What is a Reverse Mortgage Loan?
A reverse mortgage is a unique loan that allows homeowner(s) 62 years of age and older to draw on the value of their home, which is paid to the homeowner(s) in a variety of payout options. One aspect of this loan is that it does not require repayment until the homeowner(s) no longer reside in the residence, the last surviving borrower passes away or does not comply with the loan obligations such as paying property taxes and insurance, and maintaining the property to FHA guidelines. Regulated by the U.S. Department of Housing and Urban Development (HUD), Home Equity Conversion Mortgages are insured by the Federal Housing Administration (FHA) and may help older qualified homeowners with increasing living expenses.
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Frequently Asked Questions
Q: What is a HECM Reverse Mortgage loan?
Q: What is the difference between a Reverse Mortagage loan and a Home Equity Loan?
A: A HECM reverse morgage is a way to turn a portion of the equity in your home into cash. A reverse mortgage could protect your home from unexpected expenses such as a nursing home or long term care*. It could also provide you with additional cash flow for all the expenses you have. As long as all loan terms are met, the loan does not require repayment until you sell, permanently move out of your home, or until the last person on the title passes away.
Q: Do I qualify for a HECM Reverse Mortgage loan?
To qualify for a reverse mortgage all borrowers must be at least 62 years of age.
Q: Can I apply for a HECM if my current house wasn't purchase with an FHA loan?
A: Yes. Regardless if you have a home loan or own free and clear you can still apply.
Q: How does a Reverse Mortgage affect your heirs?
A: Your heirs can inherit a home that has a reverse morgage on it, just like they woudl a tranditional mortgage. They will be given up to six months with two 90-day options to extend in order to decide if they will sell it, sign it over as a deed in-lieu of foreclosure, or satisfy the outstanding balance. An appraisal can be ordered to help in making the decision to see if there is equity after the loan is paid off and costs of sale. Alternatively, your heirs can purchase the home for 95% of the appraised value or the morgage balance, whichever is lower. (NOTE: This does not constitute legal advice. You should consult an attorney for your specific situation.)
Q: Why should I work with someone on Joan's team as my Mortgage Planner?
A: Joan Qvigstad's team strongly believes the way Fairway Mortgage does things is just as important as what they do. Every team member is guided by the Fairway Core Values, which define how Joan and her team works to interact with others, and guides her in determining how to best serve their customers.
Q: When you purchase a home with a Reverse Mortgage loan will the loan be held on you existing home or your newly purchased home?
A: The reverse mortgage loan will be held on the newly purchased home as your primary residence. The down payment you will need to bring to closing is usually between 50-70%.
Q: Why is my down payment higher with a Reverse Mortgage loan?
A: Your down payment is higher initially because you will never be required to make a monthly payment (except for taxes, insurance and maintain the home). With a traditional mortgage you will lose much more in cash flow over the years because of the consistent required payments.