Resting Easily

That's just part of being a family. Reverse mortgages are all but worry-free, since they were carefully crafted by lenders and government agencies to consider all the little things that could go wrong and nip them in the bud before they can sprout. There are several myths and concerns that many adult children have for their parents when considering a reverse mortgage. We spoke to several adult children whose parents were considering reverse mortgages or who...

Meeting Financial Freedom

Those enormous loans don't materialize out of thin air. That's a lot of money to lend, and someone has to foot the bill. Jumbo Cash Accounts are also often called private lender or proprietary loans because the companies who fund them are individual private corporations. They have no ties to the government (which has its benefits and challenges) and can essentially create their own interest rate basis, loan requirements, and eligibility. The biggest and most prevalent financer of reverse...

Neglecting the Home

You may recall that there are three ways for a loan to become due in full You move out, die, or fail to maintain your property. If you neglect your home and let it go to seed, the lender can end the loan and demand repayment. Of course, it's rare that the lender will come by and inspect your home, but there are a couple of red flags that go up if you're exhibiting certain behavior 1 You stop paying your property taxes. You're required to continue all of your regular city or state property taxes...

Aging gracefully

Though you may feel discriminated against because of your age in some facets of life, reverse mortgages were designed especially for you. In order to receive a reverse mortgage you must be at least 62 years old. No exceptions. But wait, it gets even better. The older you are, the better you'll do on a reverse mortgage. Why Because lenders know that the younger you are, the longer they'll have to pay you. Lenders use actuarial charts (just like insurance companies) to guess how long you'll be in...

Factoring in your age

Just like when you bought your life insurance policy, an actuarial table will be used to guess how long you'll live and, in this case, how long you'll live in your home. The lender will determine your loan partly based on this information. The good news is, HECMs typically have very generous actuarial tables. They also only base your life home expectancy on your current age, nothing else. You could be a professional sword swallower and they'd estimate your lifespan with the same table as they...

Checking out current interest rates

Another factor in determining your loan amount (aside from your age and home value) are current interest rates. As interest rates go up and down, the amount you can borrow will change, just as it would in a forward mortgage. When you sign off on your mortgage (Chapter 11) the interest rate at that moment will be figured into the equation that determines your loan amount. The lower the interest rate, the more you'll be able to borrow. HECM interest rates are adjustable-rate mortgages (ARMs), and...

Glossary

7he following glossary of reverse mortgage terms can have you speaking like the pros. We've included some words that are not found in this book (we thought they were too technical or infrequently used) but which may come up during your own loan proceedings. Don't be afraid to take this with you when you go to your counselor or originator so you can keep up with any unfamiliar terms. At the end of this section, write in any words and their definitions that come up during the loan process and...

Qualifying for a Jumbo Cash Account

You'll find that loan qualifications for the Jumbo Cash Account are a little different than the other two loan products identified in Chapters 4 and 5. There are more restrictions in some senses, and more freedom in others. If your home didn't qualify for either of the other loans, the Jumbo Cash Account may be a pleasant surprise. Wealthy oil tycoons in Texas, you can stop reading this chapter right now. We're sorry to report that your state does not allow lines of credit, even for reverse...

Getting the Check

Designed with your individual needs in mind, the Home Keeper loans offer three payment options monthly payments, a line of credit, or a combination of these. Fannie Mae also has a less-publicized lump sum option. Ask your originator or counselor to consider this choice if you need to access your entire payment in one fell swoop. Payment decisions are made at closing, but don't feel pressured to make a choice that's set in stone. You have the right to change your mind at any time for a moderate...

Understanding Power of Attorney

One of the unofficial requirements for a reverse mortgage is that borrowers must understand the basic principles of the loan and all of the implications that go along with it. In short, the borrowers have to know what they're getting into. The loophole that allows you to give your parents the comfortable life they deserve is a durable power of attorney. By definition, a power of attorney is written permission for someone else to act on another's behalf. Almost every state in the country...

Administration on Aging

The Administration on Aging is a government-organized agency that offers one of the most comprehensive collections of information and education for seniors out there. You can find resources for every topic under the sun, from living arrangements to medical issues to mental health. The site also provides special sections for adult children and other caregivers, too, so encourage your family to take a spin on its Web site, www.aoa.dhhs.gov. If you're not Web savvy and you can't wait for your...

Paying Up

Although you don't actually have to pay the loan back until you move out permanently, there are some fees that work their way into your reverse mortgage. When you got your original mortgage, you probably had to pay all of your fees up-front, even before you got the keys to your new home. A reverse mortgage works a bit differently most, if not all of your fees are rolled into your loan, which your originator may call financing. The only fee you may not be able to finance is the appraisal fee,...

Counselor

Your first stop on the road to reverse mortgages is the counselor. They're not here to analyze your childhood or interpret your dreams instead, these counselors offer up sound advice and the information necessary for you to make an informed decision about your own loan. They are required to remain completely unbiased and can only give you the facts they never tell you what to choose or take away your power to make the best choice for you. It sounds great now, but come choosing time, you may...

Finding out more about repair addendums

During closing, the originator wants to ensure that anything that could hamper your loan process has been taken care of. Were you supposed to get your plumbing fixed or other repairs completed Was there an unsafe tree in your yard that needed to be felled Make sure you've settled all of this before the closing. ng If you've made arrangements to make repairs or other changes f after your loan has been signed and sealed, one of the documents you have to sign at closing is the repair addendum....