Your Questions About Reverse Mortgage

Chris asks…

How can someone find out if a relative got a reverse mortgage on their home?

admin answers:

Obviously you can’t ask them! If you have a friend that is a Real Estate Broker, they have access to certain types of data bases that you and I cannot check — Have R.E. Check by address of house for current name of mortgage company. Not all mortgage companies handle R.M. – these are Federal charter banks. By the name of the Mortgage company you will know if its a R.M.

Maria asks…

Does anyone know how a “REVERSE MORTGAGE works?

My mohter in law wants to take out a reverse mortgage on their house. They own it free and clear and they are both retired. They want the money to travel, vacation etc.

someone told me that it is not very cost effective and that they should just re-fi.

Any info on this subject would be helpful.

admin answers:

First of all, you have to meet a certain age limit to be qualified for a reverse mortgage. Depending on the program or lender would determine the age limit, however I do believe it starts at retirement age.

Secondly, the lender will only payout to a certain percentage of the value of the home. Again, this depends on the lender and the program. Most will perform to 50% of the value of the home. I have seen some as low as 40% with some being as high as 60%.

Third, the monthly income would determine the life expectancy of the individual. If the person is 66 years of age with a life expediency of 85, then there is 19 years that they will receive payment (as long as they do not exceed the value threshold).

So the example would be this:
Example 1
500,000 value owned free and clear
250,000 dollars allowed to be drawn on
1,094.49 dollars in income(19yrx12m=228m/250,000 dollars)

Example 2
500,000 value w/ 100K lien
150,000 dollars allowed to be drawn on (100K-250K (50%))
657.89 dollars in income (same formula as above).

Each time a payment is conducted, you will incur interest on that payment that will be compounded monthly. Hence the reason for the low LTV (loan to value) ratio.

Once the borrower passes away, you will have a certain amount of time to repay the lender back. In most cases it will be 90 days once it has gone through probate. Repaying back the loan with in 90 days either through selling the property or refinancing the property if you decide to retain the property.

Another item that you will want to consider will be the closing cost of the reverse mortgage. Closing costs are typically much higher than your traditional mortgages. In some cases it might be double to triple the normal cost. Again, that depends on the lender that you work with.

I have worked with a few people that where looking into the reverse mortgage program, that ultimately decided to finance using another program that is not a reverse mortgage. Ultimately it coomes down to cash control. You need to find a program that allowes the freedom of cash control to obtain your goals (traveling and enjoying the remaining years of your life). However, you do have a lot of home work to do in researching your options.

Contact me directly if you have any questions. Hope this helps…

Linda asks…

How do I go about getting a reverse mortgage?

And how do they work?

admin answers:

A “reverse” mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. No matter how this loan is paid out to you, you typically don’t have to pay anything back until you die, sell your home, or permanently move out of your home. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older. More information about reverse mortgages can be found here……



Richard asks…

What is a ‘Reverse Mortgage’ and is it a good thing to do. Pros and cons please.?

I see it advertised on TV. Has anyone done it? Were you happy with your decision later? How will it affect my taxes?

admin answers:

I read some of the answers and cant believe the information coming out. Your best resource is to go to the AARP website and get the real facts. It is for anyone who is over 62 and you have to have equity in the home. If you currently have a mortgage then it either has to be paid off prior or the Reverse Mortgage will pay it off. You have choices of how to receive the available money, fixed monthly amount, fixed lump sum payment, or an open check book to the amount allowed. The older you are the more you can use. It is FHA insured and you still keep the ownership of your house. The only time the mortgage needs to be paid is if you move out of your house for a period longer than one year. It is for the seniors who need additional income, or that grandparent who wants to help a child or grandchild buy a home, go to school to name a very few reasons why they are beneficial. What about someone who is leaving their home to a charity, why not do a reverse mortgage and see the fruit of the donation while you are still a live. Why not do a HELOC? Because if you use the money under a HELOC then you will have a mortgage payment. If you do a reverse mortgage and use the money you do not have to pay it back unless you move out of the house. If you are in California email me and I will send you the brochures. The only thing negative about a Reverse Mortgage is the initial cost that is rolled into the loan. Depends where you live but you will not be able to have access to the total value of your home.

John asks…

I have a reverse mortgage and was wondering if I can use home improvements on my 2007 income taxes.?

If I can deduct my improvements, what deductions can I use?

admin answers:

No, home improvements are not tax deductible. You add them to your cost basis. That will reduce your gain when you sell and any capital gains taxes due at sale time, if any are due at all.

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Your Questions About Reverse Mortgage Lenders

James asks…

Do you have to have permission from lender to add a name to a deed creating a joint tenancy? (Floroida)?

My friend was talked into adding her boyfriend to her deed and creating a joint tenancy. He makes no payments and has no equity in the property. There is a mortgage on the property and permission was not obtained from the lender before this was done. What can she do to get this reversed or is it even a legal deed in the first place since the lender is unaware of it and did not grant permission to do it.

admin answers:

He owns half the house now, including half the equity. She gave it to him. The deed is legal, what the lender will do is call the mortgage due, she is going to have to refinance.

Joseph asks…

Where does my grandmother’s house stand in the foreclosure process? How long until eviction?

Hello. I live with my grandmother in a house that had a reverse mortgage done to it a few years back. It was done under my grandfather who passed away in 2008. Usually when the borrower (my grandfather) dies the loan has to be repaid in full, but nothing has ever been repaid except property taxes. To date, me and my grandmother have been living here without hearing a word from the company or lender. This changed in mid-December 2010 when foreclosure papers arrived.

My county’s (Miami-dade, Fl) official website lets you track down docket information for cases online. I have a snapshot of the case dockets (aka a summary of the case) which you can see by clicking the link below. I just wanted someone to more-or-less translate the status of the house by looking at this information. Exactly where does this house stand in the foreclosure procedure and ‘how long would you say we are going to be officially ordered to leave from today?’ I think it was about one and a half to two months ago that a letter arrived saying they were trying to find someone to represent the interests of the house because the foreclosure papers came for “unknown heirs and tenants.”. Here is the snapshot of the dockets:

admin answers:

Stephen, have you spoken to other foreclosure specialists who just deal with foreclosures????????????? You and your grandmother need to hang in there. Knowledge is power. Here’s an informative article on tips to avoid mortgage defaults, and one of them includes what you are doing–realizing and not ignoring that you have a financial crunch, which you seek the fix:

Get a hold of some foreclosure professionals. Hope you find this helpful, particularly on how to utilize resources available to get your mortgage modified or at least fixed to avoid any potential foreclosure, and that you get through your financial troubles.

Good luck!

The Internet. Just whatever is available online and what I have on my mind, including the inclusion of relevant sites, like the one cited above that came into existence from my efforts, which is intended to be useful. Helping people get the relevant info they want is great.

Maria asks…

If you’re a lender, please help with advice?

I have a $510k loan and at least $900k equity. Tried to lower payments through a loan mod, was advised by co. to stop payments. Followed their advice & got into a worse situation. It’s w/BofA original payment $2600 is now $3900. All bank did was tack arrears to mortgage so it’s like I started over. Now bad credit 670 & 655 because we were behind. We don’t want to sell the home or move. Got turned down for a reverse mortgage, BofA will not allow another loan mod or refi. Any other savvy options or suggestions? Help!

admin answers:

Sorry to hear that. I’ve heard similar happen to many people; how a bank can advice someone to fall behind on their payments is incredible to me. Bank of America wasn’t the only one. And if you are able to make your payments, you don’t qualify for a loan mod anyway, or any of the government programs.

You may already know this, but just in case. The reason why you may have been turned down for a reverse mortgage wasn’t because you weren’t qualified (assuming you are over 62) but because FHA currently has a lending limit of $625,500. It doesn’t matter what your income is or your credit score is. Since there are currently no private jumbo loans available for reverse mortgages for high-value homes like yours, the only reverse mortgage program available is the FHA HECM. Unfortunately, because of the lending cap, any dollar over $625,500 that your home is appraised at is not given credit. How much you qualify for in a reverse mortgage depends upon the age of the youngest borrower (the older you are the more money you get), but only up to that cap. So while your home has a lot of equity, FHA only “values” it at $625,500.

That is why sometimes a younger spouse is removed from title when there is a large age gap between spouses. By using the age of the older spouse, they are eligible for more money. Not something recommended, but it is an option depending on your particular situation, if keeping the house is what you both want to do. Definitely something you want to discuss with a lawyer to protect the younger spouse’s interest.

But you can still do a reverse mortgage, if you bring money to the table at closing. I don’t know how much money you are short. Hopefully you were looking at the fixed rate product, which offers more money than the adjustable program, and can be found for as low as 4%. Some folks have other resources that they can sell or can access to bring money to the table, e.g. Sell investment property, a car, stocks, life insurance, gifts from family or friends, etc. I don’t know if this applies to you or if you are aware of it. The lender will want to document your source of funds to make sure it qualifies. Once you do the reverse mortgage, then that monthly $3900 stays in your pocket and no one can kick you out for non-payment of your mortgage. You will still have to pay your homeowner’s insurance and property taxes. Just mentioning it in case you weren’t aware. Good luck!

Daniel asks…

Will you write me in as POTUS if I promised to somehow stop this Wall Street bail out?

I would let the chips fall where they may and not reward bad investment, bad management and poor judgment on the part of mortgage holders and lenders at the expense of the American taxpayer and their children and grandchildren. Also curb and reverse the tide of illegal immigration by making it a felony and putting violators to work building the border fence that will eventually keep them out when they are returned to their home country. Use any form of energy at our disposal including but not limited to, wind, solar, tidal, hydroelectcric, methane, hydrogen, domestic oil, natural gas, coal and nuclear. I would work as quickly as possible to get our troops out of harms way in Iraq & Afghanistan by quickly bringing both nation’s armed forces up to strength for the task of defending themselves. Back to the financial meltdown for just a minute. 75% of people calling the Capitol Hill switchboard have asked Congress not to bail out anybody. This country doesn’t need Wall Street to survive. Wall Street has made it clear over the last two years that they need us more than we need them. Yes, we probably would have to endure a two to three year hardcore recession, but that would be nothing compared to the ten to twenty year depression that will ensue thanks to this goliath government bail out of $700,000,000,000 that is not even including the over $300,000,000,000 that has already been spent to bail out Freddie, Fannie, Bear-Stearns, and other failed small institutions over the last year. I also promise to not attempt in any way to change the law as it stands right now concerning any of your civil rights and would only select Supreme Court Justices that were true moderates. They would have to go through the most intensive vetting process ever seen to even be considered to a long list. I would do everthing in my power to get all political parties to start working together in a bipartisan manner for the sake of this nation or would actively support third parties that showed they would do so. So how about that write in on the first Tuesday in November, no chance huh?

admin answers:


Try running on for Mayor of Chicago on the Mrs. O’Leary ticket.

“Sorry, I’m not spending all that overtime to put the fire out. Mrs. O’leary left the lantern in the barn, she ought to do it.”

Helen asks…

Verge of foreclosure… need help on reversing this.?

In March 2005 we moved into our home. At that time we were w/ our starting finance company — which was great. Then the loan was sold (the 1st part of our mortgage) to CountryWide. In April 2005 my husband was diagnosed with epilepsy and thus lost his job because of it. Had enough savings to get through a few months of mortgage payments and in Sept the savings ran out which was going to be used for taxes but this money was not due until June, unfortunately due to the circumstances we were forced to use this for Mortgage payments. Attempted to make payments for the last 9 months but they refuse them stating all of what is due or nothing and let it build up. We rec’d a foreclosure notice in the mail in Jan. 2006. The Foreclosure finalization is 8/30/06. I have put in complaints with the FTC and the state Consumer Credit Agencies hoping to get answers to this predatory Lender. Any other ideas? Are there any real estate lawyers out there that can help? We need to reverse this asap!
Please only respond if you are :

A current broker, lawyer, or experienced in this field.

Also an interesting site:
OH and we are NOT selling, moving, renting or otherwise . We have an attorney now that will be running a counter suit through predatory lending laws, and conspiracy. There are a lot more details.

If there are lawyers that wish to respond to this and your speciality is Real Estate Law contact us!!! We are in Ilinois.
We are not going to move… we are not willing to sell our home.

admin answers:

Contact ACORN immediately. They are a non-profit organization that includes in it’s mission to help, act as a homeowner advocate to ensure lenders act fairly and legally when it comes to this whole process.

Here is the link to their offices by state. Call the one as close to your city/county as possible:

Here is the link to ACORN’s home page:

Prepare and organize all of your notes, receipts, call logs, correspondence and make time to meet with them as soon as possible.

Also, contact non-profit entities, starting with your local United Way, and your local HUD office. They have contingency plans to help families facing foreclosure. Sometimes there are funds available to help buy you time to prepare to…List your home for sale….and with a well-known and national firm. If you are fortunate enough to find the assistance, you can always cancel the listing.

Be realistic. Make a list of all of your expenditures and take that and your receipts to the nearest HUD-approved credit couseling agency. Find ways to stretch your income. For example, there are non-profits out there that oversee shared housing/roomate programs for many cities/municipalities across the U.S. They do the background checks and match up host families and tenants. If you have children and a daycare expenxe, perhaps you can do a trade with a college student looking for a chance to tutor and sit in exchange for housing. Maybe even a nursing student.

But be realistic and start the sales process for your home. You can always take the proceeds and get something more within your revised budget. You don’t want a foreclosure on your credit. This will make it nearly impossible for you to purchase a home/apt/condo anytime soon. Worse case scenario, you wait too late to list and take less than owed, and the lender then either looks to recoop the difference directly from you or writes it off and gives you an earned income statement for the difference that you then have to claim as earned income on your taxes for this year.

Please think long and hard and crunch the real numbers (start today making a list of where EVERY dollar goes, regardless) if you are even remotely considering refinancing as a solution. From what you wrote, refinancing will only set you up for a harder fall and cost you even more money…especially upfront…and this is money you need to prepare to relocate.

Call ACORN, the HUD-approved credit counseling agency and your local United Way; and they can better analyze your situation explain all your options to you and direct you on a best-case scenario path. My heart goes out to you but the time is now to act. Delaying makes things worse and wittles away your options.

God Bless you and your family.

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