Reverse Mortgages

A Reverse Mortgage Can Offer the
Perfect Retirement Plan

A reverse mortgage can be a smart choice in planning for the retirement years. With an inviting and temperate climate, a vibrant culture enhanced by its proximity to the border, and a bustling economy, National City offers a unique and exciting lifestyle. By choosing one of the three general types of reverse mortgage option, you can enjoy the best that this region has to offer for years to come – while making NO monthly mortgage payments.

A reverse mortgage, unlike other loans, allows you to benefit from the equity in your home without having to sell the house or take out a loan that will require monthly payments. Established for those 62 years of age and older, reverse mortgages are paid back from the sale or refinance of the house and property, typically occurring when the borrower no longer resides in the home.

A reverse mortgage can be obtained in a lump sum for such things as home improvement, foreclosure avoidance, medical bills, and so on. It can also be used as a way to supplement monthly income during the retirement years, helping to maintain your standard of living. Choosing a reverse mortgage can be a great way to help ensure that the retirement years are enjoyed without financial pressure.

Below are the answers to 10 of the more common questions regarding reverse mortgages:

Top 10 Things You Need To Know About Reverse Mortgages

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you, but unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD's reverse mortgage provides these benefits, and it is federally-insured as well.

2. Can I qualify for a HUD reverse mortgage?

To be eligible for a HUD reverse mortgage, HUD's Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own your home outright, or have a relatively low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan.

3. Can I apply if I didn't buy my present house with FHA mortgage insurance?

Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.

4. What types of homes are eligible?

Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for individual condominiums units to qualify under the Spot Loan program.

5. What's the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income or credit status.

Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you CANNOT be foreclosed or forced to vacate your house because you "missed your mortgage payment."

6. Can the lender take my home away if I outlive the loan?

No! You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home's value.

7. Will I still have an estate that I can leave to my heirs?

When you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home belongs to you or to your heirs. None of your other assets will be affected by HUD's reverse mortgage loan. This debt will never be passed along to the estate or heirs.

8. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home (or FHA's mortgage limits for your area, whichever is less). Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

9. Are there any other requirements or safeguards?

Yes. Before being approved for a reverse mortgage you must undergo counseling by a HUD Approved counseling agency. This is not an overly burdensome process and can be typically completed by phone. The counseling service answers all of your questions and makes sure you understand reverse mortgages. They also make sure that this type of product is suitable for your circumstances. This is done to add an extra layer of protection for the borrower through a neutral third party.

10. How do I receive my payments?

You have five options:

· Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.

· Term - equal monthly payments for a fixed period of months selected.

· Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower's choosing until the line of credit is exhausted.

· Modified Tenure - combination of line of credit with monthly payments for as long as the borrower remains in the home.

· Modified Term - combination of line of credit with monthly payments for a fixed period of months selected by the borrower.

To find out more about your reverse mortgage loan options, please answer the questions below. Upon receipt of the completed form we’ll contact you with information about the amounts you can receive and the receipt methods available.