Advisors at info@ReverseMortgageLoanAdvisors.com . Also, you can get more info at Reverse Mortgage With Existing Mortgage.
Question; What impact will this have on my Social Security Income and Medicare?
Answer; This type of financing will NOT have any impact on both Social Security and Medicare. However, it could have an impact on other government provided benefits. For example, it could have an impact on MediCaid, or SNAP, etc. It’s advisable to check with the agency that provides the assistance you are getting.
Question; How much money will I get from a reverse mortgage?
Answer; the percentage you get changes periodically, but as of now, you can get anywhere from 52.4% to 75% of the appraised value of your home. If you happen to have a spouse that’s younger than 62 years of age, it will decrease the percentage you get. You can also check out this Reverse Mortgage Age Chart.
Question; What if I am old enough to do it, but my wife or husband is not?
Answer; You may be able to do still do it. Your younger spouse will be what’s known as a Non Borrowing Spouse. They won’t actually be on the loan, BUT they will be able to live in the home for the rest of their life without a monthly payment to the bank. However, the amount you get will be based on the younger spouse’s age, so the youthfulness of your younger spouse could potentially hinder you from getting a reverse mortgage (at least for now).
Question; How much does the counseling for a RM cost?
Answer; $125.00 is the average. Once in a while you’ll see it for $90.00. Some of the places will charge more if you pay at closing (like $175).
Some places offer free counseling due to a pool of grant money that is to be used specifically for Reverse Mortgage counseling. Typically, with this, you’ll be subject to a financial assessment as it can often times be needs based AND you’ll see slower turn times in terms of how quickly you get your appointment. Just simply ask the counselor you call if they have any free counseling available. If any particular agency tells you “no”, then you can simply call the next place on the list.
Find out more about the cost of from Reverse Mortgage Loan Advisors at info@ReverseMortgageLoanAdvisors.com .
Question; What exactly is a full LESA?
Answer; It’s an acronym for Life Expectancy Set Aside. It’s basically an account where if a prospective reverse mortgage borrower doesn’t pass the financial assessment, it doesn’t disqualify them from getting the loan but it means that they may have to do this set aside. For example, let’s say a prospective borrower’s home is worth $190,839 and they are 62 years old and get a total loan amount / principal limit of exactly $100,000.
Let’s also assume that their life expectancy is for 10 years. If their taxes and insurance total $1000 per year, it means that we’d need to hold $12,000 for the LESA. The end result is that out of the $100k they have available in the loan they’ll only be able to access $88,000 (less any applicable closing costs) because we’ll be holding the $12,000 to pay their taxes and insurance. The bonus for the homeowner is that they’ll never have to worry about where they’ll get the money to pay for taxes and insurance for their home (assuming they don’t outlive their life expectancy).
Where it could present a problem if they have a total loan amount of $100,000 and their closing costs and loan pay off also amount to $100k……………………if they were required to have a LESA then in this case they would be $12k short to close.
Question, Can I do a reverse mortgage if my home is vested in a trust?
Answer; If you ask most lenders this question, but are referencing a regular mortgage, the answer is no much of the time. When it comes to a reverse mortgage, the simple answer is yes. However, it depends on the particulars. For more info, check out; Can A Reverse Mortgage Be Put Into A Trust?
Question, Is there a jumbo reverse mortgage?
Answer; Yes, there is a jumbo reverse mortgage. It works well for people that owe more than they can get with an FHA reverse mortgage and for high end homes valued at roughly $1,000,000 to $20,000,000. However, the percentage you can borrow is a little more conservative than the FHA reverse. For more in depth info, check out Jumbo Reverse Mortgage Loan to Value.
Question, What are the reverse mortgage limits?
Answer; The current HECM Max Claim amount is $765,600. However, when it comes to loan limits, HECM Loan Limits work differently than loan limits for traditional loan. For more detailed info, visit –> HECM Loan Limits.
Question, Are Reverse Mortgages Safe?
Answer, Yes, reverse mortgages are safe. It’s just a home loan like any other. Further, it’s insured by FHA. Education is key. Your best bet it to connect with a reverse mortgage specialist vs a forward loan officer who does very few reverse loans and sometimes maybe none. I’ve heard inexperienced (might be seasoned for regular loans, but not reverse) give flat out, WRONG info about reverse loans. Also, one of the requirements is that you do counseling with a neutral 3rd party. It’s one of the safeguards put into place by FHA. They just want to make sure you understand the program. For more detailed info visit –> Are Reverse Mortgages Safe?
More to come….
If we didn’t answer a specific question you have, you can always contact us or perhaps find it on HECM FAQ.
For your free Reverse Mortgage California brochure, please email Info@ReverseMortgageLoanAdvisors.com
Shawn Lawrence Vaillancourt
NMLS License # 387151. Licensed in AZ, CA, CO, KS, MO, OR, TN, VA, WA
For more in depth info on all Reverse Mortgage subjects, check out:
Equity Elite Reverse Mortgage (first company to come out with options for 60 and 61 year olds).