1) Can I do a Reverse Mortgage if I already have a mortgage on my home?
Yes. As long as your current mortgage doesn’t exceed approximately 50% – 60% of the value of the home. If you already have a mortgage or any loan on your home, our reverse mortgage will pay off your existing mortgage or loan, so you will not have any monthly payments.
2) How is the U.S. Government involved with reverse mortgages?
In 1989, the U.S. Government established the reverse mortgage program though HUD. It’s purpose was to provide a means for seniors to stay in their homes and obtain cash or a lifetime income from the equity they built up in their home over the many years of making their monthly mortgage payments. As most seniors age, their earning capacity diminishes, yet, due to rising medical costs as we age, expenses often go up. Reverse mortgages sponsored by HUD is the U.S. Government’s response to the plight many seniors faced with being “home rich” but “cash poor”. It should be noted that the absolute last thing the government wants is a seniors program that takes advantage of seniors. For that reason, the U.S. Government has put in two very important safeguards.
a) A cap on fees and expenses – the interest rate and all fees associated with reverse mortgages are capped as a safeguard for seniors.
b) Required counseling for suitability – HUD requires everyone getting a reverse mortgage make sure it’s right for them by receiving “counseling” from a non-profit, HUD approved counseling agency. This counseling can be done either in person or over the phone.
3) Why is a reverse mortgage better than simply refinancing my current mortgage?
Two reasons a reverse mortgage is better.
First: With a reverse mortgage you will not have to make monthly mortgage payments to repay your loan, unlike with a traditional mortgage where your monthly payments continue.
Second: There is no “income qualifying” with a reverse mortgage. For a traditional mortgage, you will have to qualify income wise, to make sure you will be able to repay the mortgage.
4) Could you give me an example of how a reverse mortgage works?
HighTechLending will loan you approximately 50%-80% of the market value of your home at a low interest rate. This loan is not repaid until you pass away or vacate your home for more than 12 consecutive months. And, the U.S. Government guarantees your loan to HighTechLending. A reverse mortgage is a non-recourse loan.
Here’s an example: Let’s say you are 65 and own your home with a value of $180,000 with an existing mortgage of $23,000. That existing mortgage has payments of $600 a month. If you get a reverse mortgage, you would receive the following:
$60,000 TAX FREE cash that you can receive as a line of credit, a lump sum or monthly income payments for your lifetime. This option is being eliminated January 31, 2013 and only the Adjustable Rate will be available with a much lower amount available.
$600 a month additional income because your $23,000 mortgage has been paid off.
This is accomplished by you receiving 50% of the value of your home ($90,000) via a reverse mortgage from ReverseMortgageOfTexas.com. With the $90,000, you would then pay off the existing $23,000 mortgage on your home, with the balance (after closing costs) going to you in tax free cash. If you are concerned about the repayment of the reverse mortgage, remember, no repayment is required during your life time as long as you continue to live in your home. When you pass away, your children or heirs can sell your home and repay the reverse mortgage with the proceeds of the sale. After they pay off the reverse mortgage, they will keep the profits !! TAX FREE !! And remember, your reverse mortgage is a non-recourse loan and the balance due on your loan can never exceed the value of your home.
5) Are fixed rate loans available?
No, however we do offer a 60 day rate lock as long as you close your loan within 60 days of application signing. The adjustable rate mortgage (ARM) features annual or monthly rate adjustments. The rate is tied to the one year T-Bill or LIBOR. Interest is paid to the lender only when your home is sold or the mortgage is paid off.
6) Will I have to pay any fees out of pocket to obtain a reverse mortgage?
No. We never ask you for any up-front money. However, there are fees to get a reverse mortgage and they will be added to your loan balance so that you do not have to pay any money out of pocket. These expenses include a loan origination fee of 2% of your home’s FHA appraised value or the FHA maximum loan limit in your county (whichever is lower), an appraisal fee and other ordinary closing costs, and the FHA mortgage insurance premium of 2%. A monthly servicing fee will also be charged and will be financed into the loan balance so you will not have to pay it in cash. There are no out-of-pocket costs; all fees are similar to a traditional home mortgage loan. There are no unusual fees because it’s a reverse mortgage.
7) Are the Closing Costs and Fees in a reverse mortgage high?
No, because they are paid with “future dollars” in typically 15-20 years, not with today’s dollars. There are no out of pocket, up front fees paid by the borrower.
8 ) How safe and secure are reverse mortgages?
Reverse mortgages are sponsored by the U.S. Government through HUD. The fees and expenses that can be charged on a reverse mortgage are tightly regulated by HUD in order to protect you, the senior.
9) How will a reverse mortgage affect my heirs or children? I want to leave my home to them.
Most children want their parents to enjoy their ‘golden years’ and are happy that a reverse mortgage gives you the extra money to make your life fuller. With a reverse mortgage in place, at your passing, your children may sell your home, pay off the loan amount and keep the profits tax free. If your children want to keep your home after you pass away, they simply refinance the reverse mortgage with a traditional mortgage.
10) How long does the reverse mortgage process take? When will I receive my money?
Generally, 30 to 45 days. However, we have closed loans within 16 days. The time it takes is determined by how fast you get us the required documents.