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BK#0907366
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Tucson's
Reverse Mortgage
Frequently Asked Questions
What is a Reverse Mortgage?
Why Get A Reverse Mortgage?
What Can the Funds be Used For?
Concerns of Having a Reverse Mortgage
What Types of Payments Can I Receive?
Will I Qualify For a Reverse Mortgage?
When is the loan due?
What is the process to receive a Reverse Mortgage?
"“I would advise every senior to do this because it really gives you peace of mind for you older years in life.” Doris F.
Click here to read Doris’ Testimonial.
A reverse mortgage is exactly what it sounds like, a mortgage in reverse. A Reverse Mortgage allows you to tap into the equity in your home. Think of your typical mortgage as a forward mortgage, and then let’s compare that to a reverse mortgage.
In a forward mortgage you make payments to the bank each month and the bank reduces the amount of principal you owe on your loan, and you pay the interest accrued on your loan balance for the past month. Forward mortgages are called “Falling Debt, Rising Equity Mortgages”.
In a reverse mortgage the bank makes a payment to you every month. (or go to "What Types of Payments Can I Receive?"). When the bank makes that payment to you they increase your loan balance by amount of the payment and by the interest accrued on that loan for the past month. A Reverse Mortgage is called a “Rising Debt, Falling Equity Mortgage”.
Why Get a Reverse Mortgage?
The simple answer is, “to enjoy life”. So
now you have to ask yourself another question, “What would help
you enjoy life?” Everyone has their own reason. For many it’s
simply the ability to stay in their home longer. For others it is the
ability to do things they can not do with their current limited income.
And for many others it is simply the need of extra income to pay ever
increasing costs of living or to eliminate their current mortgage payment.
There are no wrong reasons for a Reverse Mortgage, only your reason. Seniors will never under any circumstances resulting from a Reverse Mortgage be forced to leave their homes providing they make their real estate property tax and insurance payments and keep their home in acceptable condition.
What Can the Funds be Used For?
Anything you want. There are no restrictions on the use of the funds. Here are just a few items that your Reverse Mortgage funds could be used for.
• Monthly living expenses
• Increased housing expenses
• Increased medical expenses
• Home improvements
• Automobile
• Recreational Vehicle
• Motor Home
• Gift for a family member
• Help children with a down payment
• Help grand children with college
• Gift to a charity, university or foundation
• Pay for Long Term Care insurance
• Make you life easier
The list goes on and on. It’s your money; it’s your choice as to how to take advantage of a Reverse Mortgage that will benefit you the most.
Concerns of Having a Reverse Mortgage
I will lose my home or have to give it over to the bank.
With a Reverse Mortgage you will never lose your home. You are always
on title to the home and the bank will never own your home as long as
real estate property taxes and homeowners insurance are paid.
Do I have to make monthly payments?
No, you never have to make any mortgage payments. In fact, with most reverse
mortgages, you can elect to have payments made to you.
Can I owe more than the house is worth?
No, no matter what your loan balance is, you would never owe more than
the fair market value of your home. And because all Reverse Mortgages
are non recourse loans, the bank can never take any other assets to repay
the loan.
Are there any restrictions on how I can use
the funds?
NONE! You can use the money for anything you want.
Do I have to pay taxes on the money I receive?
No, the funds you receive are simply proceeds from a loan on your home.
(Be sure to ask your tax consultant)
Will my spouse have to move out after my death?
No, as long as one homeowner is surviving they maintain ownership of the
home and will continue to benefit from the Reverse Mortgage.
Only seniors who are house rich and cash poor
use Reverse Mortgages.
Some of the highest net worth seniors in the country are applying for
reverse mortgages. Estate planners and wealth management professionals
have discovered many ways to use the tax free proceeds from a reverse
mortgage in creative estate planning.
A reverse mortgage can be used to purchase
a home.
We have helped many seniors purchase more home than they thought they
could afford with their available cash. In fact they can usually purchase
twice the home they expected, and with no mortgage payments for life.
Learn more about using a Reverse Mortgage to purchase a home, Click Here.
What Types of Payments Can I Receive?
There are three types of payments you can receive from most Reverse Mortgages. First is a monthly payment. You may choose to receive a monthly payment for the rest of your life. The other choice is to receive a predetermined monthly payment that will last until your loan has reached its limit. The payments will continue until the last person living who was a signer on the original Reverse Mortgage Loan remains in the home as their primary residence.
Second is a Lump Sum. You could choose to receive the maximum amount of your loan in one payment at the closing. This would allow you to make a large purchase, gift the money to someone or invest it. Remember, there are no restrictions on how you use the funds.
Third is a Line of Credit. The Line of Credit works just the same as a regular Home Equity Line of Credit. The funds are available whenever you need them and for any purpose. In most Reverse Mortgages the unused balance of the loan will continue to grow year after year. The less you use, the more that will grow and be available later.
You can also combine any two or three methods as needed. You might decide to take some cash up front at the closing to pay off some existing debts. You could also have a monthly income and have the remaining amount available as needed in a Line of Credit. To see an example of how much you could receive from a Reverse Mortgage we would be happy to send you a Free Estimate.
Will I Qualify For a Reverse Mortgage?
Qualifying for a Reverse Mortgage is quite different
than qualifying for a traditional mortgage. First of all there are no
income or credit requirements and age is never a factor as long as you
are at least 62 years old.. We still request a credit report from the
Credit Bureaus, but it is only for the purpose of finding out what liens
are currently on the property. Any existing mortgages will need to be
paid off, or may be paid with the new Reverse Mortgage. Any tax liens
will be required to be paid off as well.
To qualify for a Reverse Mortgage you must:
• Be 62 years of age or older
• Have equity in your home
• Live in your primary residence
• Pay off all current liens on the property
• Living Trusts are allowed
The loan is due whenever you no longer occupy the home. This could be when you sell the home or move to another residence. Of course upon your death your home is passed to the heirs of your choice and the reverse mortgage comes due. Your heirs may either pay the balance due on the reverse mortgage and keep the home, or sell the home and use the proceeds to pay off the reverse mortgage. If they sell the home, they will keep any excess sales proceeds. Federal regulations allow for a very generous amount of time to satisfy the loan. You will not be leaving your loved ones with any extra burden as a result you having a reverse mortgage.
It is also important to remember that your reverse mortgage is a non-recourse loan. Regardless of whether you or your heirs sell the home, in the highly unlikely event that the proceeds from the sale are not sufficient to pay off the loan, neither you nor your heirs can ever be held responsible to repay the difference.
What is the process to receive a Reverse
Mortgage?
The first and most important step is education and research. Learn as much as you can from various websites and printed material. We have many other resources available to you as well as printed Literature we will send you for free as well as a very informative DVD. We also invite you to attend one of our upcoming seminars where we will provide more information and give everyone the opportunity to ask questions.
When you feel
you have collected enough information to take the next step you can call
me for a confidential consultation. We will meet in person and I will
provide you with additional information and answer all you questions to
assist you making a decision.
If you should make the decision to apply for a Reverse Mortgage your next step is to set an appointment with an independent counselor. I will provide you with a list of approved counselors for the loan program you have chosen. Some counselors require you to meet with them in person while other counseling is available by phone.
Once your counseling is complete we meet again so you can sign your loan application documents. As soon as we have the signed papers our processor will order your appraisal, title report and all services needed to submit your loan application to the underwriter.
The underwriter compiles all the information we
have gathered and makes sure you qualify for a Reverse Mortgage. After
the Underwriter has completed the approval, you must decide how you will
take your payments. Once you have decided, we can order your closing documents
and schedule a time for you to sign the documents when they are prepared.
You should allow six to eight weeks from the start of the process until
your Reverse Mortgage Loan funds become available to you.