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About Reverse Mortgages

Reverse mortgages are only available for borrower that are 62 or older.  They provide the older homeowner with the benefit of staying in their own home but, not having an actual monthly mortgage payment and potentially using the equity in the home into supplemental income.  There are pros and cons to all mortgages and a Reverse Mortgage is no different.  


Pros
 Cons
Borrower can receive a monthly or yearly payment from the equity in the home to supplement their income
A Reverse Mortgage is an FHA loan.  Due to this, there is FHA MI to cover with the loan
 The Borrower still owns the home and can remain in it as long as they need to
 If the borrower wants more cash/equity available the best option for this is an ARM loan.  Fixed rates are also available
 The debt/mortgage is capped and will not exceed market value.  
 Foreclosure can still occur of property taxes, HOA and HOI are not paid as agreed
 The heirs can keep the house and refinance the loan or sell the house to settle the loan and keep any remaining funds.  If the home isn't worth enough to cover the loan, no debt will pass to them.
  Borrower must have equity available to utilize the Reverse Mortgage program

The Approval Process

Reverse mortgages are not for every borrower over the age of 62.  To help borrowers determine if they want to proceed with a reverse (HECM) mortgage, there is a counseling requirement.  Any borrower considering a HECM mortgage must taking counseling before we can proceed.  Our FSB LO (Pam Clement) will provide them with the loan options available to them.  Then the counseling will be required to take place before Pam can move forward with the borrower.   The counseling reviews the pros & cons in conjunction with the borrower's current situation and helps them get the education about the loan program they need to decide if they wish to proceed.  

If they do wish to proceed, they provide proof of the counseling to our FSB Loan Officer and Pam begins the loan disclosure process.  The loan proceeds as expected with normal processing, appraisal and title taking place.  Closing must occur with a title company familiar with Reverse Mortgages.