Reverse Mortgage After Death Part 2

What happens to the reverse mortgage after the borrower's death? This is one of the most common questions when it comes to this type of loan.

What happens after death?

When the last surviving borrower of the reverse mortgage has passed, the loan balance will become due and payable. A lot of people think that the house will revert back to the bank once the last borrower dies but that is not what happens.

Your heir will have the option to choose if they would like to repay the balance of the loan or keep the house, sell it and keep its equity or just walk away and leave the house to the lender and let them take care of disposing the property.

In case they decide to keep the house, they should repay the loan, which means they need to refinance it with a new loan or use other means they have available.

They could also settle the loan at a lesser amount or about 95 percent of the existing market value. If they would rather sell the property, they have to make sure that they do whatever needs to be done to change the title so they could put the house into the market. If this is the case, it is better if the borrowers talk to an estate attorney first to make sure that they are taking the needed measures for their unique situation.

Will Your Heirs Be Held Responsible For The Balance Of Your Reverse Mortgage?

The heirs who will get the house will have to repay the outstanding balance of the reverse mortgage. They can do this by selling the house within 12 months or by refinancing it into a conventional loan. The heirs can keep the remaining equity in the house.

Is It Possible To Lose Your House With Reverse Mortgages?

You may default on this type of loan if you break at least one of the three rules on loan maturity that were outlined in your agreement. If you want to keep your loan in good standing, you have to pay your homeowner’s insurance and property taxes regularly. Plus, you also need to use the house as your primary residence. If you fail to meet any of these requirements, the lender will have the right, as per the HUD, to call the reverse mortgage due.

Is It Possible To Buy The House Back?

Because the house is already your own then there’s no point to buying it back. You need to understand that reverse mortgage Greenville is just a loan against your home. There’s no prepayment penalty. Plus, you could also repay your loan in any amount you prefer, voluntarily.

Is It Possible To Walk Away From Reverse Mortgages?

In case the balance on your outstanding loan is more than the current value of the property, you could no longer stay in your house. You can walk away or create a deed in lieu of a foreclosure. Reverse mortgage loans are known as non-recourse loans, which means you cannot transfer your debt to your heirs or estate.

Call Reverse Mortgage Specialist if you want to know more about reverse mortgage, the requirements, your obligations, and how to apply.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Reverse Mortgage After Death Part 1

One of the most popular questions when it comes to reverse mortgages is what happens with the loan and the home after the borrower’s death.

Reverse mortgages are meant to be the final loan that senior loan borrowers will make and that is why this question is always on top of the minds of many homeowners as well as their heirs since many of them want to keep the loan and their house for the rest of their lives.

In case they get approved for a reverse mortgage loan, they will be able to live in their houses without having to pay mortgage for life.

The majority of the borrowers know that the eligible principal limit or the benefit amount will depend on the youngest borrower’s age along with the HUD lending limits, home value, as well as the interest rates implemented during that time.

Those who did their research and are aware of this fact are worried about the changes that may happen on their loan once one borrower, whether younger or older, dies first. They’d like to know if the remaining spouse could stay in the house, if there will be any changes to the reverse mortgage loan, and what will be the effect on their heirs.

As a matter of fact, all borrowers who have heirs are almost always worried about what will happen to their mortgage and their homes once they pass away.

You should know that the terms do not change when the loan closes. The original terms remain if one of the loan borrowers has to leave the house or if one dies before the other one, regardless of the age of the borrower who’s remained.

Reverse Mortgage Vs. Traditional Loans

Reverse mortgage, as its name implies, is the reverse of a traditional mortgage. In the latter, the borrower makes monthly payments to the lender until the loan amount plus interest is settled. In a reverse mortgage, the lender pays the borrower the amount of the loan. The loan, interest and other charges accrue and will be due once the last borrower leaves the house permanently.

Although no repayment is due on a reverse mortgage, there’s no prepayment penalty and that means borrowers could opt to make payment in their preferred amount at any time without worrying about the penalty. But the borrower is not required to do such a thing until they permanently move out of the house or if they decide to sell their home.

However, borrowers must remember that they still need to pay the insurance and taxes of the house as well as the regular upkeep of their home. The requirements are the same as with a forward or traditional mortgage. If you don’t pay them, it will be considered as default under the loan’s terms.

What About The Interest?

There is a principal limit or maximum loan amount on every reverse mortgage loan. When it comes to how you receive the money and how fast the interest accrues will be up to you. More interest would accrue on the loan if you borrow more money and you borrow it earlier in the loan.

For instance, if you get a reverse mortgage loan under the line of credit option or payment option but you only draw a little every now and then, then the interest on your loan would not accrue as fast as those borrowers who take a lump sum on the whole amount.

This will make sure that the least amount of interest would accumulate and the balance is going to be the lowest possible once you pay back the loan. If you just want to settle an existing mortgage loan so you can stay in your house, if you don’t have any heir, then you can use the proceeds of the loan to may you live comfortably during your retirement years.

Call Reverse Mortgage Specialist now and learn more about the benefits of taking out a reverse mortgage.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Who Will Pay Back Your Reverse Mortgage?

Repayment is always a concern when it comes to any kind of loan. When is it due and who will pay it back? These are a few of the most common questions asked and they also apply to reverse mortgage loans. It’s best to take a first look at when a reverse mortgage need to be repaid if you wish to know the answer as to who needs to repay the loan. The time when the loan will be due would depend on different factors. They also determine the method of repayment and who’s responsible for repaying it.

When Is A Reverse Mortgage Due?

You don’t need to repay reverse mortgage loans until is due, though you need to deal with the homeowners insurance, property taxes, as well as the home maintenance costs. Provided that you follow these financial obligations, the loan won’t come due until you move out or sell the house, or upon your death. If the loan comes due under one of these situations, the one responsible for paying back the loan are as follows.

If You Move Out or Sell Your Home

Among the eligibility needs of the reverse mortgage loan is that your house should be your main residence. If your house is not your primary residence any more, meaning you live in the house for six months at most then your loan will become due. When this happens, you will be responsible for paying the loan back. Generally, the proceeds of the home sale can be used to pay the loan back. Any remaining amount from the sale will be yours to keep. Keep in mind that you pay only what you borrowed along with the interest that may have accrued as time goes by.

If You Die

A lot of people are concerned that their heirs would be left to pay back the loan after they die. Heirs will have a few options. If they want to keep the house, they could use the proceeds from the home sale to pay off the reverse mortgage in Greenville. Any remaining amount will be theirs to keep. They also have the option to sign the deed over to the lender and walk away from the house without any responsibility to sell the home or pay back the loan.

A Non-Recourse Loan

A reverse mortgage that is insured by the government is referred to as a non-recourse loan. This means, when the house sells for less that what’s owned on the loan, FHA insurance could cover the difference and not you or your heirs.

Call Reverse Mortgage Specialist now if you want to know more about reverse mortgages.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Is Refinancing A Reverse Mortgage Possible?

A reverse mortgage can provide homeowners who are at least 62 years old access to home equity. Just like a traditional mortgage, a reverse mortgage could be refinanced, and this move sometimes makes more sense.

Understanding Reverse Mortgages

A reverse mortgage is a type of loan that lets older borrowers tap into their home equity. Unlike a conventional mortgage, which asks the borrowers to pay a lender, a reverse mortgage requires the lender to make pay the borrower regularly.

Interest will accrue on the reverse mortgage loan with the repayment on the principal loan and interest deferred until you pass away, move out, or sell the home. This could be helpful in terms of supplementing your retirement income. However, it deducts equity from your house.

Types of Reverse Mortgages

There are a few types of reverse mortgages.

HECMs or Home Equity Conversion Mortgages – insured by the FHA or Federal Housing Administration. If you are looking to buy a new home then you should consider HECM for Purchase mortgages.

Proprietary Reverse Mortgages – similar to HECMs. The main difference is that they are not insured by the government.

Single Purpose Reverse Mortgages – are used for a single purchase

How Does Reverse Mortgage Refinance Works?

Knowing the process involved in a reverse mortgage refinance is helpful regardless of the reason why you want to have one.

Refinancing a reverse mortgage loan is comparable to refinancing a traditional mortgage. Basically, you are replacing your reverse mortgage with a new, different, and better loan. The new one might have a different interest rate or provide a different monthly payout, based on the financing terms.

You need to meet a certain set of criteria if you wish to qualify for a reverse mortgage refinance. There should be a definitive advantage for a lender to justify refinancing the reverse mortgage of a lender. This rule was set in place by the National Reverse Mortgage Lenders Association.

The rule states that when a reverse mortgage is refinanced, the rise in the principal amount should be equal or more than five times the closing cost of the loan. The loan proceeds should be equal to ore above 5% of the amount that is being refinanced.

Apart from that, homeowners is required to meet a seasoning requirement, which refers to the duration when you’ve held the mortgage. You could refinance if it’s been at least 18 months since you closed your original reverse mortgage.

The borrower must also qualify for a new reverse mortgage in Greenville. Fortunately, the criteria that is used to determine if a borrower qualifies or not for a reverse mortgage is the same with the requirements for refinancing.

The borrower requirements for HECMs are as follows:

• -      At least 62 years old
• -      You are using your home as your primary residence
• -      You own the house or you have paid a significant amount of the original mortgage.
• -      Not being a delinquent on your federal debt

-      Have the ability to fulfill your financial obligations that are related to the house like homeowners insurance, property taxes, and homeowners association fees.

The property also needs to meet the requirements set by the FHA. Basically, it means the owner must occupy one unit of the house. There shouldn’t be any safety or health hazards and the owner should have flood insurance if the property is located in a high risk area.

Call Reverse Mortgage Specialist for more information about reverse mortgage refinancing.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Michael Bloomberg Wants Reverse Mortgage Reforms

Billionaire and former New York Mayor Michael Bloomberg has decided to join the Democratic presidential primary. His decision and what he plans to do has made the headlines in recent weeks. However, there’s one thing that’s not getting that much attention and it involves his plan to enhance American’s retirement security. One of the primary topics he touched was reverse mortgage.

Proposed Reverse Mortgage Reforms

Minimum social security benefit

Bloomberg wants to add a new minimum social security benefit that would increase the payouts for 10% of seniors along with a stronger calculation of the cost of living benefits so retirees would cope better with inflation.

Develop a public option retirement plan

Common retirement plans like 401(k)s or IRAs have limitations. Bloomberg wants to create a public option plan that offers automatic contributions for employees who are not participating in a pension or 401(k). It is still not clear whether or not the public option retirement plan is voluntary for those who don’t want to save in a different qualified retirement accounts.

Lower Medicare costs, expand the coverage

Michael Bloomberg also plans to cap the cost of medications for seniors who don’t have such protection. The cap on the out of pocket expenditures on medications will be about $2,000 per year. Bloomberg wants Medicare’s coverage to be expanded so it would include hearing devices, vision exams, and dental care.

Reverse Mortgage Reforms

Bloomberg’s plan noted that people have equity in their homes and it is often the largest asset that they have once they reach their retirement age. However, they often do not use it to supplement their income inretirement.

There are several reasons why seniors are reluctant to do and one of the most common ones is the cost. Equity release products are usually unappealing and expensive and those are a few things why seniors are the target of unscrupulous players.

Bloomberg wants to create more affordable and simpler loans that are just like today’s federally insured reverse mortgage loan, which is also known as the Home Equity Conversion Mortgage.

He also wants to have advisory services to enhance financial literacy and help seniors during financial problems. The plan also includes subsidizing loans for seniors who have low income but are still qualified and promoting state property tax deferral programs.

It is clear that Bloomberg has ambitious plans. He wants to focus on the frustrating issue of retirement income security that a lot of Americans are facing today.

Call Reverse Mortgage Specialist if you want to know if a reverse mortgage loan is the best option for you.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

A Guide To The Basics Of Reverse Mortgage

A reverse mortgage is a kind of loan that can give you cash by tapping into the equity of your home. It may lack some of the lower rates and flexibility of other kinds of loans, however, they could be a great option in the right circumstances like if you are not planning to move or you won’t be leaving your house to your heirs.

Understanding Reverse Mortgage

Just like a standard mortgage, a reverse mortgage loan will use your house as a collateral. This type of loan is different in many ways. First of all, you will receive money rather than pay money to your lender. Then, the loan amount will grow as time passes by, contrary to shrinking with every monthly payment you would make on a typical mortgage.

The idea works just like a home equity loan or second mortgage, however, reverse mortgages are just available to homeowners who are at least 62 years old. You won’t have to repay this loan unless you decide to move out or if you die.

There are several sources for a reverse mortgage loan but one great option is the Home Equity Conversion Mortgage or HECM, which is available through the Federal Housing Administration. It is much less expensive for borrowers because they are backed by the government. Plus the rules for this kind of loan make it consumer friendly.

How Much Money Will You Get?

The amount of cash you’ll get from a reverse mortgage loan will depend on your home equity and the age of the youngest borrower. The more equity you have in your house, the more money can get. For many borrowers, it is ideal if they’ve been regularly paying their loan over many years and their mortgage is almost totally paid off. The youngest borrower’s age on the loan will affect the amount that you get. Older reverse mortgage borrowers will get more cash. But you have to be careful especially if you are tempted not to include somebody younger so you could get money. A younger spouse need to move out once the older borrower dies in case the younger person is not included on the loan.

How To Get Loan Payments?

You have a lot of options when it comes to how you can get your reverse mortgage Greenville loan payments. You can take the money in a lump sum. If you take this option, your loan will have a fixed interest rate and your loan balance will continue to grow over time while the interest accrues.

The other option is periodic, regular payments like once a month. These payments are called tenure payments and they can last for your whole life or you can receive them for a specific duration like 10 years.

You could also go for a lineof credit instead of taking the cash right away. This will let you draw the funds in case you need them. One good thing about this option is that you will only pay the interest on the money that you have borrowed, and that means your credit line could grow as time goes by. You can also use a combination of options like a lump sum and a line of credit.

Call Reverse Mortgage Specialist if you wish to know if this type of loan is the most suitable option for you.

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/

Understanding Reverse Mortgages

In case you are at least 62 years old and you would like to have some cash to pay off your mortgage, have an additional source of income, or perhaps fun your healthcare expenses – you should consider taking out a reverse mortgage. It lets you convert a part of your home equity into cash without the need to sell your house or pay extra monthly bills.

But you should take your time. A reverse mortgage loan can be quite complicated and may not be the best option for you. It could use up your home equity, which means less assets for you and your estate. In case you want to look for one, check the different kinds of reverse mortgages and compare them before you choose a company.

Types of Reverse Mortgage

When you are considering if a reverse mortgage is the best one for you, additionally find out which of the three kinds of reverse mortgage that is suitable for your needs.

Single purpose reverse mortgages – they are the least expensive reverse mortgage loan option. They are provided by some location and state government agencies, and non-profit organizations, however, they are not offered everywhere. This type of loan can be used for a single purpose, which the lender will determine. For instance, the lender could say the loan would only be used for home improvements, repairs, or to settle property taxes. The majority of homeowners with moderate or low income could qualify for this type of loan.

Proprietary reverse mortgages – these are private loans that are supported by the companies that created them. In case you have a home with a higher value, you might be able to get a much bigger loan advance from this kind of proprietary reverse mortgage loan. Therefore, if your house has a higher appraised value and you’ve got a small mortgage, then you may be able to qualify for more funds.

Home Equity Conversion Mortgages (HECMs) – these are reverse mortgages that are insured federally and are backed by the HUD or the U.S. Department of Housing and Urban Development. You can use an HECM loan for any purpose you want.

Proprietary reverse mortgagas and HECMs are costlier than conventional home loans. Plus, the upfront costs could be high. This is one factor that you need to think about especially if you are planning to stay in your house for a shorter time or you just want to borrow a small amount. The amount you could borrow with these two types of loans will depend on various factors like your age, the kind of reverse mortgage that you choose, your home’s appraised value, current interest rates, and assessment of your ability and willingness to pay homeowner’s insurance and property taxes.

Payment Options

There are several payment options to choose from when it comes to the HECM. It could be a single disbursement option, a term option, a tenure option, a line of credit, or a mix of line credit and monthly payments.

Call Reverse Mortgage Specialist if you wish to learn more about the different types of reverse mortgage loans. 

David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/