If you need a reverse mortgage explained to you so that you can better understand it, then you are in the right place. Reverse mortgages can definitely be confusing for a lot of people and the last thing you want to do is go blindly into this loan because there are reverse mortgage scams as well as several rules and guidelines that you need to know about.

If you are looking at a reverse mortgage you should at least know the basics of what this loan is first. A reverse mortgage is a loan that is based off the equity in your home. This loan is only available to homeowners who are 62 years or older and they have to outright own their home or have only a small mortgage on it.

 The main difference between a reverse mortgage and a conventional mortgage or home equity loan is that a reverse mortgage doesn’t require monthly payments by the homeowner. Instead the money is taken tax free and only needs to be paid back when the house is sold or the homeowner dies and leaves the house in their will to someone else. The money can be taken paid out in a lump sum, in monthly payments, or taken as a line of credit. It all depends on what the homeowner wants.

Reverse Mortgage Explained – Steps to Obtain a Reverse Mortgage

There are certain steps that a homeowner has to follow if they want to obtain a reverse mortgage. First, you should be aware of all the reverse mortgage rules and requirements so that you know you are qualified for the loan. These include being 62 years or older, owning your home or having only a small mortgage, no delinquent taxes, and the home has to be your primary residence.

If you meet those requirements and are still interested in applying for a reverse mortgage your next step is to meet with an independent HUD counselor. This is a must before you can even fill out an application for the loan. During this meeting you will have a reverse mortgage explained to you much more in depth and also they will look at your own individual case to see how much money you are approved for. You can’t meet with just any counselor or broker though. It has to be one that is certified by HUD so that they know you are getting the correct information on the loan.

If you are unsure about the process and your finances you may consider taking a family member with you to this meeting with the counselor so that they can help you with the process of applying for the reverse mortgage.

After you meet with the HUD approved counselor you can go ahead and fill out your loan application. You can simply do this with the counselor or find a private lender or financial broker to help you. You should realize though that you need to make sure the lender you do choose is familiar with reverse mortgages and they are certified to handle them.  As mentioned you have the choice to get the loan money in one lump sum, in monthly payments or through a line of credit. Choose the best option for you and what you need the money for.

You definitely should not feel embarrassed about needing a reverse mortgage explained more to you. If you have any more questions you can take a look at the HUD government website or Click Here to request a free information kit. A reverse mortgage is a huge step and will affect your finances for many years. It is definitely something to not take lightly but to do all the research you can on it.

Weighing the reverse mortgage pros and cons for yourself is definitely a very smart idea before you even sign one loan application paper. The thing about reverse mortgages is that there are going to be some definitely pros and cons but some of them will differ for some people. Homeowners have different reasons for applying for a reverse mortgage in the first place from being able to pay off some debt or to simply have money for retirement.

When looking at the reverse mortgage pros and cons listed below you need to keep in mind you own personal situation and why you are looking to get a reverse mortgage in the first place.

Pros of Reverse Mortgage

• No monthly payments are due on the loan. The homeowner doesn’t have to pay one penny each month if they don’t want to. The loan only becomes due when the home is sold or left to the estate.
• Reverse mortgage payments can be set up a few different ways according to how the homeowner wants the money. It can be a lump sum of money, monthly payments or a line of credit.
• The revenue from the loan is not taxable since it is looked at as advance on the loan.
• The money from a reverse mortgage can be used on anything of your choice. This means you can simply use it for retirement or to pay off debts you have. It can also be used to fund home repairs or simply to fund a vacation away.
• Credit scores don’t play a part in whether you are approved for the loan or not. Reverse mortgages are easy to get approved for as long as you qualify according to the reverse mortgage requirements.

 Reverse Mortgage Cons

• Even though the senior homeowner doesn’t have to pay any monthly payments on the loan, it is still collecting interest and will be due at some point or another. Some people tend to forget about this when they go to sell their home and may not have enough money to move.
• The reverse mortgage fees are usually higher than a conventional home equity loan or mortgage. The homeowner not only has to pay closing costs but also has to pay origination fees, which can add up to a significant amount of money.
• Reverse mortgages can take more time to apply for as well as be approved due to it being a government funded program. You must meet with a certified counselor before you can even apply for the loan which means you simply can’t go out to a lender tomorrow and get your money in a few days.
• For any senior homeowners who may be on Medicaid or Supplemental Social Security (SSI) they need to make sure that their liquid assets from this money doesn’t send them over the limits for benefits. Always be sure to check into this before getting a reverse mortgage so you don’t lose your benefits.

There are definitely pros and cons to a reverse mortgage, but all-in-all, these types of loans make a lot more sense for senior homeowners than a conventional second mortgage or home equity loan does. Just realize that you have to look at the reverse mortgage cons and pros from your own individual situation and see if you can really benefit in the end.

If you plan on applying for a reverse mortgage you should be aware that there are reverse mortgage fees that come along with the loan. Just like when you apply for a traditional home equity loan there are certain fees that have to be paid to simply apply for the loan as well as to finalize the loan. Here are the reverse mortgage fees that you should be aware of.

Origination Fee

The origination fee basically covers the expenses that a lender pays for filing for the loan. The HECM program has certain limits on how much the origination fee can be for borrowers. The reverse mortgage rules state that it can’t be more than 2% for the first $200,000 and then 1% on the amount over $200,000. There is a cap of $6,000 on the origination fee. This fee is often times worked into the total loan amount so that homeowners don’t have to pay it upfront.

 Appraisal Fee

When you apply for a reverse mortgage you need to have an official appraisal done on your home so that you know how much money your house is worth. Also to be approved for a HECM your home has to meet certain standards for upkeep and building codes so you need to get an appraisal done to show that it meets these standards.

An appraisal fee can run anywhere from $200-$400 depending on where you live and the appraiser you contact. This fee must be paid to the appraiser and is not included in your loan amount. Also,  if the appraiser does find something wrong with your home that prevents it from being approved for a HECM, such as a crack in the foundation or a leaking roof, you will then have to hire a contractor to come fix the problem, which will cost you more money.

Along with an appraisal you will most likely have to get a pest inspection as well. Most appraisers will be able to do this for you as well. It can cost you anywhere from $35-$100 more.

Closing Cost Fees

There are also other reverse mortgage fees that come when you finalize your loan which are known as closing costs. You can’t get your money until these costs are paid for. Some of these fees can be worked into your loan payment if you wish.

These fees can run anywhere from $800-$2000 depending on the broker or company that you use. Some of these closing costs include escrow fees, recording fees with the county, title fees and insurance, a survey done on your home, and credit report fee. The total amount you will pay in closing costs will be determined once the loan has been approved and the lender adds up all the fees that it has incurred to get you your reverse mortgage loan.

These are the most common reverse mortgage fees to look out for when applying for the home equity loan. Most of these fees can be worked into your loan amount, but you need to make sure that you do have some money for things like an appraisal so that you can get approved for your loan. If you have any more questions about reverse mortgage fees you can talk directly to a lender to see what type of fees that they may charge and what the exact amounts are for your loan.

Often times people find that reverse mortgage wholesale lenders can offer them a better deal than they can find anywhere else.  The thing to remember is that not every wholesale lender is the same and usually only the top ones will be able to offer you the best rate on your reverse mortgage.

There are several different reverse mortgage wholesale lenders that you can choose from, but it is in your best interest to choose one that is listed below as one of the top performers. These are trusted companies that have been around for years and that have been able to offer lower interest rates to senior homeowners on this equity loan.

A look at the Top Reverse Mortgage Wholesale Lenders

The list of the best performing and most popular wholesale lenders hasn’t changed that much in the past few years. There are several companies that have been on the list for years and will most likely continue to be on the list. Here are 5 top reverse mortgage wholesale lenders to choose from.

1. MetLife Bank

2. Financial Freedom Acquisition

3. Bank of America

4. Generation Mortgage Company

5. Sun West Mortgage Company

Along with this list there are also other lenders such as James B Nutter and Company and  Wells Fargo Bank that have also continued to be a top choice for a reverse mortgage wholesale lender as well but aren’t currently in the top 5.

If you are looking for a reverse mortgage, it would be very wise of you to check out the at least 3 or 4 of the 5 companies on the above list when it comes to a reverse mortgage wholesale lender. These companies are secure and trusted companies that have been able to offer a lot of senior homeowners lower interest rates than they can get elsewhere. With these brokers you don’t have to worry about reverse mortgage fraud or scams that you may have heard of as well.

This list for the top reverse mortgage wholesale lenders is a good place to start when looking for the best deal on this type of home equity loan. Not all financial lenders will give out reverse mortgages as there are only a few that are certified to do so and that have the knowledge and power to be able to give you the lowest interest rate possible. Don’t waste your time with other companies but instead choose a reverse mortgage wholesale lender listed above and get the security you need as well as save yourself a lot of money and time.

Reverse mortgages can definitely be hard to understand but it does pay to know all the reverse mortgage rules and requirements before you even apply for the loan. The Home Equity Conversion Mortgage (HECM) is a government run program that is only available for senior homeowners and it comes with special rules and requirements that must be followed. If you plan on applying for a reverse mortgage you should learn about these rules to see if you even qualify for this type of loan before you waste your time meeting with a reverse mortgage counselor.

Reverse Mortgage Requirements

When it comes to reverse mortgages there are some basic requirements that can’t be negotiated at all. The reverse mortgage rules state that these requirements must be met by the person who is applying for the loan but not every person in the household has to qualify. For example, if you are applying for the loan and you and your spouse own the home, only one of you has to fit all the requirements to be approved.

 The requirements to be approved for a reverse mortgage include:

• 62 years of age or older
• Own the home with no mortgage or only a small mortgage
• Home must be your primary residence
• No delinquent taxes or federal debts
• Must meet with an HECM approved counselor

Other Reverse Mortgage Rules to Know About

Unlike conventional home equity loans, a reverse mortgage doesn’t require the borrower to make a minimum monthly payment on the loan. Instead the full principal amount of the loan is due when the homeowner sells the home or the home gets passed on to the homeowner’s estate at the time of death. Although no minimum payment is required, most people like to pay back some of the loan if possible so that they can have more money from the sale of their home. You just need to stay aware that just because you don’t have a monthly payment you still do have to pay the loan back in due time.

Another reverse mortgage rule to know about is that there are certain limitations on the amount of money that you can borrow even if your home is worth more than those limits. It used to be that when people had more equity in their home than what the HECM would insure a lender would still approve the homeowner for a jumbo reverse mortgage, but these types of loans are very scarce nowadays. Lenders don’t have the trust in the market to give out uninsured loans on top of the reverse mortgage. If you have lots of equity built up in your home and you are looking to get a loan for $500,000 or more you may be upset to find that you can’t borrow that much money from a reverse mortgage as the limitations set by the government don’t allow it.

Now that you know the reverse mortgage requirements and rules you can have a better understanding if you may qualify for this type of home equity loan. If you do appear to qualify for a reverse mortgage according to the rules and requirements, your next step is to contact a reverse mortgage lender or counselor to start your application.

If you are a senior homeowner you may be wondering how does a reverse mortgage work. Reverse mortgages are only available to homeowners over age 62 and older and there can be definite benefits, but you must know how one works and the best way to go about getting a loan.

A reverse mortgage is often compared to a home equity loan except there are some major differences between the two. With a reverse mortgage the homeowner doesn’t have a monthly payment to that is due. Instead the whole amount of the loan is due back if the house is sold or if the homeowner passes away and leaves the house to someone else. This means that you can get a reverse mortgage and not have to pay a single penny on it for years if you don’t want to, although this may not be the best idea.

 Also, reverse mortgages can be used for just about anything. You can use it as pure income for you so you can afford retirement, you can use it to pay off any debt you may have, make improvements on your home or just to have some extra money in case of an emergency.

There is plenty of information about reverse mortgages available but the best way to learn how does a reverse mortgage work is contacting The U.S. Department of Housing and Urban Development (HUD). There is only one reverse mortgage that is insured the federal government and that is called the Home Equity Conversion Mortgage (HECM). They are only available through an approved FHA lender and there are certain things that a homeowner must do to qualify for the loan.

First, to be even considered for a reverse mortgage you must be at least 62 years of age and live in the house that you are applying for the loan with. It can’t be a vacation home or second home but must be your primary residence and you must own the home. Secondly, before you can be approved for the reverse mortgage you have to meet with an independent counselor to learn more about the loan and what kind of money you are approved for. The counselor will let you know the full amount of the mortgage you qualify for, which is based off the equity in your home as well as your age and current interest rates.

When applying for a reverse mortgage you must do your research and learn what your options are because there are several reverse mortgage scams that have been pulled on senior homeowners. By learning how does a reverse mortgage work and working with HUD you can guarantee that you will get the best information and not have to worry about potentially losing money. Always look for a lender that is FHA approved and one only goes by the book so that you can be sure your money is safe and that you can benefit from your reverse mortgage.

You may have heard the term jumbo reverse mortgage while researching reverse mortgage loans but you really didn’t know what that meant. Basically, a jumbo reverse mortgage is one that is more money than the FHA is willing to insure. 

There are maximum amounts that are set by the FHA according to the different regions for reverse mortgages. The amounts are based off the medium home values in the area. This can lead to problems for homeowners who may have a home that is worth above the medium price value in the area and wants to take out a reverse mortgage for the full price of their home.

There are not many homeowners who are affected by this, but there are still a handful of people who wonder how they can get a jumbo reverse mortgage.  With the recent mortgage crisis and the credit crunch a lot of lenders and financial institutions have stopped offering jumbo reverse mortgages. They feel that the risk is not worth it since the extra money is not insured by the FHA. The recent decrease in housing prices also has not helped the case for these types of loans.

There are some private firms who are still offering people a jumbo reverse mortgage, but they are definitely not easy to get approved for. You must be able to provide proof that your home is worth that much money as well as you give the lender reason for borrowing that much money against your home. If you are really in need of more than the maximum limit that the FHA has put on reverse mortgage loans, you may want to contact these private firms for a free quote to see if they are able to help you.

There is some good news though, recently Congress passed legislation to increase the limit amount on reverse mortgage loans. As of right now, the limit is now $625,000 compared to the previous limit of $417,000. There are not many senior homeowners who are taking out reverse mortgage loans for more than $625,000. If you are wondering how much money you can be approved for, you need to contact a HUD representative who will give you the exact maximum amount that you can borrow.

A jumbo reverse mortgage is definitely not for every senior homeowner. Most homeowners will find that their mortgage amount is well under the maximum limit set by the FHA. But if you do happen to need to find a jumbo reverse mortgage, look for a private firm that has a good reputation and can offer you the money you need. Be sure that you do your research so that you don’t fall for one of the many reverse mortgage scams that are out there nowadays.

With the amount of baby boomers reaching retirement age, reverse mortgage scams are on the rise. It’s an unfortunate thing, but there are people out there who are scamming senior homeowners out of their money. Fortunately, if you know what scams to look out for and you are well educated in reverse mortgages you can avoid being scammed and be able to get a reverse mortgage with no problems.

Here are some popular reverse mortgage scams that you need to be on the lookout for.

Every one of the major reverse mortgage program requires you to take independent counseling before you are approved for the mortgage. This is so the independent counselor can educate more about the loan and what specifically you are eligible for. Any lender who claims that you don’t need counseling or down plays its importance may be trying to run some sort of scam over on you. During your counseling, the person will let you know how much money you are eligible to receive on the reverse mortgage. Without counseling before you sign the papers, a potential scammer could take part of your loan and you may not even know it. There have been reverse mortgage scams reported where the homeowner takes out a loan for what they think is about $60,000 and actually it is more like $100,000. The difference is pocketed by the scam artist posing as the lender or financial advisor trying to help you. This means you lose thousands of dollars that eventually has to be paid back.

Another reverse mortgage scam involves the senior homeowner signing loan papers that are unfinished or not correct. The thing that you have to remember is that you never sign papers that are incorrect or unfinished and expect them to be fixed after you sign them. Instead, refuse to sign the papers until they are corrected and to your exact liking. One of the scams that have been reported by homeowners is that they sign the papers with a greater loan amount or no loan amount filled in. The scammer, posing as a financial advisor says that he will fix the paperwork after you sign them to get them done and processed as soon as possible. When the check comes for the homeowner in the wrong amount they are told to give it back to the advisor or to wire him the difference in the loan amounts and then he takes off with the money and never to be seen again. This could mean the difference between you taking out a loan for $10,000 and $100,000. Even though this is reverse mortgage fraud, there have been people who get away with it and the homeowner doesn’t even realize it.

Another one of the reverse mortgage scams to be aware of are people who pose as the government or a non-profit organization. Some salesmen actually use the selling point that they work for the government and that you should only work with them to get a reverse mortgage, but actually the government doesn’t hire workers to market to senior homeowners. The most popular reverse mortgage called Home Equity Conversion Mortgage (HECM) is actually run by the U.S. Department of Housing and Urban Development (HUD) but these people will never ever seek you out for a reverse mortgage. Instead you come to them and go through this program directly rather than dealing with some government worker trying to persuade you to get a reverse mortgage. Always be sure you know who exactly you are talking to or working with on your reverse mortgage. Don’t be embarrassed to ask for more information from the person such as their business number, their address, and other business information. If you are still leery about someone, you can always contact HUD directly and ask them for verification and they can help you determine what exactly is going on and who you may be working with. They answer all kinds of questions and they are there to help you and protect you from reverse mortgage scams.

Being informed and educated is the best way to protect yourself from reverse mortgage scams. Some people assume that older homeowners are not educated about these things and they take advantage of their trust, but you don’t have to be a victim of reverse mortgage scams if you look out for the described scams and make sure you get help from HUD when you need it.

Click Here to learn more about reverse mortgages and how you can prevent being scammed.

It is a sad thing but there are people out there who are using reverse mortgage fraud to rip off the elderly out of thousands of dollars. The best way that you can protect yourself from the scams and frauds that go along with a reverse mortgage is to know the laws and educate yourself on reverse mortgages.

Scammers will try to sell you a reverse mortgage as being the ultimate dream for your finances. They will tell you that it will give you financial freedom and you will never have to worry about money again. They will sell it to you hard and often times they approach you about the reverse mortgage instead of you seeking them out.

Some of these fraudulent companies will either pocket a part of the money from your loan or will take your money and you will never see them again. This is why it is so important that you do your research on any company before you decide to sign a contract with them. Check with the Better Business Bureau as well as online review sites to be sure that they have a good business reputation. It is truly amazing the type of information you can find on companies with a little search online.

Another thing to look out for when it comes to reverse mortgage fraud is any financial advisor who gives you advice on how to spend the money from the loan. Some of these scammers will try selling you life insurance policies as well as different annuities to invest in. These financial advisors then get a commission from whatever they tell you spend money on and before you know it all of the money from the reverse mortgage is gone.

Lastly, beware that if you are going to take out a reverse mortgage you must first get counseling that is mandated by federal law. If you come across a financial company who says you don’t need counseling or that it is not important than they are not following federal rules and you may end up paying for it in the long run. You must attend a counseling session with an independent advisor before you can be approved for a reverse mortgage and there is no way around this.

It is very unfortunate that reverse mortgage fraud is so prevalent. These scammers think that they can scam money out of older indivudals, but if you are well-educated on reverse mortgages and you seek the proper help from family as well as certified professionals, you can benefit from a reverse mortgage and have reverse mortgage financial freedom.

One of the most popular questions of people of retirement is age is if reverse mortgage financial freedom is really possible. For some people the answer to this question may be yes while for others it may be no. It all depends on the individual person’s financial situation.

Reverse Mortgage Explained

Reverse Mortgage Financial Freedom

Before you can know if a reverse mortgage can help you gain financial freedom you need to understand what a reverse mortgage is. This also helps to keep you away from reverse mortgage fraud as well. A reverse mortgage is only available to people 62 years and older who have a title of a home in their name. There are absolutely no exceptions to these rules.

The way that a reverse mortgage works is a loan is given to the homeowner for the amount of equity that is in the home they own. So, if you have $50,000 of equity in your home, you would be able to receive a loan for $50,000. The loan doesn’t come with a monthly payment and only has to be paid off when the person when you move from your home or if you pass away. It is then that the sale of the home goes toward paying off the reverse mortgage.

Reverse Mortgage Financial Freedom Looked At More Closely

Some people argue that there is no way a person can have financial freedom if they have an outstanding loan, but a reverse mortgage is different from your basic mortgage or loan. A reverse mortgage can be used for anything from paying off your credit card debt to just being able to have a comfortable retirement. This means if you have any type of debt like credit card debt or a car loan you can use a reverse mortgage to get rid of these debts. So that means you have no other debt besides this loan and your monthly payments are no longer around. At this point you start paying back some of your reverse mortgage or simply save the money if you decide to move or for an inheritance to your heirs.

A reverse mortgage as it relates to financial freedom is not going to be for everyone. If you don’t have any debt to speak of and have enough money to live comfortably in your retirement then there would be no reason for you take out a reverse mortgage on your home. On the other hand if you don’t have enough money to live off in your retirement years or you have debt stressing you out, a reverse mortgage may be a great option for you.

So, is reverse mortgage financial freedom really possible? You have to answer that question yourself and if you need help consult a reverse mortgage professional to help you decide the best path for you to take.