WHAT IS A REVERSE MORTGAGE?

A Reverse Mortgage is a method of receiving funds by mortgage withOUT paying for them up front. Closing costs are wrapped into the mortgage. The borrower RECEIVES PAYMENTS or a LUMP SUM from the bank rather than MAKING PAYMENTS. This mortgage enables eligible homeowners who are at least 62 years old to access the equity in their home TODAY and receive a periodic or steady cash flow or lump sum for the rest of their lives as long as they or a spouse reside in the property. This is equivalent to "spending down" the equity in your home while living there withOUT having to make monthly repayments. You remain on the title and still pay taxes, insurance and upkeep costs as you do now.

BENEFITS OF A REVERSE MORTGAGE

• TAX FREE funds, and no loan repayment for as long as you live in your home
  
• PAYOUTS either lump sum, monthly payments, credit line or a combination of two or three of these
• RETAIN OWNERSHIP of your home for life - your name remains on the deed. This is GUARANTEED as long as you maintain your home and pay insurance and real estate taxes
• NO RESTRICTIONS on how you can use the funds
• LOAN, FEES and closing costs are repaid from sale proceeds except for appraisal which may be refunded at the closing
• MANDATORY PAYMENT of existing loan(s) from proceeds
• SAME DAY you can purchase a property and do a reverse mortgage right after the closing
• PROPERTY TAXES AND HOMEOWNERS INSURANCE PREMIUMS can be directed by the borrower to be withdrawn from borrower's credit line or by withholding the necessary amounts from borrower's payments
  

Whether you want to repair or add to your home, "burn your mortgage," use additional funds for medical bills, or travel to Venice or visit the family... you will be evaluating the benefits and costs of a reverse mortgage. A meeting with an independent financial counselor is mandatory before you can apply for a reverse mortgage to determine if this is the best way to accomplish your goals. This website will answer many of your questions. Email MarilynFJacobs@gmail.com or call 561-988-0070 with any questions not answered here.

TYPICAL COSTS TO GET A REVERSE MORTGAGE

ORIGINATION FEE: goes to lender to cover their operating expenses for preparing and processing your loan ("originating" a loan). Fee is limited to 2% of your home's value or 2% of your county's 203-b limits; if less than $2000, a lender may charge up to $2000. The origination fee may be financed as part of the mortgage
3rd PARTY CLOSING COSTS: The mortgage starts on the day of the closing. Services may include appraisal fee, title search and insurance, home owners insurance, surveys, inspections, recording fees, mortgage taxes, flood certification fee, escrow, settlement or closing fee, document preparation fee, credit checks and a monthly servicing fee to cover projected costs of servicing your account which is added to your loan balance and based on "present value" of the monthly fee from closing until borrower would reach age 100 - limited to $30/month if annually adjusted interest rate or $35 if adjusted monthly.
INTEREST RATES:
MORTAGE INSURANCE PREMIUM ("MIP"): 2% of your home's value (or 2% of the 203-b limit in your area, whichever is less) is charge "up front" as part of the loan; 0.5% is added to the interest rate charged on your rising loan balance.

COSTS FOR REVERSE MORTGAGE

Many costs that apply in a home purchase loan apply to a reverse mortgage, but are “wrapped” into the mortgage costs, e.g., origination fee, up-font mortgage insurance program (for HECM), an appraisal fee and other standard closing costs. Most are capped.
Origination fee: covers lender’s operating expenses including office overhead, marketing costs, etc. Fee is equal to the greater of $2000 or 2% of the maximum claim amount (i.e., country FHA Loan Limit). Mortgage Insurance Premium: A mortgage insurance premium equal to 2% of the maximum claim amount, or home value, whichever is less is charged plus an annual premium thereafter equal to .5% of the loan balance. Therefore if the company managing your account (“loan servicer”) goes out of business, the government will step in and make sure you have continued access to your loan funds. The MIP guarantees that you will never owe more than the value of your home when the HECM must be repaid. Appraisal Fee: An appraiser calculates the current market value of your. Appraisal fees generally range between $300 and $400. The appraiser must also make sure that there are no major structural defects (e.g., bad foundation, leaky roof or termite damage). A contractor must repair any defects found, and the appraiser revisits to be sure the repairs have been completed. Repairs costs can be financed in the loan and completed after the reverse mortgage is made. Appraisers generally charge $50-$75 for the follow-up examination.