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Reverse Mortgages: How seniors can tap equity for extra cash

If you're a senior, looking to cash out your home equity without having to worry about monthly payments, a reverse mortgage is what you may need. If you'd like to know how a reverse mortgage can help you, and what it's all about, check out the reverse mortgage information below:



What is a reverse mortgage?

A Reverse mortgage (reverse equity mortgages) is a home loan that provides you with a steady flow of tax-free income either in installments or in lump sum. Since the loan provides an easy flow of cash, it is the preferred choice of many seniors in the country.


How does a reverse mortgage work?

It's just the reverse of a traditional mortgage which requires monthly payments. With a reverse mortgage, your debt accumulates as the bank doesn't collect the payments till the loan period ends or you or your heirs sell. Here are 5 things you should be aware of before you apply for a reverse equity mortgage:
  1. How to get the cash:
    You can get the reverse mortgage loan funds in different ways.
    • The lender or the company can provide you with a single payment.
    • You may ask for monthly cash advances.
    • You can apply for a line-of-credit that gives you the opportunity to withdraw a required amount of cash whenever you are in need.
    • The lender may allow for a combination of monthly cash advances as well as "credit-line account".
  2. Reverse mortgage limit:
    The maximum loan amount offered ranges from $200,160 to $362,790, depending on the county you live in. However under the 2008 New Housing Bill, the loan limit has been raised to $417,000. For high cost housing areas, the limit is further raised to $625,000. However, the loan amount that you will qualify for, depends upon the factors given below:
    • Age of the youngest borrower
    • The appraised value of your home
    • The equity built up in your home
    • What loan program you choose
    • How you want to get the loan funds

    Besides the above factors, the loan limit may also depend upon current interest rates and closing costs on home loans in your area.

  3. How to qualify for the loan:
    Unlike other loan options, there is no minimum income or credit requirement to qualify for a reverse mortgage. However, if you have unpaid debt on your home, it should be paid off before you apply for a reverse mortgage or else paid off as soon as you get the loan proceeds. Check out if you are eligible for reverse mortgages.
  4. Loan types you can apply for:
    You'll find a variety of loan products available in the market. They're the FHA-insured Home equity conversion mortgage (HECM), the Home Keeper Mortgage offered by Fannie Mae approved lenders, and others. You need to compare these programs and decide on the one that suits you. Check out more on Reverse Mortgages Comparison.
  5. Reverse mortgage interest rate:
    These loans are mostly adjustable rate mortgages that adjust on a monthly, semi-annual, or annual basis. The interest rates are usually based on the 1 year U.S. Treasury (T-Bill) or the LIBOR index. However, you'll also find fixed rate HECMs offered by certain lenders. However, rate changes do not affect the principal you get; rather it affects the amount you owe.


What are the advantages of a reverse mortgage?

Reverse mortgages assisted countless homeowners improve their quality of life upon retirement. These are very flexible financial planning products with limited restrictions attached to them. Key benefits of this offer are listed below-
  1. No restrictions on the use of money: Money that you receive through a reverse mortgage can be utilized for whatever purposes you want. You can use it for funding the education of a family member, for traveling purposes, for meeting the basic necessities of life or for anything else. You can also park the amount in another account as savings for the rainy days.
  2. Less risks of default:In a reverse mortgage, there is no chance of losing your home for non-payment. Whereas, in case of a home equity loan, you may lose your home because of non-payment. Again, reverse mortgage lenders don’t have any claim on your other assets and income.
  3. Federally guaranteed:There are a variety of loan products available in the market. The most widely used reverse mortgage is the federally guaranteed home equity conversion mortgages (HECM). HECMs are managed by the Department of Housing and Urban Affairs. Since these offers are federally backed, you will continue to receive payments even if the reverse mortgage lenders default.
  4. Tax benefits:Reverse mortgage is treated as a loan. The money that you receive through this route is tax-free. This is regardless of whether you receive the money in monthly basis or in lump sum amount.
  5. Retains home ownership:As long as you stay in the house, you retain ownership of the house. However, you are responsible for paying for the property taxes, insurance and maintenance.


Are there disadvantages or dangers of reverse mortgages?

There are 3 reverse mortgage pitfalls to watch out for:
  1. Rising debt and falling equity:
    A traditional mortgage requires you to make payments and build up equity. But reverse mortgages reduce your equity because you don't need to make monthly payments, and causes your mortgage debt ratio to increase. Your equity gets lower unless your home value appreciates. Thus, reverse mortgages are often known as "rising debt and falling equity" loans.

    Here's an example on "Rising debt and falling equity".

    Monthly Loan Amount: $2,000
    Yearly Loan Advance: $24,000
    Yearly Interest Rate:
    8%
    Original Home Value:
    $250,000
    Appreciation Rate of Home Value:
    5% per annum

    End of Year Principal Amount ($) Total Interest ($) Loan Amount ($) Total Home Value ($) Home Equity ($)
    (Total Home Value - Loan Amount)
    1 24,000 1,052 25,052 262,500 237,448
    2 48,000 4,102 52,102 275,625 223,523
    3 72,000 9,224 81,224 289,406 208,182
    4 96,000 16,495 112,495 303,876 191,381
    5 120,000 25,990 145,990 319,070 173,080

    As the above calculation shows, even if your home value goes up, it may not be enough to raise your home equity. The rate of appreciation in the home value should be high enough so that even if your loan balance increases, your home equity won't go down easily.

    Now, when the appreciation isn't high enough, your equity will reduce, and as a result you may not have a home to leave for your heirs. This is because your heirs will only receive your home when the value of the home is more than what you owe.

  2. Rates and closing costs:
    The rates being adjustable can be higher at times thereby raising your interest and hence your debt because you aren't paying monthly. Some reverse mortgages have high closing costs, although under the new housing laws, the costs have been cut down and capped so that older homeowners can afford to get a reverse loan.
  3. Eligibility for Medicaid benefits: The loan proceeds may affect your eligibility to receive Medicaid benefits and Supplemental Social Security income (SSI). However, you can still qualify for Medicare and Social Security Income.

In spite of the reverse mortgage cons, these loans are preferable options when it comes to paying for your healthcare costs, remodeling your home, making a big purchase, or changing your lifestyle. Moreover, if you have debts to pay off, need money for someone's education, or wish to plan for a vacation, reverse mortgages are worth considering.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am thinking of taking a reverse mortgage. I am having talks with some lenders but each of them has been giving a different estimate. Can you let me know about the costs?

Denny

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Different costs that are associated with reverse mortgages are much like that of traditional mortgage. These include loan originating fees, cost of property appraisal and credit report, FHA mortgage insurance premium and various other costs. Except the loan origination fee, all other costs can be included within the mortgage amount.

A reverse mortgage representative can provide you with a personalized cost estimate.

Zeal_Deal

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Jessica's picture
Jessica | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Denny,

The following fees are charged in a reverse mortgage transaction.

[b:1f30737f74]Origination Fee: [/b:1f30737f74]
The origination fee makes up for the lender's charges for making the loan, marketing costs and others. The origination fee is about 2% of the maximum loan amount (county FHA limit) of an HECM or any other reverse mortgage. Since the FHA limit varies from low cost to high cost areas, so the origination fee also changes in amount. The origination fee is often financed as part of the mortgage.

[b:1f30737f74]Mortgage Insurance Premium:[/b:1f30737f74]
The HECM program requires borrowers to pay the mortgage insurance premium which ensures that you receive the loan advances even when your lender or loan servicer is out of business. This premium amounts to 2% of the maximum loan amount or home value, whichever is less, along with an annual premium equal to 0.5% of the loan balance. The MIP guarantees that you will never owe more than your home value while you pay off the reverse mortgage.

[b:1f30737f74]Appraisal Fee: [/b:1f30737f74]
While you apply for a reverse mortgage, you need an appraiser to assess the current market value of your home. In return, he charges a fee between $300-$400. The appraiser checks for property defects and finds out whether your home structure complies with the Federal regulations. The appraiser may charge a fee for the second time when he conduct a second inspection of your property to check whether the repair work is completed. The fee for the second inspection ranges between $50-$75.

[b:1f30737f74]Other closing costs:[/b:1f30737f74] Apart from the origination fee, mortgage insurance premium and appraisal fee, there are various costs that are paid at the time of closing. These comprise of credit report fee, escrow fee, courier fee, pest infection fee, recording fee, document preparation fee, survey fee and title insurance fee. The sections on Closing costs and Mortgage associated fees will provide you with the details of these costs.

Along with the above costs, you will also have to pay a servicing fee for the reverse mortgage.

[b:1f30737f74]Servicing set-aside fee:[/b:1f30737f74]
This includes an amount which is deducted from the loan limit at the time of closing and makes up for the costs of servicing your account. The loan servicer may charge a monthly fee that can range from $30 to $35. This kind of fee is charged depending upon the borrower's age and life expectancy.

For more information you can refer to our section on reverse mortgage costs.

Regards,
Jessica.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I noticed somewhere that one couldn't use a reverse mortgage on a mobil home... In my case I put a double wide on two acres. This acreage is worth 60 thousand. This acreage boarders the National Forest and a State Highway.. I remodeled the double wide to look like a standard stick built home. I owe 29 thousand on the double wide and also owe around $14,000 on credit cards that I want to pay off.. Also want to build a new living room on the house and buy a new transmission for my car that I've been told will cost $4000. I am 69 years old, have served in the Army for three year and was given an honerable discharged as a non-commissioned officer. My emplyment through out the years was as a Title Inusrance officer and Real Estate Broker. Can you help me if I applied for a $75,000 loan using a Reverse mortgage.

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Mr. Norman,

Welcome to MortgageFit Forums.

It's an honor for me to communicate with a respectable person like you who served our nation in the best possible way. I shall be pleased with myself if I can help you.

Reverse mortgages are offered to double wide mobile homes by most lenders which are affixed. So, I don't think it will be a problem for you to qualify.

Can you please sign up with us at which is free just to get you registered for further communication?

If you wish you can leave your phone no. and area code with us here to let our customer care department discuss with you regarding the deal.

Please visit our section on mobile home reverse mortgage for more information.

If you have any more doubts you can post it here.

God bless you.

Thanks,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am a senior citizen living on less than $700 a month in social payments. My question to you is that if I get a reverse mortgage then what will happen to the $18,000 I now own on a [url=http://www.mortgagefit.com/home-equity.html]home equity loan[/url]? And my daughter says that I will lose all the equity in my home. Is it true?

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

There are different types of mortgage which provide a lump sum of advance cash. And therefore you can pay off the existing home equity loan with reverse mortgage.
[quote:4bb5970e3f]And my daughter says that I will lose all the equity in my home. Is it true?[/quote:4bb5970e3f]And regarding equity, with a reverse mortgage you are extracting value from your home that will be repaid when the property is sold. So in a way you are losing the equity but at the same time you will be gaining some cash.

Reverse mortgages tend to be expensive and seems to be the last financial option. so before you proceed towards getting a reverse mortgage, check with a local housing group or HUD counselor to make sure that you are considering a reverse mortgage product that does not include a claim against your growing home value. You can also seek help from an attorney who specializes in elder law.

Thanks,
Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Can you get a reverse mortgage on a condo unit?

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Mike,

Welcome to MortgageFit Forums.

Yes, there are some programs in a reverse mortgage that are offered against condominiums.

Feel free to ask if you have more queries.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

are we able to use the reverse mortgage proceeds on a second home mainly used for a few months of the year.

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

The proceeds on reverse mortgages can be used to buy a second home. As long as the home on which the reverse mortgage is taken is your primary residence, you shouldn't face any problems with utilizing the proceeds of the mortgage.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i am looking into a reverse mortgage for my mother. Her house is valued at around 90,000 and she owes 12000. I read that the loan will not affect her disability benefits, but that it may affect her medicaid (the cost of her medicine would exceed 600.00 a month w/o medicaid. What is the limit that she could have and yet not affect her medicaid benefits.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Use the loan calculator to see if she qualifies.

[color=red:6cbee1e5a2][size=9:6cbee1e5a2][Edited by Jessica as per forum rules. Thanks.][/color:6cbee1e5a2][/size:6cbee1e5a2]

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Linda,

Welcome to MortgageFit Forums.

Your mother's medicaid benefits and SSI is not going to be affected as long as she is spending the monthly cash advances fully and not accumulating.

For example your mother receives $5000 for home repairs and spends the amount within the same month; her resources are not going to be affected.

If her liquid resources exceed $2000, then she will be ineligible to receive a medicaid. Also the lump sum that she can retain without disturbing the benefits depends on the amount of other liquid resources that she is already having.

I shall suggest you to check with your local Area Agency and consult your financial advisor to know the exact guideline based on your detail.

Feel free to ask if you have any more doubts.

God bless you.

For MortgageFit,
Samantha

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tim.paul's picture
tim.paul | Joined: February 19, 2006 05:37 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Linda -

Be sure to consider all options. You don't state your mother's age, but with the relatively small home value, existing mortgage payoff and steep reverse mortgage origination costs, this option may not generate much either as a lump sum or monthly payment.

There's lots of online calculators where you can tryout different scenarios. I plugged in for a 75-year old and the best result was $39,000 lump sum or $266/month for life. Of course your mother also gains by getting rid of the existing mortgage payment.

If your mother is at an age or health status that it seems likely she would remain in the home for 7 years or less, a home equity loan or line of credit requiring interest-only payments for 10 years may be preferable. She would avoid the high origination costs but would have to make monthly interest payments that would grow over time. These payments could be made by drawing on the credit line itself

Since she has good equity and is making payments on the remaining mortgage, she should be able to find a lender.

Reverse mortgages can be great tools in many situations, but there are other options that can be more cost-effetive at times. Good luck.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

please send me info on your program for seniors. I am a social worker and have few clients that could benefit from your program. Most of them are up in age and can't cont to pay there current payment.
120 Broadcrest Dr, Pgh, PA 15235

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Teresa,

Welcome to MortgageFit Forums.

I appreciate you for the noble work that you are involved in. We do have different types of program on reverse mortgage offered by our network of lenders, based on the consumer's needs and eligibility.

I shall request you to sign up with us and place your query detail so that we may contact you and supply you with the information required.

For specific information on a specific requirement you may get the person to sign up with us and put in his/her details so that we directly serve them in the best possible way.

We will try our best to help you with your noble cause.

Feel free to ask if you have more queries.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Your website is very helpful in making the right decision/choice in an otherwise difficult process. My Dad and I THANK-YOU VERY MUCH! Keep up the good work!

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Yuhanna,

Welcome to MortgageFit Forums.

Thanks to you and your father for appreciating our effort. It's an encouragement for us that you liked our site.

We will try to live up to your expectations. Feel free to ask us if you have any problems.

We shall try our best to give you appropriate suggestions.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My father died and now the mortgage company states that I am responsible for his loan; even though he is not listed on my birth certificate as my father and I did not know about the processed loan. Also, his girlfriend has at least $12,000.00 of the money because she was on the bank account with him and when he died..she got all of his funds. Am I responsible for this loan? Why or why not?

Can this affect my credit? Do I need an attorney?

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

I feel sorry to hear about your father.

According to me you are not liable to pay any off the unpaid debts that were left behind by your father simply because he is not listed in your birth certificate.

Saying that, I would like to know a couple of things like have your father left any will or deed where it is mentioned that you will pay off his debts after his death. And is his girlfriend the co-owner of the property.

I would also suggest you to contact an attorney immediately.

Thanks,
Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello!

I am in Canton, Ohio and you can either send me information about a Reverse Mortgage for Seniors at 3833 Sanborn Avenue N.W., Canton, Ohio 44709-2258 and/or call me at (330 492-2247.

Mrs. Donald W. Keeran
04-05-06

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi, Celia

What kind of information you are looking forward to. If you can be more specific then I can help you in better way.

You can get the information here http://www.ftc.gov/bcp/conline/pubs/homes/rms.htm

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Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Canton,

We would love to give you each and information you would like to have on reverse mortgage. But since it is a huge topic in itself therefore we would ideally like you to be more specific.

Thanks,

Caron

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

When doing a reverse mortgage, does the owner still make monthly mortgage payments?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Lynn

Welcome to the forums

For reverse mortgage, homeowner doesn't make any payments to lender during the loan. The loan needs to be repaid when the homeowner ceases to occupy the home as a principal residence.

The loan repayment obligation can't exceed the home's value or sales price.

Thanks

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blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

There is no such repayment scheme required in a reverse mortgage program.
Reverse mortgage need not be paid back as long as the borrower occupies the property as his/her principal residence. Otherwise, it becomes due after the last surviving borrower dies.

Regards,
Blue

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am a widow, and I am still working a full time job . Will this effect my chances of getting a Reverse Mortage.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

No, never and if someone has said you like that then he I am sorry to say that he knows nothing about it.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My daughter is in debt and needs money, creditors are after her, and I wondered if it was wise for me to get a reverse mortgage on my house to help her out. I do now have a low income senior citizen loan when I had to put in a new furnace, home is 25 yrs old in good shape. loan is 3500. My home is worth $96,000.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Nana,

You may take a reverse mortgage to help your daughter but you have to clear the outstanding debt that you already have.

You can do it with the proceeds of your first installment. Some of the things that you need to consider here are that by taking a reverse mortgage you are going to put your home at risk.

If your heirs are not able to pay the mortgage after you then they are going to lose your home. Also, you must own your house as your main residence so that the mortgage doesn't need repayment during your lifetime.

If you feel you are ready with these conditions, then you can go ahead and take a reverse mortgage program.

James

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Nana,

This is a decision that you have to take on your own. As you know that after the last surviving borrower, mortgage needs to be paid back by their heirs in order to keep the house.

Otherwise the house gets sold to pay off the mortgage. If the requirement of your daughter is giving too much trouble and there is no other way to help her out then you can think of helping her with the program.

You will be able to get a reverse mortgage once you are above 62, but the other conditions need to be maintained so that it doesn't become due in your lifetime.

Angel

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi MS. B,

Welcome to MortgageFit Forums.

Reverse mortgage doesn't depend on whether you are on a job or not. The basic requirement to avail this program is that you have to be 62 and above in age and must possess a home.

So, if you fulfill these basic requirements you can qualify for a reverse mortgage.

Feel free to ask if you have any more doubts.

God bless you.

For MortgageFit,
Samantha

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my wife is 63 and ownes her on home, she owes 114,000 but is thinking about selling it because she cannot afford to make the 900.00 house payments, i have been talking to her about a reverse mortgage but i know very little about them. House valued at about 165,000, 4 years old.

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Johnny,

Welcome to MortgageFit Forums.

Let me tell you that your wife need not worry much on this issue. I know that it concerns her home but the important thing to think positively. Only then can she make the right decision as a lot of money is also involved here.

Your wife can very well go for a reverse mortgage but she needs to pay off the loan that she owes first. But since it won't be possible to make the payments, so she can pay off the old debt with the proceeds of the money that will be offered through the reverse mortgage.

Since your wife is 63 years old, she can qualify for a reverse mortgage provided she satisfies all other criteria. And, her property value seems to be higher than what she owes. So I think she can easily get rid off the previous loan.

Please visit our section on Reverse mortgage for further knowledge and information.

God bless you.

For MortgageFit,
Samantha.

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ckalvesmaki's picture
ckalvesmaki | Joined: January 28, 2006 06:28 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Based on some quick math and your wife's age and the values presented it would not appear that your wife will qualify for a reverse mortgage. There may be some other forward loan available to reduce the monthly payment. You should probably speak with a broker to see if there are other options.

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Bill's picture
Bill | Joined: March 21, 2006 03:20 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

After reading though this thread I thought a little Reverse Mortgage overview could be helpful.

A Reverse Mortgage offers seniors 62 years of age or older the ability to retain their personal and financial independence by combining mortgage and debt consolidation payment savings with monthly income - realizing real financial flexibility!

Unlike a traditional mortgage where the borrower makes payments each month, Reverse Mortgages provide payments to the borrower - in effect "reversing" the direction of the mortgage payments.

Reverse Mortgage loan programs receive high praise from sources such as [b:f85b84cf0c]AARP[/b:f85b84cf0c], [b:f85b84cf0c]FHA[/b:f85b84cf0c], [b:f85b84cf0c]Fannie Mae [/b:f85b84cf0c]and countless national media sources ... and for very good reasons!

[b:f85b84cf0c][u:f85b84cf0c]Top Reasons to Obtain a Reverse Mortgage[/u:f85b84cf0c]:[/b:f85b84cf0c]

[list:f85b84cf0c]1. [b:f85b84cf0c]Never Make Another Mortgage Payment [/b:f85b84cf0c]
2. [b:f85b84cf0c]"Tax Free" Income[/b:f85b84cf0c] via Monthly Payments, or a Lump Sum Payment, or a Line of Credit (or any combination of the three)
3. [b:f85b84cf0c]You Still Own & Live in Your Home [/b:f85b84cf0c]
4. [b:f85b84cf0c]No Restrictions on Use of the Money [/b:f85b84cf0c]
5. [b:f85b84cf0c]No Income, No Medical and No Credit Qualifications [/b:f85b84cf0c]
6. [b:f85b84cf0c]All Remaining Equity is Yours [/b:f85b84cf0c](or your heirs) [b:f85b84cf0c]To Keep [/b:f85b84cf0c]
7. [b:f85b84cf0c]No Debt will be Passed onto Your Heirs [/b:f85b84cf0c]or Family Members
8. [b:f85b84cf0c]Possible Greater Net Worth [/b:f85b84cf0c]after repayment[/list:u:f85b84cf0c]Reverse Mortgages are only available to seniors 62 or older and in the case of a married couple, both borrowers must be at least 62 at the time of application. Reverse Mortgages are only available on HUD/FHA recognized real estate (ie: no mobile homes sitting on wheels). The home must be occupied by each borrower as their primary residence and the mortgage comes due under all circumstances where the borrowers no longer live in the home.

Reverse mortgage terms are conservative by nature due to the fact that the lender will be holding the loan for an undetermined amount of time and the ultimate sale or [url=http://www.mortgagefit.com/refinance.html]refinance[/url] of the property must produce enough money to repay the loan + interest and fees. For this reason, the maximum allowable Reverse Mortgage loan-to-value depends on the age of the borrower and the equity remaining in the home. For these reasons, a 63 year old home owner with a current mortgage of more than 70 percent of their home’s value will not qualify for a Reverse Mortgage being as they more than likely will remain living in the home for many, many years to come without sufficient equity to repay the total loan.

Reverse Mortgages do have higher fees than many traditional mortgages so careful consideration is prudent … this is one reason why borrower counseling is a mandatory part of the loan process.

And finally, the only way to determine a borrower’s ability to qualify for a Reverse Mortgage based on age vs. equity while getting a comprehensive quote on the fees and terms is to apply with an approved Reverse Mortgage lender.

I hope this helps!

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Bill, Excellent, fantastic points. :D

This overview will help many. Rather I will ask sam to make it a new article so that it can be added into the reference section, infact you can do the same. Doing this will help others to locate this article easily. What do you say :?:

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Bill's picture
Bill | Joined: March 21, 2006 03:20 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks Niicss ... I would be honored if Sam puts this 'overview' where it will do the most good for those seeking Reverse Mortgage information.

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Why not Bill, niicss has given a great idea. That would be excellent if someone effort are getting recognized by the community.

I will also vote for you Bill. :D

Adonis

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Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks Niicss for the idea and Adonis for supporting Bill. This community is really on the way of becoming a family. It's a good sign for all of us.

Thanks

Caron

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello: I'm a Broker and have a client who is 72 and wife 77 who have equity in home in N.Y. They want to take out a reverse mortgage to purchase a second home in N.C. Is there anyway you can give me name of lenders who will do this. Their credit is "excellent". Thanks, looking forward to hearing from you a.s.a.p. Winnie

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Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi, Winnie

Welcome to the forums.

As a moderator of MortgageFit Community, I would like to invite you become our community member. Our community will surely be benefited from your services and knowledge.

For your loan request, what I can suggest you is, you can signup for a loan request with as at http://www.mortgagefit.com/signup/

Once you signup, our Loan Department will get in touch with you and then you can proceeds the things from there.

Hope to see you as our community member.

Thanks

Caron

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Can there be a co-signer for a reverse mortgage, such as a child who might stand to inherit the property? Is that legal? Would that person be obligated to make the payments?

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blue's picture
blue | Joined: October 21, 2005 09:17 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Stuart,

You can't have your son co-sign a reverse mortgage program. Reverse mortgage is solely for borrowers who are with an age 62 and above.

You need not pay back the mortgage during your lifetime, but after you if your children wish to keep the house, then they have to repay the mortgage loan.

Blue

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Stuart,

Welcome to MortgageFit Forums.

I can understand that you are thinking for the security of your child. But as Blue said, reverse mortgage programs are for senior citizens only and they are meant to help people in the age group of 62 and above who are house rich but cash poor.

With a reverse mortgage program you can take cash amount against the equity of your house and you need not pay it back as long as you stay in the home.

The mortgage becomes due when you leave the house or sell it or after your death. To keep the property at that time your children needs to pay back the mortgage.

Otherwise the house will be sold by the lender to get back the amount. Of course if the amount from a sale is more the loan amount then the excess money will go to your children.

Feel free to ask if you have more doubts.

God bless you.

For MortgageFit,
Samantha

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Bill's picture
Bill | Joined: March 21, 2006 03:20 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Stuart,

No. All applicants (ie: co-signers) MUST be 62 years of age or older.

There are no payments to be made on a Reverse Mortgage (payments go in "reverse" of a traditional mortgage). Any Reverse Mortgage will become due once the borrower no longer occupies the property and any family member that will inherit the property will have to either refinance the property or sell the property to pay-off any Reverse Mortgage lien.

Hope this helps!

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a sister who is contemplating a reverse mortgage. She has no income other than the retirement monies from her deceased husband. How feasible is it for her to take out a reverse mortgage on her property. Does she lose the retirement monies from her husband?

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Your sister need to look all the options before going into the deal. And as far as of loosing the money - No.

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Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jeanette,

Welcome to our forums.

Let me assure you that your sister won't be losing if she takes a reverse mortgage. This is a kind of loan where you don't need to show a substantial amount to qualify. And, the best part is that you can pay the initial costs from the loan amount itself.

The costs will then be added to her loan balance which she will have to pay back along with interest when the loan period is over and under certain conditions like if she leaves the property or decides to sell it much before the loan term ends.

Thanks,

Caron.

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