Is a Reverse Mortgage the Best Loan for You?
Welcome to the National One Mortgage website dedicated
to the California Reverse Mortgage
Benefits of a
Reverse Mortgage:
No Mortgage Payments; you still pay property taxes and Home insurance
You still own and live in the house
Get Cash in a lump sum or payments
Generally does not affect social security
Common Myths:
The Bank Owns your Home
Reverse Loans are expensice
Liable for balance above appraised value
Hard to qualify for
Your Home is Your Primary Residence
Youngest Homeowner is 62 or older
You own you Home
Our mission is to set the highest standard in the Reverse Mortgage industry. We are committed to quality customer service and putting the needs of the people we serve first. We will always adhere to the highest degree of integrity in all of our business dealings.When it comes to Reverse Mortgages, Education is the key. Our pledge to you, is to complete the education process, so you are able to make an informed decision. We always encourage prospective clients to invite family members to be a part of the discussion with us during the education process.
What is a reverse mortgage & how does it work? In its most basic sense, a Reverse Mortgage is any loan secured by a home where repayment is deferred to a later date. |
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The word “REVERSE” is used for two primary reasons:
Funds on traditional mortgages move FROM a borrower’s bank account TO a lender or servicer. Reverse mortgages however, have the ability to move funds in a lump sum, or in a monthly payment, FROM a lender back TO the borrower. 2. Loan balances tend to move in reverse. Since the flow of money generally moves in reverse, and the loan balances tend to move in reverse, it is obvious why this type of loan is called a Reverse Mortgage. The program allows seniors to borrow money today against their home, and pay it back after they die or move out permanently. So no monthly mortgage payments and you still own your home. As to how much you get, it ranges from 50% – 60% of the appraised value of your home. The older you are, the more you get. The loan is paid back when one of three things happens. 1. You sell the house. 2. You permanently move out of the house. An example would be to go live with your kids or to move into a nursing home. You are considered to be permanently out of the house if you vacate the house for over 12 consecutive months. Once that happens, the loan is due and payable and you have approximately 12 months to repay the loan. 3. Last surviving spouse dies. If one spouse dies, the loan is not due. But when the last surviving spouse dies, then the loan is due. You can do a reverse mortgage if you already have a mortgage on your house or if you own your house free and clear. But if you have a mortgage on it, it gets paid off as part of the reverse mortgage transaction. You don’t have any mortgage payments with a reverse mortgage. Nevertheless, you do have to show that you can pay your property taxes in the future and keep homeowners insurance on the property. Also, you have to be 62 or older, and you have to live in the home. That’s really it. And it’s assumed that you will keep up your house to a reasonable standard. It’s safe With a reverse mortgage, you get money today and it’s paid back when you die, sell or leave the house permanently. There are no monthly mortgage payments. So what about the interest on the loan? Since there are no mortgage payments, that interest is not getting paid each month, like on a regular mortgage. Rather, it’s accruing and adding to the balance of the loan. When you die, sell or permanently leave the house, the loan is due and payable. The heirs can either sale the home and the loan is paid at that time and what equity is left they keep, or they can pay off the loan and keep it. To clarify what is repaid in total when the loan is due and payable, it’s a combination of three things. It’s the amount of money originally received. Secondly, it’s the closing costs incurred when you took out the loan. And it’s the interest on the loan, along with the FHA monthly mortgage insurance premium. You may want to avoid a reverse mortgage if you don’t plan on living in your home long term. There is no requirement that you must live in the house a certain number of years, but the economic reality is there are closing cost associated with a reverse mortgage. It wouldn’t make money since if you are going to live in the house less than four years after taking out a reverse mortgage. A reverse mortgage is designed for people who intend to stay in their house long-term, typically over four years. That was the concept behind the loan when AARP lobbied Congress to create the reverse mortgage program Will the Reverse Mortgage Stick My Heirs with a Bill? No. Fortunately, this is where FHA insurance kicks in. Reverse Mortgages are non-recourse, meaning that the homeowners, and their heirs, have no obligation to pay for any deficiency caused by the home being worth less than the loan balance. Generally, the heirs will sell the home when the last surviving borrower passes away. The Reverse Mortgage balance is paid off at closing just like any other lien, and the remainder would be a form of inheritance for them. However, if the home is worth less than the loan balance, the deficiency is paid through the Mutual Mortgage Insurance Fund so that the lender, investor, borrower, and the borrower’s heirs are not stuck with a bill. 5 BIGGEST MISTAKES WHEN GETTING A REVERSE MORTGAGE #1 A report by Consumers Union and other advocacy groups found that seniors are being sold reverse mortgages when the product is not their best option, and cross-sold other financial products as well. Cross-selling can be described as encouraging borrowers to use reverse mortgage funds to purchase insurance or other products that may not be in the borrower’s best interest, and are potentially unsuitable given the borrower’s personal financial circumstance. It can’t hurt to have a trusted relative, friend or financial advisor go over your paperwork before you commit to anything. #2 Waiting:While there are some mistakes you can make in getting a reverse mortgage, one stands out among the worst: that is deciding to wait until you are older and have greater financial needs before setting up a reverse mortgage. I’ve heard it all too often, “We can manage a few more years before the money runs out. Then we will call you.” Now, don’t get me wrong, this is different from simply deciding it is the wrong step; that can be a valid conclusion for many reasons. But to put off until later, even though it is readily apparent that you are at risk of out-living your money, is often a tragic error. Too many people wait until later, only to find what would have worked before won’t work anymore. While it is prudent not to rush into such an important financial step, but simply delaying the decision because you don’t want to face the facts rarely pays positive dividends. Rates, programs, and home values can change. Also, and just as importantly, your circumstances can change. #3: Assuming your condo qualifies for a reverse mortgage: #4 Rushing:A reverse mortgage is a big financial decision, and homeowners sometimes sign for a loan before all of their questions have been answered. It’s much better for an owner to take the time to find out everything she wants to know before committing to the loan. #5 Don’t take more money than you need: With a reverse mortgage, you have an option as to how much you can take of the total proceeds that you are entitled to. Here’s the thing I would like you to understand: Take only what you need. If you take more than you need and put it in the bank, the interest it will draw will be less that n the interest that is accruing on the loan.. HECM funds can be used for any purpose you choose: Early retirement Start a business Travel Some more reasons to get a Reverse Mortgage Peace of mind It’s a line of credit that grows over time and is always available to you when you need it. You may not need it, but it’s there if something happens. The reverse mortgage is a line of credit you can leverage when other unexpected financial hardships occur. It may only be a car engine blowing up or is damaged in some way and you need a new car. The peace of mind could simply be downsizing or paying for many years in an assisted living facility. Many people aren’t prepared for elderly care. Not everyone understands what a reverse mortgage actually is and there is a lot of misinformation out there, even in otherwise reputable and reliable media sources. Some think the name means you have to give your house back. You don’t. What are the Eligibly Requirements? There are borrower and property eligibility requirements that must be met. The following items are the key items for eligibility, though lender guidelines may vary slightly. AGE HOMEOWNERSHIP CREDIT INCOME |