Reverse Mortgage in Tysons Corner & Vienna, VA
The reverse mortgage changed on October 1, 2013.
With less equity available for borrowing and a variable pricing structure based on first year usage the future outlook of the reverse mortgage has improved.
Come January 2014 reverse mortgage borrowers will be subject to a financial assessment which helps determine if the reverse mortgage is the right financial tool for the borrower. These program changes support long term sustainability of the reverse mortgage as a financial retirement tool that can help in closing the gap between longevity and financial resources.
The great news is that we are living longer, more productive and active lives than ever!
The bad news is that many of us didn’t or couldn’t plan for it and we may now or in the future face a GAP between how long we will live and the financial resources available to us to fully enjoy our golden years! A reverse mortgage may be the answer with its many valuable features and multiple options to turn equity in our homes into cash, establish a noncancellable and growing line of credit, receive monthly payments for as long as we live in our home or use a combination of different options as our needs change.
A reverse mortgage allows seniors to access some of their home equity without selling the home. For many elderly people this can alleviate fear of running out of money or outlive financial resources.
The Reverse Mortgage Program
A reverse mortgage allows homeowners 62 years of age or older to borrow against the equity in their homes with no obligation to make monthly payments as long as they live in their homes. This type of reverse mortgage loan is also known as the Home Equity Conversion Mortgage or HECM with multiple options to draw funds from while payments to the homeowners by the bank are guaranteed by the Federal Housing Administration.
The HECM reverse mortgage is an “asset based or non-recourse” loan. The borrowers are not personally liable for the repayment of the loan; the only security for the bank making the loan is the house itself while the borrowers continue to own the home. The reverse mortgage is simply a loan with no specific repayment date. It becomes due and payable when the borrowers leave the home permanently and gets repaid when the borrowers or their heirs sell the home. Any leftover equity gets paid out to the seller. If the loan balance is larger than the home’s selling price, the difference is paid out from the Mortgage Insurance fund administered by FHA/HUD.
The HECM reverse mortgage is ‘the best engineered financial product of our generation’ and easy to qualify for:
- Borrowers must be 62 years or older
- Own and occupy the home as primary residence
- Home must be a single family home, a multifamily structure, a FHA approved Condominium or approved manufactured home.
- A financial assessement will be necessary come January 2014 to determine borrowers’ capacity to pay for homeowner’s insurance and real estate taxes.
The HECM reverse mortgage is a uniquely flexible financial tool to support retirement objectives as follows:
- Supplement or increase monthly income streams with (a) regular monthly cash advances or tenure payments for as long as the borrowers live in their home, (b) a term payment for a specified period. Since these payments are loan advances they are not taxable.
- Build a growing cash reserve or emergency fund for a rainy day by not using the available line of credit which grows each month at the loan’s effective compounded interest rate plus 1.25 percent. This growing cash reserve is a most powerful financial retirement tool especially if deployed at the qualifying age of 62.
- Withdraw cash upfront subject to a limit on the amount that can be withdrawn in the first year. Borrowers accessing more than 60% of their total loan are subject to higher pricing. Exceptions to this 60 percent limit are made for existing mortgages and “mandatory payments.
- Purchase a home with a reverse mortgage without having to make monthly principal and interest payments.
Is a HECM reverse mortgage right for you?
- The HECM’s complexity requires access to high quality information about the reverse mortgage.
- The quality of advice that borrowers receive determines their borrowing power when they need it most.
- With education being the first step, every HECM borrower must be counseled by a Government approved HECM Counselor.
- Integrating reverse mortgages with the borrowers financial retirement plans improves optimal outcomes.
- Involving children and family in the educational process is highly recommended.
To get more information specific to your situation:
- Contact me at (703) 346-7262 for a free consultation
- Email your questions to email@example.com
- Feel free to ask me for references.
- Call for the date of the next educational seminar about reverse mortgages.
Andreas A. Keller
Reverse Mortgage Specialist
Southern Trust Mortgage
A subsidiary of Middleburg Bank
Reverse Mortgage Division