Have you heard the latest?     
Congress has approved a new law.
And the Reverse Mortgage just got better!

Reverse Mortgages
End Monthly Payments

Traditional Refinance Loan

The Reverse Mortgage

With a Traditional Refinance Loan the Homeowner borrows a large amount of money and makes monthly payments. As payments are made, the loan balance gets smaller and the home's equity grows.

On the other hand, with the AARP endorsed Reverse Mortgage, the Homeowner usually borrows small amounts, i.e., monthly or at other intervals, through a line of credit. Over the course of time, the loan balance gets larger, and the home's equity may become smaller depending on the state of the economy.


Payment of the loan is required only once, at the end of the loan, which in most cases is when the Homeowner sells the home, or no longer uses the home as a primary residence for 365 consecutive days, or when the Homeowner passes.

Stay In Your Home With Peace of Mind

There are no income, employment, health, or credit qualifying restrictions.

Maximum loan amount is based on age, where the borrower lives, and the value of the home. The current interest rate is around 5% - 6%. The amount owed can never exceed property value, so a Reverse Mortgage can never cause you to lose your home.

The funds received during loan term, plus any accrued interest, become due when the borrower sells or no longer uses the home as a primary residence.


Flexible Access To Extra Income


Reverse Mortgage Borrowers May Obtain Loan Proceeds ...

In a lump sum to cover large expenses.

In monthly installments to supplement income.

As a line of credit to draw on as necessary.

There is even a choice for an immediate cash advance in addition to monthly allotments. And borrowers can change funds distribution plans as many times as they wish.

Getting Your Reverse Mortgage


AWARENESS Consumer, i.e., senior Homeowner or adult child, learns about Reverse Mortgages or a particular product from an article, ad, direct mail, word-of-mouth, Broker, etc.

ACTION Consumer seeks more information by contacting a Broker, Lender, HUD, Fannie Mae, AARP, National Center for Home Equity Conversion, or Financial Planner.

COUNSELING Consumer is required to participate in a Consumer Education Session with a HUD approved counselor. This can be done by phone or in person. The purpose of the session is to explain the legal and financial considerations of obtaining a Reverse Mortgage. This session ensures that you understand the program and your obligations as stated in the loan agreement. Upon completion, you will be provided with a Certificate of Counseling which is then given to your Lender as evidence of completion. The certificate expires 180 days after the session.

APPLICATION - DISCLOSURE Consumer completes the application for Reverse Mortgage with Lender and selects payment option: fixed monthly payments for life, fixed monthly payments for term, lump sum payment, line of credit, or combination of all the options. Consumer provides Lender with required documents, i.e., photo identification, verification of Social Security number, copy of deed to home, home owner's insurance declaration page, information on any existing mortgage(s) on property, and their Counseling Certificate.

PROCESSING Appraiser prepares appraisal report. If structural problems are noticed or suspected, physical inspection of home is ordered.

UNDERWRITING After receiving all pertinent information and data, the Lender finalizes the loan parameters with Consumer, i.e., payment options, packages loan, and submits package to underwriting department for underwriting and final approval.

CLOSING Following approval, closing (signing) of loan is scheduled. Initial and expected interest rates are set. These affect the amount of funds available to Consumer, along with the age of borrower(s) and value of the home. Closing papers and final figures are prepared. Closing costs are normally financed as part of loan. Previous payments, if any, by Consumer for appraisal may be refunded or used to reduce the closing costs financed. Lender or title company has Consumer sign loan papers. Any existing debt on the home is paid off. A new lien is placed on the home.

RIGHT OF RESCISSION Consumer has three business days after signing papers in which to cancel the loan, the "three-day Right of Rescission". Upon expiration of this period, the loan is disbursed, Consumer gets access to the funds in the form of the payment option selected, i.e., monthly checks, etc.

REPAYMENT Consumer is not required to make any monthly mortgage payments to lender during the life of the loan. The Reverse Mortgage becomes fully repayable upon: a) the death of the borrower or last co-borrower; b) the sale of the home; c) a permanent move from the home by the borrower, i.e., to a nursing home, or another event, after which the home is no longer the borrower’s principal residence for 365 days in a row. The loan may be repaid by the borrower or borrower’s heirs-estate, with or without a sale of the home.

Getting Your Reverse Mortgage
Involves Several Actions

You're Just Six Steps Away
From No Monthly Mortgage Payments

This is the where you are, right now. You are taking the time to learn about the Reverse Mortgage program to determine if it is appropriate for your situation.

A counseling session can be done by phone or in person with a HUD approved counseling agency. The purpose of counseling is to explain the legal and financial considerations of obtaining a Reverse Mortgage. Counseling ensures that you understand the program and your obligations as stated in the loan agreement. Upon completion you are provided with a Certificate of Counseling, which is given to your Lender as evidence of completion. The certificate expires 180 days after the session.

You sit down with the Lender and sign the loan application. The Lender will disclose the estimated total cost of the loan, as required by the Federal Truth In Lending Act.

The Lender will order an appraisal of your home, do a title search and get a payoff value for any outstanding mortgages. Typically, it takes between 25 and 45 days to process a loan.

Loan documents are signed, including the Mortgage or Deed of Trust.

You have three business days after closing in which to cancel the loan, the three day Right of Rescission period. Upon expiration of this period, the initial draw you selected is usually available by the 5th day. Monthly payments are usually received at the beginning of the new month after a 3 week set up period.

Reverse Mortgages End Monthly Payments

To Frequently Asked Questions


Q. Am I qualified for a Reverse Mortgage if I currently have an existing loan on my home?
A. Yes, but the existing loan must be paid off prior to, or at the settlement of the Reverse Mortgage. Quite often the Reverse Mortgage is used to refinance an existing loan.

Q. My property is held in a Living Trust. Do I qualify?
A. Yes, but you must be the primary Trustee and qualified by age.

Q. To avoid probate, my children and I own the property in joint tenancy. Do we qualify?
A. Yes, if the children are age 62 and older and live on the property. Otherwise, they would need to be taken off the title for you to participate.

Q. Are the cash advances considered income by the IRS?
A. No. The cash advances are actually loan distributions and are not considered income. The cash advances are tax free.

Q. Are manufactured homes eligible?
A. Yes. The home must have been built in July, 1976 or after and have a permanent foundation that is approved by FHA. A structural inspection is required prior to processing of the Reverse Mortgage. If the home is on leased land certain additional restrictions can apply -- please ask for a clear explanation.

Q. Are there restrictions on how I can use the money?

A. No, after all, it's your money!

Q. What about fees and cost?
A. There are four basic types of charges, other than interest, involved in setting up a Reverse Mortgage ...

An origination fee.

Initial and monthly mortgage insurance premiums, called MIP.

Other closing costs, such as appraisal, title research, title insurance, flood certification, etc.

A monthly servicing fee, which is automatically added to the loan balance.

Q. Are these fees payable at closing or added monthly to the loan balance?
A. Typically, the only out of pocket expense for participation in the Reverse Mortgage program is the cost of the appraisal.

Q. What about the interest rate?
A. The borrower does have the option of either a monthly adjusting rate, an annually adjusting rate or a fixed rate. Rates are linked to the one year U.S. Treasury Security Rate or the LIBOR (London Interbank Offered Rate). The change in the interest rate has no effect on the amount or the number of loan advances that the borrower can receive, but it does cause the loan balance to grow at a faster or slower rate.

Q. When is loan repayment due?
A. The loan is due and payable when the borrowers no longer occupy the property as their principal residence for 365 days in a row, or if they fail to comply with the loan agreement, i.e., pay property tax or maintain Homeowner's Insurance. The loan agreement also states that the borrowers understand that it is their responsibility to maintain the property in normal living condition.

The loan must be repaid in one payment, either from the sale of the home or through other resources. There is no requirement that the property be sold, only that the loan is repaid, i.e., the beneficiaries can get a "forward" mortgage.

Q. What is the effect on public benefits?
A. Loan proceeds are not considered income and will not affect Social Security or Medicare because these programs are not based on need. You'll need to check with the benefit specialist for the Medicaid or SSI programs as certain rules must be adhered so as not to be disqualified for these types of public benefit programs.

Q. What is the eligibility requirement?
A. All Homeowners must be age 62 or older and occupy the property as their principal residence.

The home must be owned free and clear or only a reasonable remaining balance exists. The Reverse Mortgage may be used to pay off the balance on an existing loan.

The property must be a single-family, condo, townhouse, or up to a four-unit dwelling.

Q. How much can be borrowed?
A. Maximum amount that can be borrowed is based on these three factors:

The age of the youngest Homeowner.

The market value of the home.

The current interest rate.

Q. What are Reverse Mortgage Payment Plan options?
A. There are different ways of receiving the loan proceeds. Homeowners can choose an option that best fits their needs and goals ...

Term: Provides fixed cash advances for a set period of time.

Tenure: Provides fixed cash advances for as long as the Homeowners occupy the property as their principal residence.

Line of Credit: Establishes a credit line which the borrower draws upon as he or she wishes.

Combination: A combination of the above options.