If you are 62 or older, you could be eligible for a reverse mortgage. A reverse mortgage is basically a mortgage in which senior citizens can convert the built up equity in their home into an additional amount of cash or a line of credit. If you are interested in applying for this type of mortgage, or just curious if it would be a beneficial mortgage for you, contact Dan Turner with Geneva Financial to help you understand the facts and figures behind a reverse mortgage. We work with borrowers in the areas of Hawaii, Florida, California, Washington, Illinois, and Ohio.

Reverse Mortgage Facts

As the name implies, in a reverse mortgage, a lender makes payments to the borrower in exchange for home equity, rather than typical loans in which a borrower pays a lender mortgage payments. The homeowner does not have to pay back the reverse mortgage loan until they sell or vacate the home. Most borrowers can use the additional money however they choose, depending on what type of mortgage is secured, but most people choose to use the sum for home improvements, debts, a supplement to retirement income, or other important financial matters. To obtain a reverse mortgage, you must own your home or have most of the original mortgage paid off, and you must live in the home as your primary residence.

There are three main types of reverse mortgages, and Dan Turner with Geneva Financial can help you understand the option that is right for you.

• Home Equity Conversion Mortgage, (HECM) – this is the most popular type of reverse mortgage and is backed by the U.S. Department of Housing and Urban Development, (HUD). An HECM often has higher upfront costs, but the income from the loan can be used for any purpose. With an HECM, all borrowers must complete loan counseling
• Proprietary Reverse Mortgages – these are not government-backed loans, but are instead insured through private lenders. With this type of loan, you usually receive a larger cash advance
• Single-purpose Mortgages – these loans are offered by nonprofit organizations or specific government agencies, and are less common than the first two reverse mortgage types. With these types of loans, you can only use the money for one specific purpose

Figures: The Numbers and Costs Behind a Reverse Mortgage

In order to qualify for a reverse mortgage, you must be 62 years of age or older, and there are specific costs involved in obtaining this type of loan. First of all, if you qualify for a reverse mortgage, you will have to pay a 2% initial mortgage insurance premium fee when you close on the home, as well as an annual 0.5 percentage fee on the balance of the loan. Lenders can also charge a $30 to $35 monthly servicing fee to monitor your home equity conversion mortgage, and they will charge an origination fee for 2% of the first $200, 000 of your home’s value to process the loan. You will also have to pay for closing costs, which typically include an appraisal, insurance and title search, taxes, etc.

Deciding On a Reverse Mortgage

If you are curious about securing a reverse mortgage and want to determine if it would be advantageous for your situation, contact Dan Turner with Geneva Financial today for a consultation. We help borrowers in the regions of Hawaii, Florida, California, Washington, Illinois, and Ohio determine their best financing options.