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Home Jeri Carmicheal Fresno Reverse Mortgage Consultant, Serving Fresno, Madera,

Jeri Carmicheal Fresno Reverse Mortgage Consultant, Serving Fresno, Madera,

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Fresno Reverse Mortgage Myth #3 - A Reverse Mortgage Obligates My Heirs.

05-21-11
Jeri Carmicheal Fresno Reverse Mortgage Consultant, Serving Fresno, Madera,

WillAlthough a reverse mortgage does have some impact on your heirs, that impact is mostly from their uncertainty of whether or not they will be personally responsible for paying off the debt.

A reverse mortgage is a non-recourse loan secured by the property. The lenders only recourse is to the property itself. What does that mean to your heirs?

It means that if the home is worth more than the loan balance, then there is equity in the home. If there is equity the heirs may wish to either sell the home, payoff the reverse & keep the “change”. Perhaps they will choose to refinance the home to payoff the reverse and keep the home.

What if the loan balance is higher than the home value? This situation is one that happens not just with reverse mortgages. Many regular mortgages currently have balances higher than the home is worth and you’d be surprised at how many older homeowners are in the same boat.
The answer is this - On a reverse mortgage, the lenders only recourse is to the property itself. What this means is that the heirs can let the lender take back the home through foreclosure and the lender will then sell the home and take that amount as payment. Their is no “recourse” to the heirs or the estate for any shortage that the lender takes. It will not affect the heirs credit scores nor can the lender obtain a deficiency judgement against the estate or the heirs.

So in a nutshell, the worst that can happen to the heirs is that there would be no cash coming to them from the home itself. Any other assetts left to the heirs (insurance, cash, jewelry, furniture) cannot be touched by the lender.

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Fresno Reverse Mortgage Myth #2 - I have to own my home free & clear to get a reverse mortgage.

05-17-11
Jeri Carmicheal Fresno Reverse Mortgage Consultant, Serving Fresno, Madera,

You don't have to own your home free and clear in order to qualify for a reverse mortgage. In fact, most reverse mortgages are used primarily to payoff the existing home loan. Using a reverse mortgage to payoff the existing loan enables the homeowner to have some financial breathing room by eliminating the monthly mortgage payment.

If you take a look at the NRMLA (National Reverse Mortgage Lenders Association) consumer information website you can find answers to many common questions about reverse mortgages. Here's what they have to say about having an existing mortgage:

(Excerpt from www.reversemortgage.org)

"What If I Have An Existing Mortgage?

You may qualify for a reverse mortgage even if you still owe money on an existing mortgage. However, the reverse mortgage must be in a first lien position, so any existing indebtedness must be paid off. You can pay off the existing mortgage with a reverse mortgage, money from your savings, or assistance from a family member or friend.

For example, let's say you owe $100,000 on an existing mortgage. Based on your age, home value, and interest rates, you qualify for $125,000 under the reverse mortgage program. Under this scenario, you will be able to pay off ALL the existing mortgage and still have $25,000 left over to use as you wish.

If, however, you only qualify for $85,000, then you would need to come up with $15,000 from your own savings to get the reverse mortgage. Even then, all the money from the reverse mortgage will have been used to pay off the existing mortgage. On the other hand, you won't have a monthly mortgage payment anymore.

If you find yourself in a deficit situation where you don't have enough money to pay off the existing mortgage, you may use funds from a grant or gift from a family member or friend to cover the gap, but you cannot incur a new debt obligation (i.e., loan)."

As always - I appreciate your comments and suggestions!

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Fresno Reverse Mortgage Myth #1 - The Bank Will Own My Home.

05-15-11
Jeri Carmicheal Fresno Reverse Mortgage Consultant, Serving Fresno, Madera,

Not at all. A reverse mortgage is a loan against the property. Just like the mortgages most of us have on our homes. It has terms and conditions that the borrower and lender must agree to and if the borrower does not fulfill those conditions the lender may foreclose.

The borrowers responsibilities are these:

  • Live in the home as a primary residence.
  • Keep the home insured.
  • Pay all property taxes, homeowners or property owners association dues.
  • Maintain the home in satisfactory condition.
Notice that there is no responsibility to make monthly mortgage payments. That is a requirement of regular mortgages not reverse. It's the main reason that reverse mortgages are so important as a cash flow tool for older Americans, never having to make a monthly payment.

A Reverse Mortgage is a non-recourse loan. Non-recourse means that at maturity, if the loan balance is higher than the value of the home, the lenders only recourse is to the home itself. Period. No other assets of the homeowner or their estate can be used to pay off the loan.
Dunes


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Fresno Reverse Mortgage Question about Manufactured Homes.

05-06-11
Jeri Carmicheal Fresno Reverse Mortgage Consultant, Serving Fresno, Madera,

I live in a mobilehome and am over 62, can I get a reverse mortgage? Manufactured Home

Many mobilehomes (now referred to as Manufactured Homes) can qualify for a reverse mortgage if they conform to FHA Guidelines.
the basics of the guidelines are as follows:
  • The home must be constructed after June 15, 1976
  • It must be taxed as real property.
  • It must have a permanent foundation.
  • It cannot have been moved from it’s original site placement.
  • It cannot be in a flood zone.
  • It must be larger than 400 square feet.
If you are over 62 and live in a manufacture home that conforms to the above criteria, it will very likely qualify for a reverse mortgage. Unless the home already has an FHA loan on it, you will need to have an engineers certification that the home has a compliant foundation.

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Fixed or Adjustable? A Merced Reverse Mortgage Question.

04-20-11
Jeri Carmicheal Fresno Reverse Mortgage Consultant, Serving Fresno, Madera,

Kitten and PuppyBoth the fed and the adjustable are great reverse mortgages, but before you jump the gun and pronounce the fixed rate reverse the winner. There are some things to know about the adjustable.

The adjustable rate reverse is the reverse that allows you to take your money in differing ways: A line of credit, or monthly payments (either term or tenure), all cash or a combination of all methods. With the fixed, you must take all the money up front. (Which means you start to accrue interest on the entire amount borrowed)

Here’s some things to consider:
  • If you need the most amount of money to payoff an existing mortgage, the fixed is a good fit.
  • If you have a small or no current mortgage and are looking to supplement income, the adjustable is probably the best fit.

There is also a newer, lower cost HECM SAVER loan that has a lower FHA Upfront Premium. That is a wonderful fit for older homeowners who may not be living in the home for the next 20 years. The loan amounts are less (hence the reduced premium) but it works great and why borrow more than you need if it just means extra fees?

None of the HECM Reverse Mortgages have prepayment penalties, so seniors have the option to make payments on the loan should they wish to keep the balance lower.

A good ethical reverse mortgage consultant can help you to decide which is best for you. Fixed or Adjustable.

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