You have begun the process of buying a new home and are hearing about using a reverse mortgage for purchase loan. You like the idea of being able to put 40 to 55%¹ down, depending on your age, and not having a principal and interest payment for your life in the home. Once you begin the process of speaking with a lender and getting a quote, however, you are put off by the high closing costs. Sound familiar?
If you are considering a reverse mortgage, or researching one for a parent, friend, or client, we suggest you educate yourself on some of the most important features of the line of credit. A reverse mortgage line of credit used in the right way can be a valuable financial planning tool.
There exists a common misconception that a reverse mortgage can be used to fix a home, with no further clarification. It appears to stem from various marketing efforts that you see in print or on television, that make it seem like a simple process. The general perception is that we can close a loan for a customer with a home in disrepair, and provide the cash at closing needed to do the repairs. Unfortunately, that is far from the case in many instances.
As of April 27, 2015, the rules for obtaining a reverse mortgages require the applicant to pass a three-part qualification, including a credit history analysis, a residual income test, a review of extenuating circumstances or compensating factors.
The reverse mortgage loan process has changed as of April 27, 2015 to become more like conventional loans. No longer will you be able to call multiple lenders and get an accurate quote based off of an estimated home value, mortgage balance, and youngest homeowner birth date. To get an accurate quote, you’ll need to be prequalified by an experienced reverse mortgage specialist. Talking to a loan officer that closes a handful of reverse mortgages per year is dangerous due to their part-time attention to a complex, dynamic business.
Are you over sixty two years old and looking for a way to split your home equity as part of a divorce? Are you opposed to the idea of selling your home?
Using a reverse mortgage to make the fifty percent equity payment can be a low risk way of taking care of the spouse that will no longer occupy the property. It can also be an alternate solution for those that would have a significant tax hit for liquidating investments to make the payment.
Seniors are one of the fastest growing groups on social media (websites like Facebook, Twitter, and Linkedin). They are realizing that social media can be a great tool for staying in contact with family and friends, sharing photos, and sharing their ideas. If you are a senior who has been debating whether or not to start using social media, never say never. Continue reading
If you are interested in an FHA reverse mortgage, and your property has a well or septic tank, there are some specific requirements you will need to be aware of.