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Home equity planning

Reverse Mortgage Loans

Understand the options for turning home equity into retirement cash flow.

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Start with the basics

Introduction to Reverse Mortgage Loans

Many homeowners have found that a reverse mortgage loan is a great way for them to take advantage of the equity they have built up in their homes.

A reverse mortgage loan is different than a traditional mortgage. With a traditional mortgage loan you make monthly mortgage payments, but with a reverse mortgage loan the lender pays you money through monthly installments, a one-time lump sum payment, a line of credit or a combination of a line of credit and monthly installments. The money that you receive is dependent on your age, the value of your home and the current interest rate.

One of the great advantages of a reverse mortgage loan is that you are not required to pay the loan back until the home is no longer your primary residence or you fail to maintain the home, or fail to pay property taxes and/or homeowner's insurance or do not otherwise comply with the terms of the loan.

If you're aged 62 or older and own your home you might be eligible for a reverse mortgage loan. Contact us to find out more about reverse mortgage loans and ways to make it work for you, or apply now and start the process of tapping the equity in your home.

Protect your position

Are Reverse Mortgage Loans Safe?

You've worked hard to pay the mortgage on your home. With a reverse mortgage loan you can receive a portion of the equity that you earned. A federally insured HECM reverse mortgage loan can help you unlock that equity by increasing your monthly cash flow. Rest easy knowing you're protected because with a reverse mortgage loan you can:

  • Access the equity in your home and stay in your home as long as you want. However, if you move, pass away or fail to pay property taxes or homeowners insurance or otherwise fail to comply with the loan terms then you could be forced to sell your home or repay the loan.
  • Receive an annuity-like stream of cash flow for as long as you, the borrower(s), remain in the home, maintain the home, continue to stay current with property tax and homeowner's insurance payments and otherwise comply with the loan terms. Some borrowers elect to receive a lump-sum payment rather than the monthly payments.

Speak with one of our professionals today and learn how you can make the most of a reverse mortgage loan.

Make an informed choice

3 Reverse Mortgage Loan Questions to Consider

What is a Reverse Mortgage Loan?

A reverse mortgage loan is a loan designed to allow seniors to draw upon the equity in their homes. Seniors can select to receive the loan proceeds either by a lump sum payment, by monthly installments, as a line of credit or as a combination of a line of credit and monthly installments thus providing cash flow even after retirement. The reason this type of loan is called a "reverse mortgage loan" is because the loan proceeds are paid to the home owner. Eventually the money paid to the homeowner is repaid with interest, however the loan generally does not become due until the borrower passes away, sells the home, no longer maintains the home as the primary residence or fails to pay property taxes, fails to pay homeowners insurance or otherwise fails to comply with the loan terms.

Why should I get a Reverse Mortgage Loan?

Getting a reverse mortgage loan is a big step and needs to be carefully evaluated. Many people have found that by taking a reverse mortgage loan they avail themselves of the equity they have built in their home. Typically those who benefit most from a reverse mortgage loan are those who plan to stay in their homes over an extended period and have built a decent amount of equity in their homes. Contact one of our professionals today to find out if you have enough home equity to make a reverse mortgage loan a good decision for you. If you have a good amount of equity in your home and you plan on staying there for an extended period of time then a reverse mortgage loan might be right for you.

How do I qualify for a Reverse Mortgage Loan?

If you own your home and are 62 years of age or older you might be eligible to apply for a reverse mortgage loan. The home you are thinking of taking the reverse mortgage loan out on must be your primary residence. There are some conditions to what type of home may qualify: Typically single-family units are accepted; HUD-Approved Condominiums; most mobile homes and co-ops are generally not eligible. We can help you figure out if you're eligible for a reverse mortgage loan. Call us today!

From conversation to cash flow

Steps to getting a Reverse Mortgage Loan

Below is the most common process for getting a reverse mortgage loan. Our professionals are eager to help you understand the reverse mortgage loan process. Please contact us with any questions.

  1. 01

    Research Reverse Mortgage Loans

    Speak with a mortgage professional about reverse mortgage loan options. Familiarize yourself with the various types of reverse mortgage loans and pick the one that is right for you.

  2. 02

    Meet with a HUD approved counselor

    In order to receive a reverse mortgage loan you must meet with a HUD approved counselor who will help you understand what it means to have a reverse mortgage loan. Independent HUD counseling typically costs $125 and we would be happy to provide you with a list of HUD approved counselors in your area.

  3. 03

    Fill out our Reverse Mortgage Loan application

    After you've determined which reverse mortgage loan option best suits you, fill out our reverse mortgage loan application by contacting us. Your information is securely stored and transmitted.

  4. 04

    Your application is processed and your home is appraised

    While your application is being processed a licensed appraiser will determine if your house needs any kind of repair. Any problems must be fixed before you can be approved.

  5. 05

    Your loan reaches underwriting

    All details are worked out and your loan is underwritten. Additionally it will be determined whether you've been approved or not.

  6. 06

    Your loan reaches closing

    Once you are approved your loan will enter closing where you'll get the chance to review the terms and sign the paperwork.

  7. 07

    Receive your payments

    After closing you'll have three business days in which to cancel the loan. Once that grace period is up, you'll start to receive the reverse mortgage loan proceeds according to the manner that you have elected: one-time lump sum payment, monthly installments, as a line of credit or as a combination of a line of credit and monthly installments.

  8. 08

    Repaying your Reverse Mortgage Loan

    Your reverse mortgage loan becomes due under the following circumstances: homeowner death (unless the home continues to be the primary residence for a non-borrowing spouse); sale of home; the home is no longer the borrower or non-borrowing spouse's primary residence; failure to maintain insurance, property taxes or otherwise comply with loan terms; any other event of default (failure to pay property taxes, failure to keep the home in good repair, failure to insure the home, taking of new debt on the home, bankruptcy, abandonment or donation of the home, eminent domain).

Plan ahead

What about repaying a Reverse Mortgage Loan?

The very nature of a reverse mortgage loan can be confusing. With a reverse mortgage loan, lenders pay you either in monthly installments, with one lump sum, a line of credit or as a combination of a line of credit and monthly installments. The following lists provide information regarding repayment of a reverse mortgage loan.

A reverse mortgage loan comes due under the following conditions:

  • Death of the homeowner or last surviving eligible non-borrowing spouse
  • Upon sale of the home by the homeowner
  • If the homeowner lives elsewhere for 12 consecutive months (i.e. assisted living home)
  • Upon an instance of default.

When the reverse mortgage loan becomes due there are two options for paying it off:

  • Proceeds from the sale of the home
  • The homeowner or heirs of the homeowner can refinance the loan

Reasons a borrower may find themselves in default include:

  • Failure to pay property taxes
  • Failure to keep the home in good repair
  • Failure to insure the home
  • Taking of new debt on the home
  • Bankruptcy
  • Abandonment or donation of the home
  • Eminent domain

Understand the fees

What are the costs of getting a Reverse Mortgage Loan?

Much like a traditional mortgage, a reverse mortgage loan does have fees associated with securing it. The following is a list explaining common fees you may have to pay when getting your reverse mortgage loan.

Origination Fee

The origination fee covers the lender's operating expenses associated with making the reverse mortgage loan. This can include things like overhead, marketing and title searches. A lender can charge a HECM origination fee up to $2,500 if your home is valued at less than $125,000. If your home is valued at more than $125,000 lenders can charge 2% of the first $200,000 of your home's value plus 1% of the amount over $200,000 up to a cap of $6,000.

Appraisal Fees

Before a reverse mortgage loan can be approved an appraiser will come to your home and inspect it. The appraiser will be looking to determine the worth of your home based mostly on condition, location and the current market situation. If the appraiser uncovers a significant problem you will be required to hire a contractor to fix the problem before obtaining your reverse mortgage loan. That same appraiser will come out again and re-inspect the property.

Mortgage Insurance Premium

The mortgage insurance premium is a fee associated with the HECM reverse mortgage loan. The initial MIP will be .5 percent or 2.5 percent, depending on the amount you request to be disbursed. Additionally, you will be charged an annual MIP that equals 1.25% of the loan balance. The mortgage insurance premium guarantees that you will continue to receive your monthly payments and that you will never owe more than what your home is worth once the loan reaches maturity unless you choose to pay off the loan while you or a non-borrowing spouse are still living in the home.

Closing Costs

Closing costs that are generally included in a reverse mortgage loan are: credit report, document preparation, flood zone certification, termite inspection, attorney's fee and title examination, recording fees, escrow/settlement fee, other fees.

These materials are not from HUD or FHA and were not approved by HUD or a government agency.

Reverse mortgage guidance

Looking for a Reverse Mortgage Loan?

214-817-0636seth@ironoaklending.com
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