Tag: owners pass away

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.

Reverse Mortgage for the Married Couple

reverse mortgage advisor connecticutIf you’re married and have been looking into a reverse mortgage, it’s not unlikely the question keeps arising: ‘What about my spouse?’  This is a perfect starting point for understanding the long term effects of taking out a reverse mortgage as a couple.

Here are a few points to understand:

• As long as both spouses are age 62 or older, they can both be on the loan.  If only one spouse is over the required age, a loan can still be obtained and there are some protections in place for the ineligible spouse.

• The reverse mortgage amount is calculated from the age of the youngest borrower. The older the age, the more money is available.

• If both are on the loan, if one spouse needs to leave the home permanently, such as to move into a health care facility, but the other stays in the home, the reverse mortgage will continue as originated.

• If both are on the loan, and one spouse passes away, while it is true the remaining spouse will continue on with the reverse mortgage unscathed, things will change if they remarry. While remarrying will not affect the original borrower, it can affect the new spouse if the borrower were to pass away or leave the home permanently.  Reverse mortgage does not include the second spouse automatically.  Refinancing or adding the new spouse would have to be considered.

If you are married and considering a reverse mortgage choose a reputable reverse mortgage lender to work with. They can lay out all your options and help you see the long term picture of what will happen in all the different possible scenarios.  It is also especially important to make sure everyone feels comfortable and no one is being pressured into a scenario that could potentially end badly if the proper precautions are not put into place.

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.