Is a Reverse Mortgage Right for me? Part 2

continued from yesterday’s post.

What Can I Do With The Money I Receive?

You can put the money toward any expenses you have – there are no
limitations. As with any home loan, it is best to use it where you need it most: medical bills, home repairs, home Care, balance the cost of living, gifts to children/grandchildren, or a more comfortable lifestyle. Consult your bank or financial advisor to discuss the best use of your reverse mortgage funds. Since most people don’t have financial advisors you may wish to see your attorney or an accountant to discuss the issues of a reverse mortgage with you.

How Do I Find Out How Much I Can Receive?

The amount of money you can receive every month is based on the
qualifications discussed Above: your age, your home’s current value, and the
equity you’ve built up in your home. Another factor is how you elect to receive your funds. Your reverse mortgage specialist is a great resource for everything you need to know about your reverse mortgage and will be able to give you more specific information Regarding the Amount that You Qualify to Receive.

What are your payment options:

• a line of credit.

• monthly payments for as long as you live in your home or for a
predetermined, shorter time frame.

• a combination of monthly income and a line of credit.

• a lump-sum upfront payment.

Getting A Reverse Mortgage:

How much does it cost to get a reverse mortgage?

Many of the costs you would find with getting a regular home loan
also apply to reverse mortgages. Fees you might see are: an origination fee, a
mortgage insurance fee, an appraisal fee, and closing costs. In most cases, the costs are financed as part of your reverse mortgage.

Are there different reverse mortgage programs? How will I choose?

When you obtain a reverse mortgage, you do have options. Your
banker will work with you every step of the way to match you with the reverse mortgage that fits you best.

When do I pay back the loan?

As long as you are living in your home, you will never make a
single house payment again. When you no longer occupy your home as your principal residence, the loan becomes due. The Amount due will be the net proceeds from the sale of your home.  Please remember
that this means that if you have to go to an assisted living facility or a
nursing home, there will be a demand on you for the outstanding balance plus interest, just when your monetary resources are stretched to the limits.

For your protection, the repayment amount will never be more than
the value of your home. Selling the home is not the only option for repayment; you always have the option of paying off the loan and keeping the home.

A reverse mortgage benefit checklist:

• get tax-free funds for as long as you live in your home.

• no loan repayment for as long as you live in your home.

• no medical or income requirements.

• never worry about making monthly payments.

• choose the payment option that suits you.

• no restrictions on how you use your money.

• no risk of default.

Getting A Reverse Mortgage: six steps toward a reverse mortgage:

If you are like most people seeking a reverse mortgage you want to
be prepared. You need to shop for the best reverse mortgage available.

You need to look at your current financial situation with a legitimate banker or licensed mortgage broker to see if a reverse mortgage is right for you. Again, if you are unsure you may wish to discuss your options, after reviewing your finances, with a certified financial planner, attorney or accountant to see if you are a good match for a reverse mortgage. Do not forget to ask questions! The professionals with whom you are dealing are required to give you honest answers you need to make the best decision.

Attending Counseling.

Before securing a reverse mortgage, you are required to receive independent counseling from a certified, HUD-approved financial counselor. This is to help you make sure you are in the right position for a reverse mortgage.
Your counselor is another great resource to answer all of your questions so
that you feel confident in your plan. Counseling can be done over the phone.
However, we recommend you meet face to face with the counselor. The
HUD-approved financial counselor should not have any financial ties to the
financial institution where you intend to obtain your reverse mortgage.

Appraisal of Your Home.

Together with your banker or licensed mortgage broker, you will
schedule your home appraisal for a time that fits your schedule. The appraiser will determine the market value of your home, make sure it is good repair, and check for any repairs that you may need.

The Inspection of Your Home.

You may need an inspection to make sure your home is structurally
sound and that it is not suffering from extensive termite damage, dry rot or
other wear-worthy symptoms.

The Underwriting of Your Mortgage.

Underwriting is a part of any mortgage process. After the appraisal
and inspection reports are complete, an underwriter will review your complete file in order to ensure that everything is properly documented and all qualifying guidelines are met.

The Mortgage Closing.

At closing, you will sign all of your final loan documents,
including a note, indicating you owe money to the institution giving you the
mortgage and then you will sign the mortgage itself, which secures the note.
There will be closing costs. The costs involved in a reverse mortgage transaction are similar to conventional loan products. Typically, there is 2% origination fee, a 2% FHA premium, the cost of the appraisal and the cost of the title company’s services. Any balance accrues interest based on the current interest rate.  Reverse mortgages are usually variable rate mortgages where the interest rate rises and falls with the mortgage market  You are
not required to make any payments to reduce the balance or offset the interest for as long as they live in the home.

After the first spouse dies and the second spouse may continue to
live in the home without being required to make any payments on the reverse mortgage.

When the second spouse dies the note becomes due.

What Happens at the End of Life?

Let’s say that during the course of the reverse mortgage course a
couple and then after the first partner dies, the surviving spouse, took out
$100,000 from their reverse mortgage.

The heirs decide to sell the home.

• In the first scenario – the home’s value has increased and the
heirs are able to sell the home for it for $200,000. After repaying the
mortgage and costs associated with selling the home, the remaining, roughly,
$100,000 goes the heirs through the probate estate.

• In the second scenario – the home has lost a great deal of value and they are only able to sell it for $80,000. The heirs are required to send the net proceeds from the sale of the home to repay the Mortgage and the
reverse mortgage lender takes a 20,000 loss.  Neither the probate estate nor their heirs are responsible for reimbursing the lender
for this loss.

You may contact the law firm of Samuel A. Mutch, P.A. if you have
any questions about a reverse mortgage. If you wish we can discuss a reverse mortgage while doing your estate planning or when we are preparing a trust for you.

 

Is a Reverse Mortgage Right for Me? Part 1

When your income is fixed, but the cost of living is not the financial problems people have become acute.  In this short article, you will learn about how to obtain a reverse mortgage but also what are some of the pitfalls you need to watch for when shopping for a reverse mortgage.

Getting a Reverse Mortgage

You have dreams for retirement, but money challenges can cloud your dreams overnight.  That is why the U.S. Government created a new kind of mortgage exclusively for seniors.  It is called a reverse mortgage and it is the first mortgage where the bank pays you!  How does this work?  Congress saw a need for seniors to be able to use the equity in their homes and still live in their homes for as long as possible.

If you qualify, the equity you have spent years building can be paid to you in monthly installments, in one lump sum, or as a line of credit.  Here is the best part: you never have to make a payment for as long as you live in your home.

Is a Reverse Mortgage the Right Choice for You?

At our law firm we know that reverse mortgages bring a lot of questions to mind about security, stability, ownership and risk. That is why
we can assist you with the resources and information you need in order to make confident choices about your financial future.  In a senior reverse mortgage the law firm of Samuel A. Mutch, p.a. will ensure, depending on the type of reverse mortgage you choose:

You own your home – not the bank or some unscrupulous person.

You will maintain ownership of your home as long as you live in it – with no time limit. (however, at the end of your life the note secured by the mortgage may come due.

Your heirs will either have to pay down the mortgage (what you took out of the equity of your home while you were alive, plus interest; or the bank will take ownership of your home.

You may choose to never make a payment as long as you live in your home.

You should, by the terms of the reverse mortgage, be able to refinance whenever you want – with no penalty.

You should, by the terms of the reverse mortgage, not be required to pay a penalty for paying off your mortgage at any time.

You should be treated with respect by the financial institution with whom you are dealing, every step of the way.

If you have questions about the reverse mortgage the law firm of Samuel A. Mutch, P.A. promises to listen to your concerns, to answer
questions fully, and to help you make the decision that is right for you.

If you wish our law firm will attend the closing of your reverse mortgage to ensure that everything is correct and as promised by the
financial institution you have selected.

Why Obtain a Reverse Mortgage?

There are a lot of reasons to obtain a reverse mortgage, but they all have one thing in common:  a reverse may mortgage assist you with financial freedom. 

If you have worked hard for a comfortable retirement, but the cost of living is getting in the way, a reverse mortgage may help.  Here are some of the reasons the financial industry gives for getting a reverse mortgage:

You would like to stay in your home, but you cannot afford it.

Your income is fixed, but the cost of living is on the rise.

Gas prices, the cost of food and other monthly bills make every day living difficult to enjoy.

If rising expenses are pushing you out of your home, a reverse mortgage may be the answer.

You could get the money you need to cover your expenses and live the comfortably in the home you love.

Subsidizing your health care may be a reason for obtaining a reverse mortgage.  Good health is your first priority. But with the rising cost of prescriptions, office visits and in-home care, many retired homeowners are finding it harder to afford.
The way we see it, there is no better reason for a reverse mortgage.  A reverse mortgage can help you get a handle on your medical expenses by not only eliminating your monthly payments, but replacing that expense with additional income.  Some people use their reverse mortgage to:

Help pay for prescriptions

Pay for in-home care for themselves or a spouse
Make improvements or updates to their home
Pay medical bills
Home improvements.  Are your plans for your home bigger than your budget? Home improvements and repairs are expensive.  A reverse mortgage may give you the same advantages as a home equity loan without an additional mortgage payment.
Lifestyle enhancement.  When you planned for retirement, did you plan for high gas prices? What about rising food prices? If you are like most of
people, your vision of retirement was a lot different than what you can afford with the rising cost of living.  A reverse mortgage may help get that dream back for you – whether you want to travel, visit family or just live comfortably.

Supplement your income.  If you are not yet retired but are not making enough to cover the rising cost of living, a reverse mortgage can be a great
supplement to your income. Why be forced to downsize when you can live better in the home you love?

Help family members.  Had you hoped to send a family member to college? Had you hoped to travel during your retirement?  A reverse mortgage is a great financial tool to help you do any of that.

The proceeds from a reverse mortgage may be used in any manner in which you choose.

The Federal Requirements
for Getting a Reverse Mortgage

Here are the minimum requirements for a reverse mortgage  set by the federal government:

• you must own your own home

• you must be 62 or older ( if you are married in Florida and your home is your homestead, both you and your
spouse must be 62 years of age.)

• you should have a good amount of equity built up in your home;

Age requirements can sometime cause the most confusion, raising questions like: what if my spouse is not yet 62 years old? Can one of
us qualify? Here is the rule to remember: if your name is on the title to your home, you must be 62 to qualify for a reverse mortgage. So, if you’re married in Florida and one of you is not yet 62 years of age, and the home is your homestead, it means that even with your spouse off the deed, he or she still owns the property by the entireties with you and you may not be eligible for a reverse mortgage until your spouse turns 62 years of age.)  If you co-own your home with another person, other than your spouse, and you want both of your names on the title, you must
both be 62 years old.  If one of you is not yet 62 years old, you can consider dropping their name from the home’s
title in order to meet the standards for reverse mortgage applicants.

You will need to determine if you have enough equity in your home to qualify for a reverse mortgage. Even if you still have an
outstanding balance on your first mortgage? You may still qualify.  You should call a reputable bank for answers.  Your primary residence is the
only home eligible for a reverse mortgage and you must be living in your home to qualify.  Homes that are eligible for
a reverse mortgage are the same as with a regular mortgage, including:

• single-family homes

• most manufactured homes

• most condominiums

• 2- to 4-unit owner-occupied residences

• townhomes

Come back tomorrow for more on Reverse Mortgages.