Reverse mortgages help seniors with the costs of retirement by turning equity into cash, making the twilight years truly golden   Odds are – if you’re over the age of 62 and own all or some of your home – you’ve wondered, “what is a reverse mortgage?”  With all the negative spin and fake news attacking from every corner, it’s easy to get confused by fearmongering that distorts facts.  You have enough things going on and time would be better spent enjoying the people and things you cherish. Thankfully, Phil Stevenson, AKA The Mortgage Nerd, and PS Mortgage Lending are here to clear up a few misconceptions and straighten out the facts.    Here is some need-to-know info everyone should have when considering a reverse mortgage. What is a reverse mortgage? Reverse mortgages are federally insured loans anyone 62 and over who has equity in a home can take out as cash for their financial necessities.    Better known as a Home Equity Conversion Mortgage (HECM), it allows you to take a portion of what you’ve invested into your property to pay off an existing mortgage and anything else you may need. Although you still have to take care of paying property taxes, homeowners’ insurance, and home maintenance costs, this frees up some money so you’re able to handle these costs. The loan is repaid when you and your spouse can pay it back or have moved on. Who is eligible? There are 6 essential requirements to qualify for a HECM:
  1. Must be 62 years of age or older
  2. Own your primary property or have a considerable amount invested in it
  3. The property must be a primary residence and an
  4. Not have any delinquent federal debt
  5. Must be able to pay off property taxes, HOA, insurance, bills, etc. 
  6. Consult a HECM counselor approved by the Department of Housing and Urban Development (HUD)
Though a few other small HUD Regulations must be discussed and looked over, this is the gist of it until sitting down with a counselor. How does a reverse mortgage work? Five quick things to get out of the way right off the top are:
  1. If you own the home, you remain the owner of the home UNLESS YOU DON’T PAY TAXES
  2. You can sell the home or pay off the loan with no penalty
  3. No monthly payments are required, but you can make payments if you like
  4. You can receive the loan as one lump sum, in monthly payments, a line of credit, or any combination of the three 
  5. You will not owe more than the value of your home if it sells for less than you mortgaged because you have protection against declining home values since it’s a non-recourse FHA Federally insured loan
Can I get a reverse mortgage if I have a mortgage?  Yes. Another common misconception is that if you can’t get a reverse mortgage if you already have a mortgage of a traditional type. This is false. If you have a decent enough amount of equity in your property, you can turn some of it into liquid assets. Why get a reverse mortgage? Phil recommends people get this type of loan for a variety of reasons including:
    1. You don’t have anyone interested in inheriting the home
    2. You need to fulfill and immediate need or take care of an emergency
  • Are considering an equity loan for any reason
In other words, if you have any retirement needs, Phil recommends you seek some reverse mortgage counseling in Florida now. How is a reverse mortgage paid back? Quite simply, put the loan is paid back when you or your spouse leave the home – however that may be.   The basic premise behind the reverse mortgage is that you’re able to use the equity you need now because you really can’t take it with you when you pass away. That’s why this is such a great opportunity for those with well-off heirs or don’t have that worry.   And if you do have legal successors, all they have to do is pay back the loan or cash in on anything that’s left. A reverse mortgage gives you a more comfortable lifestyle in those times when you deserve to reap the benefits of your hard work.  After all, you earned it. Can I lose my home or go into foreclosure with a reverse mortgage? The straight answer is YES, but ONLY if you do not meet the terms of the loan.  You might be thinking, “didn’t you just say the reverse mortgage does not require payments?”  That is correct, but you must continue to pay the following, just as if your home was free and clear with no mortgage of any kind:
  1. You must continue to pay your property taxes
  2. You must continue to pay your homeowners insurance
  3. You must maintain your property, meaning you cannot let it fall into disrepair
  4. At least 1 borrower must be alive and living in the home.  If all borrowers are away from the home for more than 12 consecutive months due to physical or mental illness, then the loan is due and payable.
If one spouse is under 62 years old, can both spouses get an FHA insured reverse mortgage? The answer is yes and no.   Yes, the reverse mortgage can be done under the name of the spouse who is over 62.   No, both spouses cannot be “borrowers”, but the one who is under 62 CAN be what is called a “non-borrowing spouse” or NBS.   Yes, both spouses CAN live in the home for the rest of their lives, as long as the following criteria are met:
  1. The NBS must be living in the home and married to the borrower at the time of the closing of the reverse mortgage.
  2. The NBS must still be living in the home and married to the borrower at the time of the borrower’s death.
  3. Death of the borrower is the only that the deferral period, the period in which the NBS can stay in the home for life, can go into effect and the NBS would be “protected” under the rules.
Private or Jumbo Reverse Mortgages are not insured by FHA.  These reverse mortgages allow for borrowers to be 60 and older, and have loan amounts up to $4,000,000. Where can I find a professional HECM counselor near me? Finding a HECM counselor approved by HUD in Florida shouldn’t be too hard – we got a guy.  Phil Stevenson knows that your home and what you put into it is a culmination of years’ worth of hard work filled with memories.  He’s even been featured in Forbes Magazine discussing his expertise.  Its value is significant financially and priceless emotionally.  Getting a HECM requires advising from someone who knows what they’re doing – and can trust – in order to plan for the future appropriately.    This is not a trade or a second mortgage nor do you need to sell your home to pay back the debt.  Borrowing against your home is a big decision. It requires HUD-approved counseling for a reason and Phil understands it on a personal level.  He became interested in reverse mortgages by trying to help his beloved grandparents – abuelo y abuela – when they needed money. Check out PS Mortgage Lending’s Reverse Mortgage Calculator and see if this is an opportunity that could benefit you.

Are you or a loved one considering a reverse mortgage? Reach out to Phil Stevenson and the Expert Mortgage Team at PS Mortgage Lending to see how you can benefit!

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