Picture this… you’re a senior homeowner and nearly every time you go to your mail box, you get 1-5 solicitations for a reverse mortgage. You keep all the postcards and letters handy in case you decide to make a decision to proceed with a reverse mortgage. You’re starting to learn a lot about the program just from all the direct mail pieces you have received. Your phone is starting to ring almost daily with reverse mortgage telemarketers. You hear the buzz on the news and with your friends that reverse mortgages have created. You see TV commercials with Robert Wagner, James Gardner, and Pat Boone among many others. You now have a stack of solicitations higher than three Los Angeles phone books and your interest has peaked. You know you want to start to look into a reverse mortgage but you don’t know what steps are involved or how to you proceed with a reputable company? Yes you do have hundreds of mail pieces, but what company will truly offer you the best service and best fee structure.

The above scenario is very common. The entire reverse mortgage process can be very overwhelming for some people. The decision of what company to choose to the process itself can cause a lot of seniors who would greatly benefit from a reverse mortgage to turn a shoulder and not even explore the idea. Fact is, with the right reverse mortgage lender, a reverse mortgage may very well be the easiest transaction a lot of seniors have ever been a party to.  

The first step is to choose a reputable company. Look towards friends and family who may have received a reverse mortgage. If you are unaware of anyone who has received a reverse mortgage, or perhaps you friends or family didn’t have a good experience with their reverse mortgage professional, look to NRMLA (National Reverse Mortgage Lenders Association). Members of NRMLA have subscribed to their code of ethics and will always deal in a professional manner with their senior clientele.  

Once a reverse mortgage lender or broker is chosen, it’s time to start to learn more about reverse mortgages. The first conversation you have with a reverse mortgage professional will generally be to gather all important information from you such as birthday, property address, home value, existing loan amount and most importantly the reverse mortgage professional will explore with you why you’re looking into a reverse mortgage to help determine if it’s the right decision for you. At this point in time, you and the advisor will discuss how much money is available to you as well as all the fees involved. They will also send you a quote in writing that will contain 4 items. 1. Reverse Mortgage Estimates page, which shows a comparison of three programs. 2. A Good Faith Estimate that shows a breakdown of all fees involved. 3. An Amortization Schedule that shows how the loan balance grows over time. 4. A TALC (Total Annual Loan Cost), which shows the cost of the loan over time.  

Now, after the first discussion, this is a good time to discuss the reverse mortgage with friends, family or a trusted advisor. They may also have questions for the reverse mortgage professional and it’s a good idea to have them touch base to make sure that all questions are thoroughly answered.  

Next, if you decide to proceed, you will need to go through a counseling session done by an independent third party counselor. Counseling costs on average $125 and is due at the time of your counseling session. If you have a hardship and can’t pay for it upfront, please notify your counselor. Your reverse mortgage professional should provide you with a list of at least 5 counselors that are in the proximity of your home. This counseling session can be done over the phone, or in person. At your counseling session, the counselor will review the 4 items that the reverse mortgage professional sent you earlier. The counselor will make sure you understand the reverse mortgage program as well as other alternatives to reverse mortgages.  

After counseling is complete you will receive a counseling certificate in the mail. You will need to sign it and return it to your lender or broker. Once the lender or broker has the certificate, then the process can continue. The next stages are like any other mortgage. The lender will order an appraisal, title report and open escrow. In the mean time, the reverse mortgage professional will take a full application from you, either in person or over the phone, which takes about 10 minutes. Just a side note, the lender can take the application prior to your counseling session, however there can be nothing done by the lender that would incur an expense to you prior to counseling.   Once the lender has taken your application, it will be sent to you for signatures. Another point to note here is that signing the application does not obligate you to do the reverse mortgage. You may back out at any point in time during the process for whatever reason. Attached to the application will be a list of items required by the lender such as verification of your social security number, a photo ID, a copy of your mortgage statement (if you have a mortgage), copy of your trust (if applicable), copy of the Power of Attorney (if applicable), copy of your homeowners insurance declaration page, etc. All you need to do is sign and return the requested items specific to your loan scenario.  

When the lender receives all items from you, the appraisal, title report and any other necessary items, the loan will be submitted to underwriting. During this stage, the underwriter looks at the file and makes a determination if any other items will be necessary. If so, they let the lender know, who in turn will notify you of any additional items needed. Once those items are met, the underwriter will issue a clear to close.  

Once a clear to close status has been received, you will receive a phone call from the reverse mortgage professional verifying how you would like to receive your loan proceeds as well as setting up a time to sign your final loan documents. When it comes time to sign you final loan documents, most lenders will send someone to your home to accomplish this task.

After the loan documents are signed, they are sent back to the lender for final review. After your three day right of rescission is up, if all outstanding items have been met, the lender will fund your loan. Once the loan funds, title will receive a wire from the lender. They disburse the funds as requested and release the loan to record with the county.   Then you are free to enjoy your loan proceeds however you see fit. Your job after the loan closes is two fold. One, enjoy life to the fullest and two, spread the word about reverse mortgages to those who you feel could benefit from the product. Oh yeah, if your reverse mortgage professional did a good job, feel free to refer him/her to your friends and family.   

January 1st 2010 was an important time for Reverse Mortgage Lenders. Real Estate Settlement Procedures Act or RESPA amendment was changed for all FHA loans and there are now some new protections. These protections are built in to the changes to protect the borrower from improper increases in closing costs for the borrower. This article will explain how these changes in the RESPA will affect your financial future, and how it has made the very safe Reverse Mortgage, even safer.

Before this new change in RESPA, a major complaint of Reverse Mortgages was how closing costs were handled. Originally, all figures of a qualified estimate or quote were always subject to a later appraisal value. Any figures given to you before the appraisal is completed are only estimates and not valid. It was possible for lenders to drastically change these closing costs. Some of the closing fees could be double, or removed entirely, and the problem was that the borrower or prospect would have no way on knowing until the processing was completed and the final closing documents were to be signed.

Obviously the flaws in the previous system needed to be addressed and thanks to these current changes in the RESPA Requirements, Lenders now have much stricter regulations governing the way that these fees and costs are disclosed to their clients and prospects. Now when a loan officer, professional, or a loan originator creates an estimate for a customer, those fees are now binding. You will not be required to submit to uncertainty in the future of your loan. These numbers are now valid through the end of your processing time, and it removes the temptation for dishonest or disreputable predatory Reverse Mortgage Lenders from unethically raising the costs of an individual’s loan.

RESPA has limited the amount that certain fees or costs that have an actual fluctuation from case to case by very reasonable percentages. For example, the fee for the appraisal can be disclosed at a certain level, and then by the RESPA’s permission, increase by a maximum of 10% of the initial amount listed on your Good Faith estimate. This is now defined and regulated for the borrower’s protection.

These are positive changes that will make one of the safest senior products ever created, even safer. The Lender is now much more defined on their fees, and processing system. The borrower is not going to be surprised at closing, and the whole process will be more streamlined and safe. To learn more about these changes, contact a specialist at ReverseMortgageNation.com today!

To put it simply, the reverse home mortgage works in the opposite way, than the traditional mortgage. With the traditional mortgage a senior pays every month a certain sum until the whole loan is paid away. The reverse home mortgage uses this capital and releases money to a senior every month but a senior must not pay back anything on a monthly basis.

1. Can I Get It, If I Have Traditional Mortgage Left?

Yes, you can but you cannot have both at the same time. This means, that if you have a traditional loan left, you will first pay that away with the reverse loan. This is good, because this means an additional sum of disposable money to you every month.

2. Can The Bank Get My Home?

There is one great principle with the reverse home mortgage and that is that you can never owe more than the value of your home. The lender can never use your other assets to pay the reverse loan capital or other expenses. That is why the lender will not ask about your credit score nor about your income.

3. What Does The Mortgage Insurance Do?

When you will take the reverse home mortgage, you have to take a compulsory mortgage insurance. The law says so. The target of this insurance is, that in all cases the lender will get the loan capital and expenses and you avoid to use your other assets to pay the reverse loan expenses. If needed the mortgage insurance will take care about them.

4. Is The Counselor In The Bank Payroll?

The reverse mortgage counselors are federal counselors, who are independent counselors and never in the payroll of any lender. So they can give useful and personal guidance without hard sales pitches. They can also give recommendations about reliable lenders, who have good reputations.

5. Can I Buy A House To My Child?

Yes, actually this is one of the most popular way to use the reverse home mortgage loan, because now the equity will be transferred from one property into another one. Actually the borrower will decide how he or she want to use the money. The loan terms does not include any restrictions about how the borrower can use the money.

If you are interested about the reverse home mortgage but are not sure, whether you will take it or not, I would recommend that you will meet the federal counselor. The counselor can give a lot of useful information about how to organize your senior years financially!

Today you’ll find that reverse mortgages are quite popular and many seniors today find that this is one of the best senior housing options that are available. Although many people seem to think that they understand the way reverse mortgages work, there are still many people who don’t totally understand how these mortgages work. There are a variety of myths out there when it comes to reverse home mortgages and it is important that people are able to get beyond the misinformation about these loans so that they understand how they work and can decide if these mortgages are a viable option for their needs. So, let’s take a look at some of the most common myths out there and the real truth about them that you need to know.

Common Myth #1 – You Don’t Have Enough Credit
Many people believe the common myth that they don’t have enough credit to get a reverse mortgage. However, the truth of the matter is that there are few qualifications that you have to go through when it comes to credit for a reverse home mortgage. When it comes to the HECM, there are only few requirements, which include not being delinquent on any federal obligations that you may have, such as a Federally Insured Student Loan , a Federally Insured SBA Loan, or a FHA loan. Even if you have had to declare a bankruptcy in the past, you will still be able to get a HECM reverse mortgage and you can qualify even if you are on a payment plan for bankruptcy if you have gone for a year of making your payment. People who are going through a foreclosure can even get the reverse mortgage that they want as well.

Common Myth #2 – The Lender Will Receive Your Home
Another very common myth that you may encounter while you are checking into reverse mortgages is the myth that the lender is going to get your home. You are the one that still owns your home, but the lender does have lien on it when you go with a Minnesota reverse mortgage. It is almost like a traditional mortgage, but instead of you paying payments on your home, you’ll find that the money that is there in the equity of your home is yours, which you can get in monthly payments, up front, or even as a line of credit. You won’t be making any monthly payments and then when you decide to sell your home, you don’t live in it any more, or you pass away, the loan will be due on the home. However, throughout the time that you have a home mortgage, you will still have the title to your home.

Common Myth #3 – Reverse Mortgages Affect Benefits From Social Security
There are some people that believe the myth that reverse mortgages affect benefits from social security, but this is another myth that is totally false. You will find that your social security cannot be affected by a reverse mortgage; however, it is important to understand that some need based programs may be affected if your reverse mortgage is handled the way that it should be. However, if you need the help from a reverse mortgage to stay in your home, you don’t have to worry about your benefits from social security or even your retirement benefits from other places being affected.

Common Myth #4 – I Have to Have My House Entirely Paid Off
The idea that you have to have your home entirely paid off is yet another myth out there that needs to be dispersed. Basically a reverse mortgage is designed to take the equity that is in your home and convert it into cash that you can have. As long as you have enough equity in your home, you may be able to get the reverse home mortgage that you want. This does not mean that your home has to be totally paid off for you to receive this benefit. In fact, there are actually many people who take out a reverse mortgage in order to pay off their mortgage so that they don’t have to worry about a payment on a monthly basis anymore.

Common Myth #5 – Use of the Money is Restricted
There are many people today that think that the money that they get from one of these reverse mortgages is going to be restricted as to the way that they can use it. This is totally false. You will find that there are no restrictions at all as to how you can use your money that you get from this mortgage, so you can use it in any way. However, it is definitely a wonderful idea to talk to a financial advisor that can help you to make the best possible financial decisions. Some people use the money that they get through this play to pay off their debt, help out their family, travel around the world, live a bit easier without having to worry about money, and even to pay medical expenses.

Common Myth #6 – Reverse Mortgages are Only for Needy Seniors
Last of all, another very common myth is that a reverse mortgage is only for seniors that are needy. Although this is definitely a great idea for seniors that are in need, it is a great tool for anyone who owns a home when they are in their retirement years. It can help to enhance their life and today there are many people who are going with jumbo reverse mortgages that allow even people that have million dollar homes to get a reverse mortgage as well. Although FHA lending limits are below $400,000, there are other options available those who have more expensive homes as well. So, this is a wonderful option for people from all income brackets.