Tag: FHA insured

Banks vs Brokers vs Direct Lenders – Navigating HECM Reverse Mortgage Professionals

reverse mortgage advisor connecticutSo, who are these HECM Reverse Mortgage professionals, anyway?  And how do you know which is the right fit for you?  

I was recently asked by a borrower’s attorney to take over a loan application, because after two months nothing, and I do mean nothing, had been done by the original reverse mortgage 
broker!  It’s frustrating for me to see situations like this when I know full well that borrowers have alternatives – but the borrowers usually don’t know this.  Here’s some information I think anyone considering a HECM reverse mortgage needs to know about the various professionals who work in the industry:

Banks and Credit Unions – Most local banks and credit unions do not offer reverse mortgage loans, although sometimes the larger ones will.  Unfortunately seeking a loan through them can often mean little or no face-to-face time, and it’s not uncommon for these banks to leave the industry down the road.  At one time Wells Fargo and Bank of America were in the business, but they quit, leaving their borrowers with loans that few employees can understand. 

 Brokers – A reverse mortgage broker is a third party individual that is licensed by the state but doesn’t work directly with a lender, instead they essentially shop the marketplace.  When working with a broker, borrowers will pay higher fees because they will have to cover the costs of the broker!  In addition, because all transactions run through a third party, things can easily get slowed down – or even stalled – like in the situation I mentioned above.   

Direct Lender Advisors – This is the category I fall into.  Working directly with a lender that specializes in FHA insured HECM reverse mortgages, such as Retirement Funding Solutions, I’m able to offer local, personal, face-to-face time with clients, and eliminate the need for costly third-party fees.  (Be forewarned most lenders do not offer face-to-face meetings or allow you to work with the attorney of your choice.)  I’m able to do all this while ensuring the smoothest, most efficient transaction possible because I am handling the loan and not farming it out to another company.

HECM reverse mortgages are available to individuals and married couples age 62 and older.  These FHA insured loans allow homeowners to live mortgage and loan payment free until they pass away, permanently leave the home (meaning 12 consecutive months), or they default on financial responsibilities associated with the home, such as property taxes or homeowner’s insurance.  The funds are available via monthly installments, a line of credit, a lump sum, or even to purchase a home

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

Today Show : Part 2 – Is A HECM Reverse Mortgage Right For Your Aging Parents?

Recently, financial expert, Jean Chatzky, did a three part series on the Today Show called “Taking Care of Mom & Dad”.  Each of these segments specifically touched on real questions adult children have regarding what to expect as their parents age.

The video featured here is Part 2 – How to Handle the Cost of Aging Parents: Is a Reverse Mortgage Right For You?

Take a few minutes to watch this well done, informative short video.  Find Part 1 here, and Part 3 here

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

6 Reverse Mortgage Myths That Need Debunked

reverse mortgage advisor connecticutThe HECM Reverse Mortgage program was created to give our retiring generation a way to keep their homes and manage the ever increasing costs of life in America after working long and hard over the years. It is an option that could be just right for you. All applicants are required to participate in HUD approved counseling to ensure all their questions and concerns are addressed. Working with a reputable reverse mortgage advisor will also be critical in the process, as this person should be your advocate – even telling you when a reverse mortgage may be wrong for you.

Let’s unravel the myths floating around about what a reverse mortgage is and what it does.  Here are a few myth busting facts:

Myth #1: Reverse mortgages are only for poor people.

Fact: Many retirees use reverse mortgage as a way to fulfill their desires for retirement, or to help grandchildren with college, or even to move into their dream home.


Myth #2:
It’s free money.

Fact: It is a loan specialized for those 62 years old and older that does not need to be paid back until the last borrower passes away or leaves the home permanently, or if the borrower defaults on property taxes or homeowners insurance.  If anyone attempts to market a reverse mortgage as “free money”, beware as it is likely a scam.


Myth #3:
 The bank owns your home.

Fact: The title of your home stays in your hands, and you own it just like you would with a conventional mortgage.  


Myth #4:
It is not a safe program.

Fact: Reverse mortgages are FHA insured and fully guaranteed – regardless of how you receive the payout.


Myth #5:
My equity is safe if I don’t use a reverse mortgage right now.

Fact: Your equity is dependent upon the housing market, which is always changing.  And as markets improve, home values continue to rise, so even if you have a reverse mortgage, your equity can still increase – equity that will be available to heirs when the loan comes payable.


Myth #6:
 If I’m married, my spouse will lose the home if I pass away.

Fact:  Married couples can both be on the loan if both are 62 or older.  There are many ways to ensure both spouses are not at risk.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

Should Your Elderly Parent Age In Place?

reverse mortgage advisor connecticutAs you watch your parents or loved ones age, it can sometimes be a struggle to determine the best option for their long term housing. Should they age in place in their home? Should you make space in your home for them? Should they move to a long-term care facility? Or should they move to a home that more adequately suits their changing needs?

To better guide you in the right direction, here are some questions to ask yourself:

• Are they able to get around by him or herself? Are there stairs in the home?

• Is this person able to take medications without assistance? Is there a health concern that would require more regular supervision, such as Alzheimer’s or Parkinson’s?

 • Is your parent able to manage mortgage payments, home-owners insurance payments, and property taxes. Is the home outdated and in need of frequent repairs – such as a furnace, roofing, electricity?

• Where is this home located? Is it in close proximity to relatives, hospitals, etc? Or is it secluded and away from town?

• Is this person lonely? Has he or she suffered the loss of a spouse? Does he or she have a solid social group or close friends?

Based on your answers to these questions, aging in place may be an option and a HECM reverse mortgage can help to fund it. Reverse mortgages allow homeowners age 62 and older to access equity in their home. The homeowner retains the title and remains in the home. With a reverse mortgage homeowners can lessen the financial burden of mortgage repayment and, if needed, in home medical care.  All reverse mortgages are government guaranteed with an FHA backed loan and no repayment is due until the last borrower passes away or permanently leaves the home. At that time there are several options that include keeping the home in the family.

If selling the current residence and moving into a new home is a more reasonable route, a HECM Reverse Mortgage for Purchase has many perks including living mortgage payment free in the new home.

Often times adult children encourage their elderly loved one to move in with them, not taking into account that this person will be leaving everything that is familiar, including their home, neighborhood, friends and social circles. Before making this decision, consider whether the move will be a strain on the family of which this person will be joining or the person who will be making the move. Depression can be cause for concern with the elderly and interrupting a solid routine or social interaction and hobbies can often make this concern a reality.

If this person has medical concerns, considering live-in care or a long term care facility may be the best option. There are many outlets to help guide you in the best direction when making a decision on the proper route or facility.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

What Exactly Is A Reverse Mortgage Line of Credit?

reverse mortgage advisor connecticutReverse mortgages aren’t new, but the shifting perspective on them certainly is.  After undergoing various regulation changes the past couple years, everyone is taking a second look.  Real estate agents are seeking more information on the Reverse Mortgage for Purchase so they can offer this option to their senior buyers.  Adult children are realizing the myths they’d heard over the years are just that – myths.  And now retirement experts are suggesting adding home equity into the equation when helping retirees plan for their golden years.

Reverse mortgages are very versatile when it comes to ways to access funds, but this article is going to focus on one that is quickly gaining in popularity – the HECM Reverse Mortgage Line of Credit.

What is a Reverse Mortgage Line of Credit?

The line of credit option allows homeowners to tap into the equity of their home and have access to the funds whenever needed, but unlike a lump sum or monthly payments, they don’t have to withdraw any funds at all and can keep it as a safety net.  Or the funds can be used when needed to supplement retirement income.  The options are endless. The best part?  There are no loan payments and the loan does not come due until the last borrower leaves the home, or if property taxes or homeowners insurance become grossly delinquent.

How is the amount on a line of credit determined?

Just like all reverse mortgages, the amount is determined based on the age of the borrower and the appraised value of the home.  The older the borrower and the more the home is worth, the larger the line of credit will initially be.  Borrowers also are not required to use all the available equity in their home as the line of credit, and they have options to combine it with other funding sources such as monthly installments or even a home purchase.

Will the line of credit funding amount ever change?  

Yes and no.  Unlike other reverse mortgage funding options, a line of credit will increase at a compounding rate determine by HUD – and on the flip side, it will never decrease even if home values depreciate.

Why get a Line of Credit now rather than wait until I’m sure I need it?  

Retirement experts are recommending to many clients to include the reverse mortgage line of credit in their retirement portfolios from the get-go for various reasons.  One, the housing market is strong right now and appraised home values are high.  Two, as the years go on, these programs change and it may not be available in 10 years, but anyone who has an already established line of credit will always be ‘grandfathered’ into the program, even if it is eliminated in the future.  And three, in the case of economic downturn where investments are affected, having the line of credit immediately available can be a future safety net.

Is a Reverse Mortgage Line of Credit FHA Insured?

Typically yes, as long you are working with a reputable reverse mortgage lender, the line of credit will be FHA insured just like any other reverse mortgage product.  This means there are protections and guarantees in place for the borrower that will never falter.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

What Happens to a Reverse Mortgage After the Owners Pass?

reverse mortgage advisor connecticutA common question and concern surrounding a HECM reverse mortgage in Connecticut is what will happen to the home after the homeowners pass away?  Will the bank take possession?  Will it be allowed as inheritance?  Will it be possible to keep the home in the family?

These are very valid concerns – so I’d like to offer some clear and concise guidance.

When the last homeowner passes, whether we’re talking about you or a loved one, the home will transfer into the estate or a specific person according  to the wishes expressed in the homeowner’s will.  At this time there are three main options:

1.  Pay off the remainder of the loan

Depending on the amount of equity that still exists in the home, the financial situation of the family, and just the overall ability of those involved, this may or may not be a feasible option.  It’s not uncommon for a portion of life insurance to be used in this manner.  Because theses loans are FHA insured, no one will ever owe more than the home appraises for.

2. Obtain a conventional loan.

Many mortgage brokers are familiar with the reverse mortgage process and the right broker will be able to help those in need identify the best route in obtaining a conventional loan and keeping the home.

3. Sell the home

The final option is to sell the home.  When there is not a desire to keep the home, the heirs can sell the home.  If the home sells for less than the loan amount, the FHA insurance will cover the difference.  If the home sells for more than the loan amount, the remaining equity will end up in the hands of the heirs.

One last note, as long as the communication lines remain open, the bank will typically allow up to one year to help with the transition.  This one year is allotted in three month increments.

Reverse mortgage is an individualized, specialized loan for those 62 and over that allows older homeowners to tap into the equity of their home while living mortgage and loan payment free.  The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home. Working with an experienced and reputable Connecticut reverse mortgage lender is a must.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.

 

What is a FHA Insured Reverse Mortgage Loan?

reverse mortgage advisor connecticutIf you’ve taken the time to learn even a little bit about a Connecticut reverse mortgage, it’s likely you’ve heard the term “FHA insured” at least a couple of times.  But what exactly does it mean?

Homeowners 62 and over, with significant equity in their home, may be eligible for a reverse mortgage.  These loans are typically insured by the FHA and provide non-taxable income to the borrowers based on the available equity in the home.  The more equity and the older the borrower, the more funds available.  The funds can be accessed via a line of credit, monthly installments, a lump sum, and even can be wrapped into the purchase of a new home.  The borrower can always use the funds for whatever they deem fit.

The homeowner will live mortgage payment free for as long as they remain in the home, although they will have a few financial obligations related to the house such as homeowners insurance, property taxes, utilities, and HOA fees.  As long as the borrowers keeps current on these few obligations, they cannot be evicted from the home or made to repay the loan.  The loan comes due once the last borrower has left the home for 12 consecutive months or passes away.  At this time the loan will be due and payable with time allotted to allow for transitions.  This is where the FHA insurance comes in.

In the case of a death, the home with pass onto the heirs.  At this time they have two options – 1) Pay off the loan and keep the home (often through life insurance or sale of another asset), or 2) Sell the home.

In the scenario of loan repayment the heirs will never have to repay any more than the home is appraised for.  They will only be required to pay 95% of the appraised home value or the full amount of the loan, whichever is less.  Any amount due on the loan above the appraised amount will be covered by the FHA insurance and no one will be held liable.

In the case of a home sale, the heirs will never be required to pay more on the loan than the home sells for as long as the sale price is at least 95% of the appraised value.  Any remaining balance will be covered by the FHA insurance.  On the other hand, if the home sells for more than the loan balance, the heirs will keep any remaining funds.   This is especially important as over the years the housing market shifts.

Sara Cornwall is a local Reverse Mortgage Advisor serving the entire state of Connecticut. Contact Sara and learn if reverse mortgage is right for you.