On October 1, 2017, the U.S. Department of Housing & Urban Development (HUD) changed requirements for obtaining a reverse mortgage. Although their intention was to reduce the number of associated defaults, the impact is felt by elderly borrowers who now face steeper fees because of the change. Since your home is your most significant asset, because of the HUD changes, you should carefully consider whether a reverse mortgage remains your best option to inject cash into your personal finance equation.
Before making the decision, answer the following questions:
- Do you own your home outright or are you close to paying it off? To qualify for a reverse mortgage, you should have enough equity that a reverse mortgage will leave you with a reasonable lump sum, monthly payment or line of credit after paying off your existing mortgage balance.
Are you short on cash and don’t have any other viable way to get the money you need for the expenses of daily life? Since your home is your biggest asset, it takes years to accumulate equity. Taking out a reverse mortgage means spending a portion of that equity onloan fees and interest. That said, if your home has ample equity, you may be able to safely take out a reverse while leaving other portions of the equity untouched.
- Do you want to stay in your home long-term or do you plan to move? Staying put can make taking out a reverse mortgage worthwhile. This is not the case, however, if your immediate plans include a move. Lender fees, such as the origination fee, can be as high as $6,000 – depending on your home’s value. Other applicable fees could include up-front mortgage insurance; and closing costs such as title insurance, a home appraisal and a home inspection may not be worth the expense if you don’t plan to stay put.
- Can you afford ongoing property taxes, homeowners insurance and home maintenance? Keeping up with your property taxes, homeowner’s insurance and home maintenance are essential if you have a reverse mortgage. If you fall behind such payments, the lender could declare your loan immediately due and payable.
- Is your spouse aged 62 or older? Reverse Mortgage borrowers must be at least 62 years old. In general, the younger you or your spouse are, the lower the amount you can initially borrow. While new laws protect the non-borrowing spouse from losing the home if you die first, he or she won’t be able to collect remaining reverse mortgage proceeds after you are gone. In this case, the reverse mortgage set up as a monthly income stream or a line of credit would be discontinued, so your spouse would lose access to a necessary source of income. Also, reverse mortgage proceeds are based on the youngest spouse’s age –whether that person is on the loan.
- Do you know someone you can trust who handles reverse mortgages? Since scammers often target senior citizens, make sure you find a professional reverse mortgage counselor who will be able to give you an accurate idea about whether a reverse mortgage can provide a long-term solution to your financial problems. You can trust the experts at Reverse Mortgage Certified, who have years of experience securing reverse mortgages for seniors in the Inland Empire, North Orange County, Los Angeles basin and San Gabriel Valley.
The Bottom Line
Despite the hype and negative publicity, reverse mortgages can be the answer to your financial prayers. After a lifetime of hard work and sacrifice, we love helping homeowners improve their financial situation by taking out a reverse mortgage. Wouldn’t you rather get a check each month rather than having to scrimp and save to pay the mortgage? If you own your own home, you may be eligible. If you have questions about how much reverse mortgage capital you might qualify for, contact Manny LaFosse, your certified reverse mortgage consultant.
About Reverse Mortgage Certified
Residents of Los Angeles County and North Orange County should look to the experts at Reverse Mortgage Certified for great rates and information about the reverse mortgage loans as well as several other available financial options. Call our senior hotline today to find out if a reverse mortgage may be right for you or for someone you love (855) 444-9798.