- Credit 101
- Teaching Tools
- Scores
- Life Stages
- Credit Mishaps
- Understanding Different Bankruptcy Chapters
- Your Credit Report After a Bankruptcy
- Understanding Judgments
- Inaccuracies on Your Credit Report
- Disputing Credit Report Errors
- Understanding Foreclosure
- The Foreclosure Process & What To Do Afterwards
- Understanding Identity Theft
- In the event of: The Death of a Spouse
- Rebuilding Your Credit
- Choosing a Reputable Credit Counselor
- Avoid the Downside of Credit Mismanagement
- What is a Credit Freeze
- Worksheets & Letters
- 6 Steps to Creating a Budget
- Household Budget: Wants vs Needs
- Personal Budget Template
- Understanding Amortization Schedules
- Loan Amortization Calculator
- Sample Opt-Out Letter
- Sample Dispute Letter
- Annual Credit Report Request Form
- Auto Loan Payment Calculator
- Back-to-School Budgeting
- Cost of Credit
- Emergency Fund
- How Much Car Can You Afford
- How Much House Can You Afford
- How Much Will College Cost
- How Much Will My Loan Cost
- How Will My Savings Grow
- Mortgage Payment
- Mortgage Refinancing
- Pay Down Debt or Invest
- Repaying Student Loans
- Retirement Fund
- Rework Your Budget
- Saving for a Goal
- Should I Consolidate My Debt
- Travel Budgeting
- Your Holiday Budget
- Buying a House
- 5 Steps to Buying a Home
- 5 C's of credit When Applying for a Loan
- What Score is Needed to Purchase a Home
- Using a Realtor
- Understanding Fixed Rate Mortgages
- Understanding FHA Loans
- Understanding VA Loans
- Understanding Interest Only Loans
- Understanding ARM Loans
- Understanding Combo Loans
- Understanding Streamline K Loans
- Understanding Bridge Loans
- Understanding HELOC (Home Equity Line of Credit)
- Understanding Reverse Mortgages
- Basic Mortgage Underwriting Principles
- Credit & Financial Law
- Home
5 C's of Credit When Applying for a Loan
What Score Is Needed to Purchase a Home
Understanding Fixed Rate Mortgages
Understanding Interest Only Loans
Understanding Streamline K Loans
Understanding HELOC (Home Equity Line of Credit)
Understanding Reverse Mortgages
How Does a Reverse Mortgage Work?
Reverse mortgages allow a home owner to borrow equity. Instead of making payments to the lender, the lender makes payments to the borrower. Payments can be made as follows:
- A lump sum
- Monthly, for as long as the borrower occupies the home
- Periodic advances through a line of credit
- Combination of any of the above
Who Can Qualify for a Reverse Mortgage?
Anybody over the age of 62 who owns a home can qualify for a reverse mortgage, if there is adequate equity in the home.
- Existing mortgage(s) will be paid off.
- Deferred maintenance / repairs will be required, if necessary.
- Credit scores do not apply and credit history is irrelevant.
How Much Do Reverse Mortgages Cost?
Like with a regular loan, borrowers pay fees to get the money. These fees can be rolled into the loan and financed. Because there are no "standard charges," the fees will vary depending on the lender, third-party vendors and the type of loan selected. Basically, borrowers pay for:
- Mortgage insurance premiums. This insurance pays for a loss to the lender if your home is worth less than the amount owed at the end of your loan.
- Monthly lender fees. Lenders typically charge the borrower to disburse monthly payments.
- Loan points or application fee. This fee increases the lender's return on investment.
- Normal closing costs. Fees to close include charges for recording, escrow or closing agent, title policy, etc.
How Much Can You Borrow?
The amount of loan available depends on the type of loan program selected, how much equity remains after paying off existing mortgages and the borrower's age.
Where Can You Get a Reverse Mortgage?
- The National Reserve Mortgage Lenders Association publishes a list, sorted by state, of approved lenders who originate reverse mortgages.
- Department of Housing and Urban Development also publishes a list of approved HUD lenders. Remember to check the box that limits the search to lenders who have completed a HECM loan within the past 12 months.
