Commentary: The reverse mortgage is one of the most misunderstood mortgage products around. So what is it exactly? https://t.co/sP1oxOo4Ap : newsbotMARKET

Commentary: The reverse mortgage is one of the most misunderstood mortgage products around. So what is it exactly? : newsbotMARKET

Correct – there are may misconceptions. First it makes sense to give a more basic description of the program – the Reverse Mortgage is a “Home Equity Conversion Mortgage,” referred now as a “HECM,” which means, the equity in a home (the difference between value, vs mortgage liens) is converted into $$ for your use – I.E., you have “paid the house,” much of your life, so now the house “pays” you!”

  1. The HECM is insured by FHA and HUD allows, in the combination, that the loan is a “non-recourse loan (heirs or, anyone with an interest in the primary residence, cannot be chased for any shortage, nor the borrowers, should they expire, leave, etc., if the loan becomes in default), – there is more owed on the mortgage than the home is worth.

  2. There are many other “protections,” – all seniors must obtain a HUD counseling session – via phone, to make sure the program suggested is understood by the borrowers, and at the final signing, of course there is a Federally required “Right of Recession,” giving the borrower’s 3 business days,” to finally confirm their desire to or not to proceed.

  3. Title does not leave the borrowers, during the life of the loan.

  4. Income taxes do not need to be paid on the mortgage loan, since proceeds of a loan are not considered income. (You may want to consult a Financial Counselor for details).

  5. “If I have a mortgage, I can’t qualify,” not so, since many seniors pay off their mortgages to remove the monthly principal and interest payments (taxes, homeowner’s insurance and HOA fees(if applicable) must be kept current.

  6. The funds may be spent for any legal purpose, or all or a portion may remain in a Line-of-Credit, which takes the annual average balance and adds more funds each year, according to the original loan documents – many people do not know that the funds used from the Line-of-Credit, may be reinvested back into that Line-of-Credit, up tp their original balance at the time funded.

Read about:   Is a Split Mortgage a Good Choice for You?

The above does not even scratch the surface of how a HECM can benefit seniors – there are numerous ways to receive the funds, which allows the “Certified Reverse Mortgage Professionals, CRMP,” to tailor make the program for each need. In my case, I have closed over 100 HECM’s in over 20 States in the last 13 years, so many scenarios have occurred.

Please do not hesitate to ask another question or a more specific question – contact me at [email protected] for a private instant estimate of your, your parents, grandparents, friends situation and needs. Everyone knows someone in need of financial help!

2) There are many other “protections,” – all seniors must obtain a HUD counseling session – via phone, to make sure the program suggested is understood by the borrowers, and at the final signing, of course there is a Federally required “Right of Recession,” giving the borrower’s 3 business days, to finally confirm their desire to or not to proceed.

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