I asked Eric May and Donald Geragi of Prosperity Mortgage who recently spoke to us at Long & Foster in Devon to share some information about reverse mortgages, how they work and who can use them. This is a great way for seniors to provide income for themselves or to help a grandchild purchase their first home using the equity they have built up in their own homes.
Reverse Mortgage loans are managed, controlled and backed by the federal government, offering total safety and security to senior homeowners.
The home must be designated as the primary residence as the benefits of a reverse mortgage are extended to the homeowner for as long as they continue to live in the home. Also, included is an outline of the requirements and steps needed to apply for any of these programs.
Reverse Mortgage loans, including the most popular, HECM (Home Equity Conversion Mortgage) offered by HUD and FHA insured, as well as the HomeKeeper® Reverse Mortgage - secured and backed by Fannie Mae, offer a variety of attractive financial solutions to consumers who currently own or have substantial equity in their homes. All of these products offer homeowners the ability to have access to a portion of the equity in their primary residence ... Tax Free! Distribution of these funds can be taken in virtually any manner the homeowner chooses, including:
•· Lump Sum Cash
•· Credit Line
•· Term - monthly payments
•· Tenure monthly payments
•· Or any combination of these
Payment plans to Reverse Mortgage holders can be changed at any time by the homeowner. *(Actual benefit amounts will be determined when application is signed and dated by the homeowner(s) and accepted by HUD)
There are no qualifying requirements for these programs related to credit, employment, income or assets. The amount of funds available to the homeowner is based on:
•· The lower of the ages of all the owners on the deed of the property (all must be 62 years of age at closing),
•· The lower of either the appraised value of the home, or the county in which the property is located (established by the lending cap of the loan that is selected; HUD HECM or Fannie Mae HomeKeeper®), and
•· Outstanding balances of existing mortgages or liens on the property. After paying off any existing mortgage / liens from the available equity, all remaining funds can be used for any purpose the homeowner chooses!
The loan amount required to be paid back (the amount of funds used over the life of the loan with any accumulated interest) only becomes due when and if the last owner on the deed, decides to move, sell the property, or the home passes into an estate. The property may then be sold by the estate to settle the loan or it may be acquired with alternative funds. Any and all remaining equity or property appreciation after the loan debt is settled goes back to the homeowner or to the heirs of the estate.
Once the reverse mortgage loan is in place the homeowner:
•· will never have to make a monthly mortgage payment
•· will never have to move from their home
•· will never have to give up title to their home
•· and the homeowner, or the heirs to their estate, can never owe more on the loan than the home's value (reverse mortgages are non-recourse loans)
Another important benefit of a Reverse Mortgage Loan is that the proceeds do not affect * Social Security or Medicare benefits. * (Need based programs such as Medicaid could be affected and one is urged to contact Medicaid directly with your individual circumstances, if you currently received these types of benefits)
All fees and closing costs can be financed with the proceeds of a Reverse Mortgage. Other inspections may be required and are the responsibility of the homeowner if applicable, including well, septic, termite, flat roof certification, etc.
A required step in the application process is for the homeowner to attend a reverse mortgage counseling session delivered by an approved and certified HUD agency and the AARP. The session generally takes about 1/2 hour or less. Reverse Mortgage Consultants can provide a list of counseling agencies that borrowers can visit or call to make an appointment with.
At the conclusion of this session borrowers receive a certificate (letter) that is required to be processed with the loan application when it is forwarded to HUD for the loan's approval.
For further help please contact Eric May at PROSPERITY M O R T G A G E, MAC # M7478-011, 92 Lancaster Avenue, Devon, PA 19333, 610.225.7456 Office, 484.716.4299 Mobile, Eric.May@Prosperitymortgage.com. Or go to his website at www.ericmaymortgage.com
If you are buying or selling on or around Tredyffrin Easttown or along the Main Line we can help you, contact us or connect
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