Things to know about reverse mortgages
Reverse mortgage for seniors is a loan facility available for seniors over 62 years old. It allows people to pull their equity out of their home. It is a loan made by a lender to a homeowner using the home as a security. It is very important to review all the available information carefully before going for reverse mortgages. The reverse mortgages for seniors is a very good idea, but it is important to discuss with your family before going for such a type of loan and to reason whether it would be decent enough for you.

What are the types of reverse mortgage for seniors loans?

• Home equity conversion mortgage : This is a reverse mortgage created and regulated by the U.S. Department of Housing and Urban Development. It is not a government loan, however; it is a loan issued by a mortgage lender but insured by the Federal Housing Administration, which is a part of HUD.
• Proprietary reverse mortgage : These types of reverse mortgages are privately insured by the mortgage companies that offer them. They are not subjected to the same regulations as HECMs, but most of the companies that offer this type of mortgages emulate the same consumer protections that are found in the HECM program, including mandatory counseling. Proprietary Reverse Mortgages are helpful such senior homeowners whose properties are not eligible for FHA financing.

What are the borrower requirements and responsibilities for a reverse mortgage for seniors?

• Age qualification : The borrower must be at least 62 years old. It might be possible to get a reverse mortgage for seniors if one spouse is under 62. In such a case, the loan officer will need to collect additional information to determine eligibility.
• Occupancy requirements : The primary residence must be the property used as collateral for the reverse mortgage; investor properties and vacation homes do not qualify.
• Taxes and insurance : Presently, the borrowers must stay on real estate taxes, homeowner’s insurance in addition to other essential obligations, which also include condominium fees.
• Property condition: Borrowers are responsible for the completion of mandatory repairs and for the maintenance of the condition of the property.
• Conveyance of the pledged possessions by way of the will or process of law to the estate or beneficiary after the mortgagor’s demise: When a reverse mortgage for seniors becomes due and payable because of the death of the last surviving borrower and the property is conveyed by will or by law, the heirs or estate may satisfy the HECM debt.

Is there anything you can do if you change your mind and don’t want the loan any longer?

• When it comes to canceling a loan different lender might have different processes.
• It is better to discuss this matter up front and explore the options.

Is there any time limit for paying back the reverse mortgage for seniors loan?

• Unlike traditional loans, there is no time boundary for paying back a reverse mortgage.
• In general cases, it is after the last surviving homeowner passes away or moves.
• In one of the above situations, the estate sells the house, using the money from the sale to repay the loan.
• If there is not enough money to pay to the lender even after selling the house, they have to accept the loss. They are not allowed to claim money from the estate or the heirs.

Is counseling required?

• Many people do not completely understand reverse mortgages.
• There are different mortgage choices and confusing financial products that are meant for helping senior people, but often there is no understanding of how they work, which can lead to financial losses.
• Hence, counseling is required before agreeing to a reverse mortgage.

What are the pros of reverse mortgages for seniors?

• It provides a flexible payment option that is monthly or line of credit
• The house owner is able to live in the house without paying monthly mortgage payments
• If the pay-off balance exceeds the home value, the heirs are not responsible for its payment
• After paying off the reverse mortgage for seniors loan, the remaining home equity is inherited by the heirs
• There may be low-interest rates as compared to other options

It is very important to calculate everything you have before going for reverse mortgage for seniors plans. There are various reverse mortgage calculators available online. So, one can choose the most suitable and easy-to-use reverse mortgage calculator for this purpose.