Learn More About Reverse Mortgages
What is a Reverse Mortgage?
A reverse mortgage allows borrowers age 55 or older to access part of the equity in their primary home without making payments. Accrued interest is simply applied toward the loan balance. If there is a current traditional loan balance on the home, the entire balance may be included in the reverse mortgage.
How do Reverse Mortgages differ from traditional Forward Mortgages?
Typical home equity loans, second mortgages, and home equity lines of credit (HELOC) have strict requirements for income and creditworthiness. The homeowners must make monthly payments to repay the loans, and are responsible for property taxes, insurance, and maintenance.
Typical Reverse Mortgages have no credit score requirements. Homeowners receive cash from lenders without being required to make monthly payments, and accrued loan interest is added to the balances of the loans. Homeowners are required to use their homes as their primary residences, and are responsible for property taxes, insurance, and maintenance.
How is money from a Reverse Mortgage distributed?
There are several ways to receive the proceeds from a reverse mortgage:
– Lump sum: A lump sum of cash at closing
– Tenure: Equal monthly payments as long as the homeowner lives in the home
– Term: Equal monthly payments for a fixed number of years
– Line of Credit: Draw any amount at any time until the line of credit is exhausted
– Any combination of the options listed above
Does the homeowner keep title to the property?
Borrowers maintain title and may remain in the home indefinitely, even if the loan balance becomes greater than the value of the home. The general loan conditions are: At least one homeowner lives in the home as their primary residence, continues to pay required property taxes and homeowners insurance, and maintains the home in accordance with FHA requirements.
Do heirs inherit an estate with a Reverse Mortgage loan?
Reverse mortgage loans are structured to preserve equity in the property. In the event of death or in the event that the home ceases to be the primary residence for more than 12 months, the homeowner’s estate has 6 months to either refinance the property/repay the HECM loan, or sell the property.
What happens when the home is sold? If the equity in the home is higher than the balance of the HECM mortgage, the remaining equity belongs to the estate. If the home sells for less than the amount of the mortgage, the lender must take a loss. No other assets are affected by a HECM mortgage: (Investments, second homes, cars, and other valuable possessions cannot be taken from the estate to pay off the mortgage.)
What are the Reverse Mortgage loan limits?
Please use our free calculator to estimate the available amount. This generally depends on four factors:
– Current interest rate
– Appraised value of the home
– Government imposed lending limits.
Why choose a Reverse Mortgage?
Diversify sources of retirement income
Hedge against risks such as market downturns and outliving savings
Provide a source of funds for senior living expenses
A resource to allow seniors to remain in their homes after retirement
Provide a source of emergency funds
Pay for in-home care
A source of nontaxable income: (Because the money is a loan, it won’t increase your income tax rate or Medicare premiums)
As in any important financial decision, a borrower should be well-informed. We require borrowers to attend counseling with a third-party HUD certified specialist that will review all the pros and cons of a reverse mortgage, and help ensure it is a good fit for them.
How are loan amounts calculated?
– The age of the youngest borrower
– Current interest rate
– Location of the home
– Appraised value of the home
– Government imposed lending limits
How are funds distributed?
1. Lump sum – a lump sum of cash at closing
2. Tenure – equal monthly payments as long as the homeowner lives in the home
3. Term – equal monthly payments for a fixed number of years
4. Line of Credit – draw any amount at any time until the line of credit is exhausted
5. A combination of the options listed above
Can I purchase a home with a Reverse Mortgage?
Qualified buyers may use a Reverse Mortgage to purchase a home with a partial down payment and make no monthly payments on the remaining balance.
What happens to my home equity?
Reverse mortgages tap into part of your home’s equity. However, because homes historically appreciate in value over time, and only part of a home’s equity is accessed through a Reverse Mortgage, most borrowers continue to grow equity in their home.
Testimonials and About Choose Reverse
We refinanced twice with Choose Reverse. First, to eliminate our traditional mortgage. Then, a year later after our house continued to increase in value, we helped our daughter buy a house with our second refinance.
I refinanced twice with Choose Reverse. First to eliminate my traditional mortgage. A year+ later after the house continued to increase in value, I refinanced again and bought an investment property out of state.
I am building an ADU at my son’s house for me to move into. I used a Reverse Refinance to pull cash out to build the ADU before selling my Condo. The whole process was PERFECT! I am so happy my Trustee suggested this mortgage.
I asked my previous mortgage broker about a reverse mortgage. He said our closing costs would be $35k+ and we had to bring $30k to closing. Choose Reverse waived 90% of these closing costs and gave me $40k BACK!
About Choose Reverse
Choose Reverse is a specialized division of Up Capital & Mortgage, Inc. Our company headquarters is located in San Francisco, CA, with loan officers distributed throughout the state of California.
We built Choose Reverse to focus solely on Reverse Mortgages. Why put so much effort into one element of home lending? Because this level of specialization allows us to deliver a higher level of customer service.
We have over three decades of mortgage industry experience. Our trained representatives are here to provide insight and help you select the right options to meet your financing goals.
Our proprietary technology and unique Options Reports take the guesswork out of financing, while streamlining your overall experience.
At Choose Reverse, we believe it is our fiduciary responsibility to offer our clients the highest level of service. We make it our priority to minimize stress and simplify the often-challenging task of securing financing. What does this mean in the real world? We work hard behind the scenes to make your process simpler and faster.
To learn more, please reach out to us by phone, email, or the contact forms on this website. Our decades of mortgage experience are available to you whenever you need financing for your home.
Begin Your Application
Congratulations on taking the first step toward your financing. Please note that beginning an application does not obligate you to complete a funding package, nor does it guarantee that you will be approved for funding.
Once you begin the application process, a skilled advisor will be assigned to your account. They will be a point of contact to answer questions, and provide estimates. If you choose to move forward with your funding, they will also help guide you through the process.
We also require applicants to attend a counseling session with an independent, certified HUD counselor, to help ensure that your financing package is the right fit for your needs.
Save Money Around The House
Swap Out Old Light Bulbs for LED Lights
If you have old light bulbs, consider LED lights. They might seem like a more expensive investment up front, but you’ll save quite a bit in the long run. Save up to nine percent annually by replacing your frequently used light bulbs with more energy-efficient options.
Lower Energy Rates
Many electricity suppliers offer a discounted rate for energy use outside of peak hours, which typically run from late afternoon into the evening. Run a full load in your dishwasher or laundry before bed and save a considerable amount on your electricity bills.
Keep All the Vents and Filters Clean
Do your due diligence and clean the vents and filters in your home: replace the A/C filter every three months. The Department of Energy reports that this cuts down energy use by 15 percent.
Use Fans Instead of Air Conditioning
Hot summers may tempt us to run the A/C all day, pushing our electricity costs up. Instead, opt for good room fans to cool off, or check out home improvement retailers for a ceiling fan. And if you’re using the A/C, you can get more out of it using your ceiling fan.
Keep Seals and Ducts Tight
This is a big one: check if the seals on doors and windows are tight, and that your heating and conditioning system ducts are properly sealed. Doors and windows often leak heat during winters and cool air during the summer.
Make Small Adjustments Around the House
Implementing little changes in your home can make a big difference. Refrigerators tend to use a lot of energy, so turn the fridge and freezer temperature up a notch for easy utility savings.
Another quick tip that curbs utility costs is adjusting your thermostat by a few degrees. According to the Department of Energy, you can save around 10 percent on heating and cooling costs by turning the thermostat down seven to ten degrees for eight hours a day.
Save Water in the Bathroom
There are simple fixes for bathroom fixtures that contribute to your water bills. While taking shorter showers can help, you can enjoy longer showers and cut down your water usage by installing water-saving shower heads and faucets.
Also check for leaky faucets, shower heads, and plumbing; a shower that leaks 10 drips every minute can equal 500 gallons per year.
Lighten the Load on Your Water Heater
Water heating makes up about 18% of household energy use, and the average household spends $400 to $600 every year on water heating. Lowering a water heater by 20 degrees can save you 10 to 15 percent on your bills.
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