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12 Things to Know About Reverse Mortgages
Government regulations require that all reverse mortgage lenders operate under the same guidelines. This assures borrowers that as long as they are using an approved lender and obtaining an FHA insured reverse mortgage, the loan will have all the consumer protections required in this program.
It is of paramount importance that you understand the details of the program, as you will need to make some decisions along the way. Meeting with someone you know and trust will ensure a smooth transaction, and you can feel confident that all your questions are being answered so that you can make informed, educated decisions.
We recommend you select a lender who you know and trust. Ideally, an experienced lender who can assure you the greatest depth of knowledge, and one whose expertise will make the program easy to understand and the process simple. You can be confident that members of the 1st Reverse Mortgage USA Lender NetworkÂŽ have the best possible resources to assure your transaction is completed timely, accurately and professionally.
With very few exceptions, you should never be made to feel there are deadlines that must be met. This is an outstanding program, and once you decide it is right for you, helping the lender expedite the transaction is in your best interest.
While you should never feel you are being pressured to proceed before you are ready, you should also make sure the advice and guidance you are receiving about this program is from people who are knowledgeable about the facts of the program. Many well-meaning family members, friends and professionals may offer advice, but if their understanding about the program is not based on the facts, you may be misguided or make a wrong decision. Please feel free to use us as a resource to help you confirm any information you are getting about this programâ€“regardless of the source.
A reverse mortgage gives you access to a portion of the equity in your home. You decide the amount of available funds to draw (subject to HUD guidelines) and interest is assessed only against the outstanding loan balance. Funds you do not draw remain as equity in your home. When you draw funds, the amount drawn is added to your existing loan balance. When you or your heirs sell the home, the amount repaid is equal to the funds advanced, financed closing costs and the accrued interest and FHA Mortgage Insurance Premiums. Any equity above and beyond the loan balance remains with you or your heirs
All costs associated with your reverse mortgage must be disclosed to you in detail. All fees, including upfront fees and any recurring fees over the life of the reverse mortgage, will be added to the final payoff. If you should ever desire to make a partial or full repayment of this loan, you may do so without penalty.
Depending on the loan program you choose, you may have sole discretion as to how you draw your funds (subject to HUD guidelines).
Unlike a traditional mortgage, you are not required to make a monthly mortgage payment on your loan as long as the loan requirements are met: 1. At least one of the borrowers must occupy the home as their primary residence; 2. You must keep your property taxes current; 3. You must keep current and adequate homeownerâ€™s insurance on your home (in the case of a condominium or townhouse, keep your HOA dues current); and, 4. Perform whatever routine maintenance is necessary to keep your home in good repair so as to not lose eligibility for your homeownerâ€™s insurance.
If the appraiser determines you have any urgent repairs that HUD
requires as a condition of the loan, funds from your reverse mortgage can be set aside to pay for those repairs, and those repairs can be made in the months following the closing of your reverse mortgage.
There are minimal income or credit requirements on a reverse mortgage.
However, if you have any outstanding judgments that have been filed against you or your property, those judgments may need to be paid at closing. Reverse mortgage proceeds may be used to pay these obligations.
If your property is currently in a trust, you will need to provide a copy of
your trust documents. If the terms of the trust are in accordance with HUD guidelines, the loan may close in the name of the trust. Disclaimer: Cherry Creek Mortgage Company is not endorsed by, nor acting on behalf of or at the direction of, the U.S. Department of Housing and Urban Development, Federal Housing Administration, the Veterans Administration, the U.S. Department of Agriculture or the Federal Government.
10 Simple Steps t STEP 1: The first and most important step is education and fact finding. This is a very important step because it will dispel the many misconceptions you, your family and/or your trusted advisors may have about the program. Members of the 1st Reverse Mortgage USA Lender Network速 are highly qualified to answer any and all questions about this government-insured program. STEP 2: Once you are satisfied that a reverse mortgage could be a solution to your financial needs, we will provide you with a list of HUD-approved reverse mortgage counselors in your area. As a safeguard, prior to proceeding with your transaction, HUD requires you meet with a counselor to review all the information about a reverse mortgage. You have the option for any family members you choose to accompany you to this meeting; however, the lender may not attend with you. The counselor will provide you with a Certificate of Counseling which enables us to proceed with your reverse mortgage. Counseling can be done either by phone or in person. STEP 3: When you inform us that you have received your Counseling Certificate, we will arrange for you to complete a loan application and provide copies of a small number of support documents. STEP 4: Upon completion of your loan application, FHA will assign a case number to your loan; title insurance will be ordered; and an appraiser will contact you to make an appointment to view your home. STEP 5: Once the processing center has received your signed loan application package, the appraisal and title information, your loan will be sent to underwriting for review. Your file will be processed and underwritten at one location, so your personal information will be more secure and the time necessary to approve your loan for closing will be substantially reduced.
to Getting a Revers STEP
Once we satisfy all underwriting
requirements, the underwriter will give us a â€œClear-toCloseâ€? notification. This is our permission to set a date and time for your closing. Prior to closing, we will once again review the options of how you would like to structure your reverse mortgage funds. Your loan will close based on your instructions. STEP 7: At closing, the closing agent will review all the documents with you as you sign. You will be given a copy of all documents, and an informational booklet about the company who will service your loan. This will include information about how you receive your funds and the statements you will receive each month. Federal regulations state that you have three banking days following the day of closing to review all your documents, a three-day rescission period. If, during that three-day period, you decide for any reason that you would prefer not to complete your loan, you have the right to cancel the transaction at no cost to you. STEP 8: Following the three-day rescission period, the title company will disburse funds to pay off any existing mortgages; any funds you had requested as an up front draw, and record the transaction with the county. Your file will be set up with the servicing agent, and in the following month you will begin receiving your monthly statements. Your reverse mortgage proceeds will be available to you based on your choice of how you chose to receive the funds and subject to HUD guidelines.
se Mortgage STEP 9: Now that your loan is closed, your obligations are: • At least one borrower must occupy the home as their primary residence; • You must keep your property taxes current; • You must keep current and adequate homeowner’s insurance on your home (in the case of a condominium or townhouse, keep HOA dues current); and, • You must perform whatever routine maintenance is necessary to keep your home in good repair so as to not lose eligibility for your homeowner’s insurance. STEP 10: Sit back and enjoy peace of mind knowing you have enhanced your financial security without having to relinquish any of your rights as a homeowner, and without placing yourself, your home or any member of your family at any financial risk. All costs associated with your reverse mortgage must be disclosed to you in detail. All fees, including upfront fees and any recurring fees over the life of the reverse mortgage, will be added to the final payoff. If you should ever desire to make a partial or full repayment of this loan, you may do so without penalty. Subject to HUD guidelines and with some loan programs, you will have sole discretion as to how you draw your funds. You will declare your choice just prior to closing your reverse mortgage. Should you ever need to change the way you are receiving your funds, you may request a change at any time for a very nominal fee.