BENEFITS OF A REVERSE MORTGAGE
Reverse Mortgage is a tax-free* way to use the equity
in your home to:
• Eliminate your house payment
• Supplement your income
• Fund long term healthcare
• Home improvements
• Fund your grandchildren’s education
*Tax situations vary – consult with your financial
professional or the IRS directly.
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REVERSE MORTGAGE FAQs
What is a Reverse Mortgage?
A Reverse Mortgage is a special type of home loan that enables a
senior homeowner 62 years of age or older to access a portion of their
equity, tax-free*, based on their age, home value (or County limit
whichever is lower) and the current interest rate. Unlike traditional
home loans or second mortgages, no repayment is required until the
homeowner(s) no longer occupy the property as their primary residence.
Who's Eligible?
All owners of the home must apply for the Reverse Mortgage and sign
the loan papers. All borrower(s) must be 62 years of age, occupy the
home as their primary residence for the majority of the year, and own
the home outright or with a relatively low mortgage balance that must
be paid off through the proceeds of the Reverse Mortgage. The
homeowner(s) must also attend a free HUD Counseling Session either
face to face or by telephone.
What Kind of Property is Eligible?
• Single Family One-Unit Dwellings
• 2-4 Unit Owner Occupied Dwellings (only one must be owner-occupied)
• Some Condominiums and Planned Unit Developments
• Some Manufactured Homes
MOBILE HOMES AND COOPERATIVES ARE GENERALLY NOT ELIGIBLE.
How Reverse Mortgages Work?
Reverse Mortgage loans typically require no repayment for as long as
you live in your home. They must be repaid in full - including accrued
and financed closing costs - when the last living borrower permanently
vacates or sells the property. Because the borrower(s) make no monthly
payments the amount you owe grows larger over time. As your debt grows
larger, the amount of equity you have left after selling and paying
off the loan generally grows smaller. YOU WILL NEVER OWE MORE THAN
YOUR HOME'S VALUE at the time loan is paid. Reverse Mortgage
borrower(s) continue to own their homes, so you are still responsible
for property taxes, insurance and repairs. If you fail to carry out
these responsibilities, your loan could become due and payable in
full.
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The Reverse Mortgage Process
Step 1. Action
You contact a Reverse Mortgage Advisor to get all of the information
they will be needed to decide if a Reverse Mortgage is right for you.
Step 2. Counseling
Third party Counseling is mandatory and must be provided by a HUD
approved agency. The counselor explains different options available to
the consumer. To help schedule this you can contact HUD directly, or
Jim Syler, Reverse Mortgage Specialist at 626-201-1288 or toll free at
1-888-781-4111.
Step 3. Application
You fill out the application and select the payment option: Monthly
payments for life, credit line or lump sum payment, or I can structure
a plan that includes all three options.
Step 4. Processing
We processes the loan, order an appraisal (to determine value of home)
title report, lien payoffs and credit report. If the appraiser
uncovers structural defects and if repairs are required, the repairs
can be completed after closing within 6 months and the costs will be
held in reserve.
Step 5. Underwriting
After receiving all pertinent information and data, we will finalize
the loan parameters, package loan and submit it for underwriting and
final approval.
Step 6. Closing
The loan is approved and the final signing is scheduled. The initial
interest rate is calculated. Closing costs are normally financed into
the loan. Closing papers and final figures are prepared and signed by
you.
Step 7. Disbursement
You have three business days after closing to cancel the loan. After
this period the funds are disbursed. The loan has repaid any previous
debts on the property and you begin receiving payments according to
your selected option.
Step 8. Repayment
You do not make any monthly mortgage payments to your lender during
the life of the loan. The reverse mortgage becomes due and payable
upon: the death of the borrower, the sale of the home, or if you no
longer use the home as a primary residence.
Upon the death of the borrower, the heirs/estate may repay the loan
from the sale of the home and cash out on the remaining equity, or
refinance the home.
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