Reverse Mortgage

As part of the reverse mortgage application process, you are required to seek counseling with a third-party, HUD-approved counselor. This may be conducted face-to-face or by telephone. The counselor will provide you with an explanation of the legal and financial obligations of the program as well as the alternatives that may be available to you. Upon completion of the counseling, you will be given a certificate to present to us as proof that you have completed your counseling. We can provide you a list of names and phone numbers of the HUD counselors in your area to help you get started.

Next, you will complete and sign the loan application package, which includes, but not limited to:

• Disclosure for the estimated total cost of the loan
• Good Faith Estimate
• Total Annual Loan Cost (TALC)
• Loan Comparisons
• Benefits Summary

Several services will be ordered including, but not limited to:

• Appraisal—to determine the value of your home
• Credit report
• Title
• Flood determination
• Application information verification
• Additional information may be requested by processor

After receiving all documentation, we will process and submit the loan package to an underwriter for review. The underwriter ensures the loan requests and documentation meet all FHA guidelines.

Once approved, final figures and closing papers are prepared, and a closing date is scheduled. After the closing date, you have three days to cancel the mortgage if you change your mind.

Once your closing is complete, you will receive the proceeds from the loan—in the form of a lump sum, monthly payments or a line of credit—depending on the product you chose.

After the reverse mortgage closing process has been completed, your responsibilities with a reverse mortgage are similar to those associated with a traditional mortgage. You are expected to:

• Pay property taxes in full and on time
• Keep adequate property insurance and keep the policy up-to-date
• Maintain the home in good repair
• Continue living in your home as your primary residence

Counseling is an important consumer protection that‘s been built into the reverse mortgage process. Prior to applying for your reverse mortgage, you will meet and/or speak with an independent third-party counselor who will make sure you understand the program and review alternative options with you.

Yes, you may be eligible for a reverse mortgage even if you still owe money on a mortgage or home equity loan. The funds you would receive from the reverse mortgage may be used to pay off whatever existing mortgages you have on the property. If you have a large mortgage on your property, please contact Christensen Financial to find out if you qualify.

The proceeds from a reverse mortgage can be used for anything, from supplementing your retirement income to covering your daily living expenses. Some typical uses include repairs or modifications to your home (i.e., widening halls or installing a wheelchair ramp), paying for health care or long-term care insurance, paying off existing debts, buying a new car or taking a “dream” vacation, covering property taxes, and preventing foreclosure.

When you sell your home or no longer use it as your primary residence, you or your estate must repay the lender for the cash received from the reverse mortgage, plus interest, monthly service fee, and any other accrued costs. Any remaining equity belongs to you or your heirs. For instance, if you owe $100,000 and you sell your home for $125,000, your estate will get to keep the remaining $25,000. However, if you owe $100,000 and you are only able to sell your home for $95,000, your estate will not be personally responsible for repayment of any amount greater than $95,000.

No, you can prepay a reverse mortgage in full at any time without penalty. All that would need to be repaid would be any monies borrowed, which includes the closing costs, service fees, and interest that has accrued. Partial prepayment is also allowed for certain programs, which in turn increases the available line of credit. Please contact Christensen Financial for further explanation on prepayment of a reverse mortgage.

Both fixed and adjustable rates are available for reverse mortgages. How you are going to borrow the money may determine which program will be more beneficial to you. As reverse mortgage specialists, our goal is to educate you on all programs so you can choose the best option to suit your needs.

No, you always retain title to your home. You have the right to sell or refinance your home at any time. All you are doing is putting a mortgage against your home, which will be paid back in the future when you sell your home or no longer live there as a primary resident.

You are referred to as the “Sandwich Generation.” You’ve got kids in or heading for college as well as retired parents. Wherever you look, all you can see is additional expenses.In the rough economy of the past few years–with home values and retirement savings down, government benefit programs threatened and longer life expectancy–many children of seniors are concerned about their parents being able to finance the remainder of their lives, even if they have been diligent about retirement planning.

Reverse mortgages were conceived as a means to help people in or near retirement who have limited income use the money they have put into their home to pay off debts (including traditional mortgages), cover basic monthly living expenses or pay for health care. There is no restriction on how a borrower may use their reverse mortgage proceeds.

No. Borrowers are not required to pay back the loan until the home is sold or otherwise vacated. As long as they live in the home, they are not required to make any monthly payments towards the loan balance, but they must remain current on tax and insurance payments.

No. With a reverse mortgage, the borrower always retains title to or ownership of the home. The lender never, at any point, owns the home even after the last surviving spouse permanently vacates the property.

The total funds received depends on the age of the youngest borrower, the value of the homes, the interest rate, and upfront costs. The older the borrower is, the more proceeds he or she can receive.

Loan fees can be paid out of the loan proceeds. Meaning, a borrower incurs a small out-of-pocket expense to get a reverse mortgage. The only out-of-pocket expense is the appraisal fee, usually a few hundred dollars.

No matter how large the loan balance, your parents or you never have to pay more than the appraised value of the home or the sale price. This feature is referred to as non-recourse. If the loan balance exceeds the appraised value of the home, then the federal government absorbs that loss. The government pays for it with proceeds from its insurance fund, which the borrower pays into on a monthly basis.

Primary lien: A reverse mortgage must be the primary lien on a home. Any prior mortgage must be paid in full to acquire the reverse mortgage (reverse mortgage proceeds can be used for this purpose).

While the typical retiree uses a reverse mortgage to eliminate debts, pay for healthcare and cover daily living expenses, a growing segment of the senior population is using it to purchase a home that better suits their needs.