Last week, on November 6, FHA released Mortgagee Letter MORTGAGEE LETTER 2008-35 which announced the official increase in the national mortgage limit for all Home Equity Mortgages (HECM), which is the FHA version of the Reverse Mortgage. This increase will help eligible Reverse Mortgage borrowers in Orange County, especially in cities like Irvine, Newport Beach, Tustin, Orange, Santa Ana, and any area where the old limit was too based on home values.
The Reverse Mortgage has become more popular as more homeowners who are eligible for this loan product have taken the time to learn how the program works. There are several common misconceptions out there that have kept many people from seriously considering a Reverse Mortgage.
- "The Lender take the house" - this is not true. The homeowner retains full ownership of the home. A Reverse Mortgage is still a mortgage. You just don't need to make a payment, as you would on a "forward" mortgage.
- "I can be thrown out of my home" - The homeowner can stay in the home until they either decide to move out (live with the kids, or move into a senior care facility), or until they pass away.
- "I can owe more than my home is worth" - Even if this does happen, the homeowner still stays in the home with no payments. Generally Reverse Mortgages are at fairly low "loan to values", in order to make sure there is always equity in the home.
- "My heirs will be against it" - Experience shows hat heirs are in favor of Reverse Mortgages. Many times the heirs may need to be educated on how a Reverse Mortgage works as well.
Once a homeowner turns 62 they are eligible. A Reverse Mortgage will be the easiest loan they ever applied for. Because there are no payments, the lender doesn't care about credit or income. The loan is completely based on the value of the property and the age of the homeowner.
Loan proceeds are tax free and can be paid out in a few different ways. Either they are paid out in a lump sum, monthly payments, a line of credit, or any combination.
I've actually been getting calls from homeowners who wanted to try and get their loan "modified" because they were having a tough time making their payments. After finding out they were eligible for a Reverse Mortgage, and with some education on how it works, they have been thrilled to eliminate the mortgage payment expense from their monthly budget.
This is a great option for Seniors to consider. For more information or a free analysis to see how much you will qualify for, please contact Tim Storm @ 949-829-1846, or click here.