{"id":490,"date":"2014-06-18T23:33:42","date_gmt":"2014-06-19T06:33:42","guid":{"rendered":"https:\/\/shellyrobersonrealtor.com\/?p=490"},"modified":"2014-07-01T10:41:12","modified_gmt":"2014-07-01T17:41:12","slug":"straight-facts-about-reverse-mortgages","status":"publish","type":"post","link":"https:\/\/shellyrobersonrealtor.com\/straight-facts-about-reverse-mortgages\/","title":{"rendered":"Straight Facts about Reverse Mortgages"},"content":{"rendered":"

\"reverse-mortgage-620xa-<\/a><\/h2>\n

Reverse Mortgages Are Not For Everyone, But They Are Great Products For Certain Individuals In Their Retirement Years With Limited Cash Flow<\/h1>\n

You have probably heard the term \u201creverse mortgage\u201d but do you really understand what one is?\u00a0 A reverse mortgage is basically a loan homeowners older than 62 years old can utilize to convert part of their equity in their home into cash.\u00a0 Retirees with limited income streams were originally the target audience for this product \u2013 the idea was that folks in their retirement years could benefit from the equity in their homes by having the home\/bank make payments back to the homeowner instead of the homeowner paying the bank.\u00a0 A borrower is not required to pay back the loan until the home is sold or otherwise vacated.\u00a0 As long as a borrower lives in the home they are not required to make any monthly payments towards the note balance, however the borrower must remain current on the property taxes, HOA dues, etc.<\/p>\n

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To obtain a reverse mortgage on a home, that home must be your primary residence, which means you must reside there at least 183 days per year.\u00a0 Additionally, once you obtain a reverse mortgage, you must confirm your residency by signing an Annual Occupancy Certificate that is provided to a borrower by the loan servicer.\u00a0 If you must leave your home for an extended period of time, due to work or health reasons, you are required to notify the servicer.\u00a0 If you are out of your home for more than 12 consecutive months your loan will be in default.<\/p>\n

Importantly for borrowers, there is no restriction for how reverse mortgage proceeds can be utilized.<\/p>\n

 <\/p>\n

\"reverse_mortgage1\"<\/a><\/p>\n

 <\/p>\n

Types of Reverse Mortgages<\/strong><\/h2>\n

A Home Equity Conversion Mortgage<\/strong>, or HECM, is a reverse mortgage insured by the Federal Housing Administration through U.S. Department of Housing and Urban Development.\u00a0 The maximum loan amount you may access during the first 12 months after closing escrow is sixty (60) percent of the full loan amount.\u00a0 If you have access to $200,000 you may only use $120,000 for the first 12 months.\u00a0 After 12 months is up you may access the entire amount plus an additional 10 percent.<\/p>\n

HECM\u2019s are not government loans thus the borrower pays an upfront fee and an annual fee for insurance of approximately 1.25% per year.\u00a0\u00a0 The insurance protects the borrower if and when the lender is not able to make a payment, or if the value of the home upon sale is not enough to cover the loan balance.\u00a0 HECM\u2019s make of the majority of reverse mortgages in the U.S.\u00a0 Importantly, HECM\u2019s require the borrower receive third party counseling prior to loan execution and completion.<\/p>\n

Proprietary Reverse Mortgages \u2013 PRMs<\/strong><\/p>\n

Although they exist there are currently very few PRMs.\u00a0 These type reverse mortgages are non-FHA insured reverse mortgages offered by banks and mortgage companies.\u00a0 PRMs are not subjected to the same rules and regulations that HECMs are and in some states no counseling is required for PRMs.\u00a0 Another name for PRMs is \u2018Jumbo\u2019 reverse mortgages because they are typically placed on higher value homes, such as $750,000 or more.<\/p>\n

 <\/p>\n

\"ReverseMortgage\"<\/a><\/p>\n

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Counseling Is Required (Typically)<\/strong><\/p>\n

It is always recommended that seeking this type of lending vehicle be accompanied by competent advice.\u00a0 HECMs require counseling, but in addition to statutory counseling a borrower should seek competent counsel from others including friends, family, and even a real estate attorney familiar with these loans.\u00a0 The primary reason for counseling is that many circumstances may arise which do not seem likely at the time of origination, but may be lurking down the road like long-term care facility requirements, or other health related circumstances.\u00a0 A competent counselor will explain the reverse mortgage to a borrower.\u00a0 They will explain the costs, the product options, explain alternatives, explain consequences of default, and will provide other resources for the borrower to review.\u00a0 At the end of the counseling session the borrower and counselor will both an affidavit of counseling<\/p>\n

Conclusion – Is A\u00a0Reverse Mortgage Right For You?<\/strong><\/p>\n

Although reverse mortgage may present options for millions of retired Americans they are clearly not for everyone.\u00a0 Long-term health concerns, cost conscious borrowers, and other reasons will prevent some people from using this option.\u00a0 It is extremely important to seek competent advice and counsel if you are interested in pursuing a reverse mortgage.\u00a0\u00a0 Please don\u2019t hesitate to contact for me further information about reverse mortgages and confidential referrals for reverse mortgage professionals.<\/p>\n","protected":false},"excerpt":{"rendered":"

Reverse Mortgages Are Not For Everyone, But They Are Great Products For Certain Individuals In Their Retirement Years With Limited Cash Flow You have probably heard the term \u201creverse mortgage\u201d but do you really understand what one is?\u00a0 A reverse mortgage is basically a loan homeowners older than 62 years old can utilize to convert…<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[12],"tags":[39,38,37,36,40],"yoast_head":"\nStraight Facts about Reverse Mortgages - shellyrobersonrealtor.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/shellyrobersonrealtor.com\/straight-facts-about-reverse-mortgages\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Straight Facts about Reverse Mortgages - 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