3 Completely False Myths About Reverse Mortgages That Need to Be Debunked

3 Completely False Myths About Reverse Mortgages That Need to Be DebunkedAre you a senior or retired individual older than 62 who is looking to supplement their retirement income? If so, you may have heard about a unique financial product known as a reverse mortgage. In today’s blog post we will explore three myths about reverse mortgages and share why they need to be debunked. Let’s get started.

Myth #1: Reverse Mortgages Are Expensive

The first myth we will debunk is that reverse mortgages are costly financial products that are full of fees. In fact, nothing could be further from the truth. It’s true that there are closing costs attached to a reverse mortgage, just like with a traditional mortgage. These costs will vary depending on a wide range of factors, including the terms of the reverse mortgage, your financial history, your home’s location, size, assessed value and more.

If you are interested in a reverse mortgage, don’t let the potential fees or closing costs scare you off.

Myth #2: Children Inherit The Reverse Mortgage Payments

Many people believe that they are saddling their children with a mortgage payment when they take out a reverse mortgage, but this isn’t true. After you (and your spouse, if you have one) move on, whoever is overseeing your estate will have the option to sell your home and use the proceeds to pay off the balance of the reverse mortgage. Alternatively, they may decide to use cash to pay off the balance and keep the home. But your children aren’t going to inherit a monthly repayment.

Keep in mind that having a plan for your estate and a proper will is important, regardless of whether or not you have a reverse mortgage. Be sure to contact an attorney who is skilled in estate law for more information.

Myth #3: The Bank Ends Up Owning Your House

Finally, some believe that the bank will end up owning your home if you take out a reverse mortgage. This isn’t true either. With a reverse mortgage, you are borrowing money against the equity or value that you have built up in your home. You will continue to own the house, but the lender may place a lien against it to secure the mortgage loan.

These are just a few of the many myths about reverse mortgages that you might hear about or read online. When you are ready to learn more about this type of mortgage, get in touch. Our team of mortgage professionals is here and ready to assist you.

3 Ways That a Reverse Mortgage Can Transform Your Retirement

3 Ways That a Reverse Mortgage Can Transform Your RetirementAre you a retired individual looking for ways to increase your financial security? If so, you may have heard of a home equity conversion mortgage, more commonly known as a reverse mortgage. Used correctly, this is one of the most effective financial products for retirees who own their home.

Let’s explore three ways that a reverse mortgage can help to transform a dull retirement into one filled with excitement.

It’s All About Flexibility

The primary benefit that one receives with a reverse mortgage is financial flexibility. It is an excellent way to tap into the equity that has built up in your home over time without having to sell the house and move out. Moreover, unlike a traditional home loan, the payment terms are far more flexible. In many cases, payments are not required until you are ready to leave the home permanently.

An Extra Source Of Income

Is your lifestyle starting to suffer because you do not have a regular salary coming in for you and your partner? Regardless of how much you have saved in 401-k and other retirement accounts, losing that regular monthly income can be depressing.

The good news: a reverse mortgage can help to change that. The funds you receive can be used however you want. You can invest in renovations for your home, take a nice vacation, invest in the stock market or simply leave it in your bank account. It is a helpful ‘bridge’ income source that will ensure that you have no trouble taking care of life’s many expenses.

A Contingency Fund, Just ‘In Case’

Finally, a reverse mortgage can be an excellent contingency fund. If you take this out as a line of credit, the money will be available if and when they are needed. Many retired individuals lack a financial ‘safety net’ and end up suffering due to unexpected health or other costs. With a reverse mortgage, you can sleep soundly knowing that emergency cash is there if needed.

As you can see, taking advantage of a reverse mortgage can be the catalyst that helps take your retirement to the next level. To learn more about these unique financial products, contact our professional mortgage team today. We are happy to share how a reverse mortgage can benefit you and your family.

62 or Older? 3 Reasons Why a Reverse Mortgage Might Be the Perfect Financial Solution for You

62 or Older? 3 Reasons Why a Reverse Mortgage Might Be the Perfect Financial Solution for YouAre you and your spouse starting to move into your retirement years? If so, you already know that you are going to need a solid financial plan for when your primary sources of income are no longer bringing money in. If you have invested in your retirement, you might be all set. However, what if your house makes up the majority of your net worth?

Let’s take a quick look at three reasons why a reverse mortgage might be a great way to unlock the equity you’ve built up in your home.

Reason #1: This Is Your Last Home

To qualify for a reverse mortgage, you have to own your home or be very close to paying off any outstanding mortgage debt. A reverse mortgage is money borrowed against the equity in your home, which is considered collateral. So, if staying in this house is your long-term plan, then a reverse mortgage should be a good fit.

Note that it is not impossible to buy a new home or move when you have a reverse mortgage. You simply have to pay the outstanding balance as with any other loan or mortgage product.

Reason #2: You Don’t Plan On Leaving Your House To Anyone

It is important to note that when you or your spouse dies, your reverse mortgage becomes due. In most circumstances, the house is either sold or transferred to cover the outstanding amount of the mortgage. This means that anyone inheriting the house is going to inherit the reverse mortgage as well, leaving them responsible for the outstanding balance.

If you do not have any children, or if they are already financially stable and not in need of an inheritance, you may not have to leave your house to anyone. This makes a reverse mortgage a good source of extra cash.

Reason #3: You Can Afford Taxes And Upkeep

Finally, don’t forget that with a reverse mortgage, you are still responsible for taxes, insurance and maintenance costs. Falling behind on these items can cause your reverse mortgage to become repayable immediately. If you can afford these costs without having to stretch, then you’re in good shape.

If you are looking to make more of your home equity as a financial asset and both you and your spouse are 62 or older, reverse mortgages are an excellent idea. To learn more about these financial products and your options, contact us today. Our professional team of mortgage advisors is happy to show you why a reverse mortgage is a good fit.

You Ask, We Answer: What Kind of Fees Are Involved When I Get a Reverse Mortgage?

You Ask, We Answer: What Kind of Fees Are Involved When I Get a Reverse Mortgage?If you are approaching your golden years and seeking a bit of financial flexibility, you might want to look at a reverse mortgage. This unique financial product is only open to individuals over 62 years of age. It allows you to convert some of your home’s equity into cash which you can use as needed in your retirement.

Of course, a reverse mortgage isn’t without its costs. Let’s explore the fees that you will encounter when you take out a reverse mortgage loan.

Upfront And Pre-Closing Costs

The first step in getting a reverse mortgage (also known as a Home Equity Conversion Mortgage or “HECM”) is to visit with a third-party HECM advisor. These advisors are approved by the Department of Housing and Urban Development. It is their job to ensure that you know the ins and outs of getting a reverse mortgage. Expect to pay from $100 to $200 for this session.

Another cost you’ll incur is a home appraisal. Every reverse mortgage lender will require that your home’s value assessed by an independent appraiser. This cost varies from $200 to $500 and up depending on the size of your home, its current condition, its age and a variety of other factors.

Like a traditional mortgage, your lender is likely to assess an origination fee. This fee covers the cost of processing and closing your reverse mortgage loan. Most lenders charge a small percentage of the total amount of your loan. For example, if you are borrowing $100,000 you may pay around one or two percent, which comes to $1,000 or $2,000. Regardless of the total amount, the origination fee is capped at $6,000 total.

Post-Closing And Ongoing Costs

After your reverse mortgage has closed, you may find that there are some additional ongoing costs that you will need to be aware of. For example, some lenders charge a loan servicing fee. This fee is usually paid each month and tends to vary depending on the interest rate of your reverse mortgage.

Finally, you’ll be responsible for paying the ongoing cost of mortgage insurance. This is assessed as an annual premium and equals around 1.25 percent of the balance owing. As this can end up being a significant cost, it is one you’ll want to budget for.

As with any loan, a reverse mortgage has its costs. However, the financial flexibility you gain with a reverse mortgage is certainly worth it. When you’re ready to explore your reverse mortgage options, contact our friendly team of mortgage professionals. We’re happy to help.

Mortgage Tips: Answers to 4 Common Questions About Reverse Mortgages

Mortgage Tips: Answers to 4 Common Questions About Reverse MortgagesThere are many mortgage products on the market that work for all different kinds of homebuyers, but many people have not heard about reverse mortgages and how they can benefit their situation. If you’re curious about this type of mortgage and want to know more, here are some questions that will get you on the road to understanding the ins-and-outs of this product.

What’s A Reverse Mortgage?

The reverse mortgage was created in the wake of the 2008 recession and is commonly known as HECM, the Home Equity Conversion Mortgage for Purchase. While this mortgage option is beneficial for those who want to use the equity in their home and defer their monthly payments, it’s not a good choice for those who are planning to move in the short-term future.

Who Can Qualify?

Since a reverse mortgage allows the homeowner to tap into the equity that they’ve already accumulated in their home, they need to have a high amount of their mortgage paid off. They must also be 62 years of age or older in order to qualify. In addition, they should have a solid financial history so lenders will be assured they have the ability to pay insurance and property taxes.

What’s Required To Apply?

Like all mortgage products, a reverse mortgage is a type of loan so you’ll need to apply for it. In order to do this, you’ll need proper identification, address verification and proof that you’ve met with a professional to ensure this is the right choice for you. In addition, you’ll need to prove that you can make the monthly insurance and property tax payments and you’ll have to provide financial documentation to ensure that you’re a good credit risk.

Should I Choose A Reverse Mortgage?

A reverse mortgage can be beneficial if you want to forego monthly payments, but it’s worth knowing that this mortgage will be payable in the event that you decide to sell the home or pass away. It’s also important to be aware that interest can accrue on the home since you’ll be deferring monthly payments. While this may work for you, it’s important to talk with a mortgage professional before making a final decision.

A reverse mortgage can be an option for those older than 62, but it’s important to be aware of what it entails and what it can do for you before choosing this product. If you’re currently considering your mortgage options, contact your trusted mortgage professionals for more information.

A Quick Look at Reverse Mortgages: The Golden Ticket to Enjoying Your Golden Years

A Quick Look at Reverse Mortgages: The Golden Ticket to Enjoying Your Golden YearsWith a high volume of millennials set to enter the real estate market this year, it may seem like all the available options out there were created to snag new home buyers. However, there are products available on the market that cater to those who are in their golden years too. If you’re older than 62 and are currently weighing the options with your mortgage, here are the basics on reverse mortgages and why they might positively benefit you.

The Scoop On Reverse Mortgages

It may seem like this mortgage option hasn’t been around that long, but it was actually created in 2009 following the recession. Known as the Home Equity Conversion Mortgage for Purchase (HECM), this product is specifically directed at those who are retired or close to retirement that want to tap into the equity in their home. This option is only beneficial for those who plan on staying in their home long term, the loan is paid off at the time the homeowner moves out or passes on.

What Are The Requirements?

Because a reverse mortgage enables the homeowner to tap into the equity they’ve already paid into their home, there are many requirements involved in using this type of mortgage product. In addition to being 62 or older, the homeowner will have to have a high amount of equity in their home. They will also have to prove that they have the financial ability to make their monthly payments, in addition to being able to pay the insurance and property taxes on the property. The homeowner will also have to comply with the requirements set out by the Federal Housing Administration.

Is It The Right Choice?

Like any mortgage product, it’s important to determine before choosing this mortgage product that it’s right for you. While a reverse mortgage gives the benefit of providing access to cash and allows you to put your money elsewhere, it can end up costing more down the road since interest will continue to accrue on the principal amount owing. Before diving in, ensure that you do the calculations and consult with a professional to ensure it’s going to be a financial benefit in the end.

A reverse mortgage can be a great means of accessing cash for homeowners who are 62 or older, but it’s important to weigh all the financial aspects before making a final decision. If you’re currently looking into your mortgage options, contact your trusted mortgage professionals for more information.

What Fees Are Involved With a Reverse Mortgage? Let’s Take a Look

What Fees Are Involved With a Reverse Mortgage? Let's Take a LookInvesting in a home may be one of the most significant purchases you’ll make in your lifetime, but many people forget that there are a number of other costs associated with buying a home. If you’re considering a reverse mortgage and want to be clear on all of the fees involved, here are a few things you can expect to come across.

Initial Home Appraisal Fee

In order to ensure that you qualify for a reverse mortgage, you’ll need to spend a lump sum up front to determine the market cost of your home. While the amount of this fee will depend on the size and age of your home, it generally runs from a couple hundred dollars to less than a thousand and will be paid to the appraisal company that you’re dealing with.

Mortgage Insurance Premiums

At the time that you close on your mortgage, you’ll be required to pay a mortgage insurance premium (MIP) in order to secure your loan. This amount will vary from lender to lender and will be calculated based on the lesser-appraised value of your home. In addition to this, annual mortgage insurance premiums will be charged throughout the entire period of the loan and will be a percentage of the outstanding balance of your mortgage.

Loan Origination Fee

In order to process and underwrite your loan, you will also be required to pay a loan origination fee, which covers the administrative costs. While this amount has come down in recent years, it is a sizeable lump sum that hovers around 2% of your home’s value up to $200,000. If the home’s value exceeds this amount, it will go down to 1% after the initial amount is charged.

Other Third Party Fees

Like any mortgage loan, there are a number of one times fees that you’ll need to pay in order to secure your mortgage. In addition to a monthly servicing fee, there will also be fees like surveying, title fees and credit checks that will be added on to the total cost of your mortgage product. It’s important before choosing this option to ensure that you know what costs you’ll be dealing with.

A reverse mortgage may be the right mortgage product for you, but it’s important to be educated of all of the costs before choosing this option. If you’re currently considering other mortgage products, you may want to contact one of our mortgage professionals for more information.