Is a reverse mortgage a financial transaction of last resort?

A reverse mortgage can be a viable and strategic financial tool. It is a man in which seniors can supplement their existing financial portfolio, and retirement benefits. A reverse mortgage should be considered and based on the homeowner’s financial circumstances.

Do homeowners have to make monthly payments on a reverse mortgage?

No. There are no monthly mortgage payments. The homeowner has to pay for the maintenance on their home, the insurance and property taxes on their home. The reverse mortgage allows the homeowners to use equity from their home while continuing to live in their home.

Can the homeowners outlive the reverse mortgage?

No. A reverse mortgage lasts for the rest of the lives of the homeowners, as long as they pay the insurance, property taxes and they maintain the home ingood repair.

What happens to the funds involved in the reverse mortgage if they are not all withdrawn during the life of the homeowners?

If the homeowners die without receiving all of the funds from the reverse mortgage, the funds will become part of the homeowners’ estate. When a homeowner dies, the homeowners’ heirs have up to 6 months to either repayThe loan or sell the house and repay the loan.

What can the funds in a reverse mortgage be used to pay?

The funds from a reverse mortgage can be used to pay virtually any debts or expenses the homeowners have. They can be used to pay an existingmortgage, medical bills, home repairs and renovations, in-home nursing care and virtually any other expenses the homeowners have.

Do the homeowners risk losing their home when they take out a reverse mortgage?

No. If the homeowners fulfill their obligations on the reverse mortgage which is solely related to maintaining the home, maintaining homeowner’s insurance and paying the property taxes, they have virtually no risk of losing their home.

What happens if the home appreciates during the term of the reverse mortgage?

If the home appreciates during the term of the reverse mortgage the equity in the home increases. This means if the home is sold to repay the reverse mortgage there would be funds left over. If there is a significant increase in the value of the home during the term of the reverse mortgage, the homeowners can refinance the home and payoff the reverse mortgage.

Who owns the home in a reverse mortgage?

The homeowner owns the home. A reverse mortgage just allows the homeowners to pull equity out of their home while maintaining the ownership of the home.

The law firm of Schlissel DeCorpo LLP has been helping families deal with mortgage and foreclosure problems for more than 30 years. We can be reached at 718-350-2802, 516-561-6645 or 631-319-8262 or by e-mail at info@sdnylaw.com.

How much money will you receive from a reverse mortgage?

The amount of money that can be received from a reverse mortgage usually ranges between 40% and 60% of the home’s appraised valuation. In situations where the seniors are older, the amount of money they can receive in the reverse mortgage is usually higher.

What are the factors that are used by the financial institutions to determine the amount given to the homeowners?

There are 3 factors that are used to underwrite the homeowner:

• The age of the youngest of the homeowners,
• The value of the home, and
• The current rate of interest.

If there is an existing mortgage on the home or other liens, they must be paid off at the time a reverse mortgage is taken out. There are also closing costs involved in obtaining a reverse mortgage.

How does the homeowner receive their funds?

The homeowner can receive their funds on the reverse in any of the following manners:

• All the money at once;
• Line of credit that the homeowners draw against;
• Firm payments on a specific schedule;
• Guaranteed payments for as long as the homeowner lives.

How does a low credit score impact the homeowner’s ability to obtain a reverse mortgage?

Unlike in traditional mortgages, a low credit score is not a significant drawback when obtaining a reverse mortgage.

How does someone qualify for a reverse mortgage?

There are a variety of qualifications necessary to meet the standards of obtaining a reverse mortgage.

• To start with the homeowner must be at least 62 years of age.
• They must own their home and it must be their primary residence.
• There must be equity in the borrower’s home.

What are the benefits, if any, of homeowners obtaining a reverse mortgage?

Benefits of obtaining a reverse mortgage:

1. As long as the homeowner complies with the terms of the loan, they don’t have to make any payments on the loan.
2. With a reverse mortgage homeowners will not lose their Medicare benefits or Social Security benefits.
3. Homeowners sometimes end up owing more than the equity in their homes. (The loan is underwritten.)
4. Reverse mortgages can provide homeowners with a sense of financial freedom. It gives them cashflow to live with dignity.

The law firm of Schlissel DeCorpo LLP has been helping families deal with mortgage and foreclosure problems for more than 30 years. We can be reached at 718-350-2802, 516-561-6645 or 631-319-8262 or by e-mail at info@sdnylaw.com.