About reverse mortgages
Jim MillerAugust 8, 2012 | 1,864 views | 1 comment
Dear Savvy Senior,
Where can I get reliable, unbiased information on reverse mortgages? My wife and I are thinking about getting one but want to do some research first.
For seniors that are house rich but cash poor, a reverse mortgage is a viable option, but there’s a lot to know and consider to be sure it’s a good choice for you. Here are some tips and tools to help you research this complex financial product.
Let’s start with a quick review. A reverse mortgage is a loan that lets older homeowners convert part of the equity in their home into cash that doesn’t have to be paid back as long as they live there.
•To be eligible you must be age 62 or older, own your home (or owe only a small balance), and currently be living there.
•You can receive the cash either as a lump sum, a line of credit, regular monthly checks, or a combination of these. And with a reverse mortgage, you, not the bank, own the house, so you’re still responsible for property taxes, insurance, and repairs.
•Currently, 99 percent of all reverse mortgages offered today are Home Equity Conversion Mortgages (HECM), which are backed by the Federal Housing Administration.
•Repayment is due when you or the last borrower dies, sells the place, or lives elsewhere for 12 months. Then you or your heirs will have to pay off the loan (which includes the money you borrowed plus accrued interest and fees) either with the proceeds from selling the place, or if you want to keep the house, with money from another source.
To get a better handle on reverse mortgages and how they work, there are several excellent resources you can turn to for reliable information, but you’re going to need access to the Internet to utilize them.
To get started, the National Council on Aging recently created a free new website called the Home Equity Advisor that’s designed to help you think through the best way to leverage your home -- a reverse mortgage isn’t your only option.
Just go to homeequityadvisor.org and click on their “Quick Check” tool, which will ask you a series of questions about your personal and household situation to define exactly what you might need or want. Then, based on your answers, you’ll receive an individualized report offering information, tools, and consumer advice on a range of possible solutions that includes reverse mortgages and other alternatives.
If you find that you are a good candidate for a reverse mortgage, your next stop is at reversemortgage.org, a new consumer website created by the National Reverse Mortgage Lenders Association.
This site offers lots of educational information including “Your Road Map” which will help guide you through all the features of reverse mortgages and the process of obtaining one.
It also has a calculator to estimate how much you’d be eligible to receive from a reverse mortgage, and offers a comprehensive directory of licensed HUD-approved mortgage lenders, banks, and credit unions that offer reverse mortgage loans in your state.
Another important resource to help you understand the pros and cons of a reverse mortgage and how it would work in your particular situation is through counseling.
In fact, because reverse mortgages are such complicated products, the federal government requires that all reverse mortgage borrowers receive counseling through a HUD-approved independent counseling agency before they take out a HECM loan.
Counseling can be done in person or over the phone and some agencies today provide it for free or at a minimal fee. Some locations charge around $125. To locate counseling agencies in your area, visit hud.gov/offices/hsg/sfh/hecm/hecmhome.cfm or call 1-800-569-4287.
Jim Miller is a contributor to the NBC “Today” show and author of The Savvy Senior book. Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org.
Your Opinions and Comments
Share your comment or opinion on this story!
You must be logged in to post a comment.
South Texas Living Archives
Apple Pie readers help Julia fill in the blanks (September 21, 2016)
Cheap cell phone plans for seniors (September 21, 2016)
Come And Take It starts Sept. 30 (September 21, 2016)
Disc water pitcher (September 21, 2016)
DRT chapter plans meeting, new member class (September 21, 2016)
Get ready to grill at show barn’s barbecue cook-off (September 21, 2016)
Old Town Day seeks vendors (September 21, 2016)
Poth VFD to serve up barbecued chicken (September 21, 2016)
Run and shine at Neon Sizzle 5K (September 21, 2016)
Spots open for Community Yard Sale (September 21, 2016)
St. Mary’s Fall Festival Sept. 25 (September 21, 2016)
Support FUMC youth at barbecue ‘fun’ raiser (September 21, 2016)
Teen MOPS plans upcoming meetings (September 21, 2016)
The root of many evils (September 21, 2016)
Uncovering local legends: The grave in the middle of the road (September 21, 2016)
URBAN-15 seeks dancers, drummers (September 21, 2016)
Chicago Cub yearbooks (September 14, 2016)
Enjoy Country Music Show Sept. 20 (September 14, 2016)
How to prevent falls at home (September 14, 2016)
Krawietz family reunion (September 14, 2016)
La Vernia EMS plans Car Show (September 14, 2016)
Labatt Club donates to library, children (September 14, 2016)
Low voices and high hopes (September 14, 2016)
Lutheran Church plans Sausage Dinner (September 14, 2016)
Medicaid covers mosquito repellent to fight Zika (September 14, 2016)
Metting family plans reunion (September 14, 2016)
Non-prescription drugs — the forgotten solution to rising health-care costs (September 14, 2016)
Relay For Life meeting is Sept. 15 (September 14, 2016)
Seguin Cowboy Gathering is Sept. 17 (September 14, 2016)
Smith Gas celebrates 88 years in business (September 14, 2016)
The life of Doris Billimek Moczygemba (September 14, 2016)
Trail ride donations surpass $1M (September 14, 2016)
Visit Remembering Our Fallen exhibit in Seguin (September 14, 2016)
Who will take care of you? (September 14, 2016)
A life shaped by hard work and hunting (September 7, 2016)
After-Dinner Chocolates (September 7, 2016)
Cajun music Sept. 10 (September 7, 2016)
Donate hearing aids, glasses, equipment (September 7, 2016)
Earn a certification in native landscaping (September 7, 2016)
Enjoy EquestFest 2016 (September 7, 2016)
Getting Engaged? How to spend wisely (September 7, 2016)
Mystery box (September 7, 2016)
Nominate a nonprofit for Literacy Award (September 7, 2016)
Old medicine chest dates back to 1821 (September 7, 2016)
Professional bull riding returns to Fredericksburg (September 7, 2016)
Register to run for tacos Oct. 1 (September 7, 2016)
Road Runners plan September outings (September 7, 2016)
Still time to buy tickets for Wild Game Dinner (September 7, 2016)
Take a tour of SS museum Sept. 17 (September 7, 2016)
Take the H-E-B Slim Down challenge (September 7, 2016)
Vote for top flick at Manhattan Short Film Festival (September 7, 2016)
Welcome to The Greenline, a 43-acre linear park (September 7, 2016)
‘Cupping’ long before Phelps did it (September 7, 2016)