Your Questions About Reverse Mortgage

Betty asks…

What is the best way to get reverse mortgage clients?

I have been doing loans for about 8 yrs and seems that loans are getting tougher to do. I am doing a reverse mortgage and seems to be going very smoothly. This was a referral from someone. What do you experienced loan officers suggest for finding reverse mtg clients?

admin answers:

Learn as much as you can about reverse mortgages so you can be considered an expert. They are pretty easy to do since credit and income are not an issue.

However, you do need to be able to explain the benefits, closing costs, etc. Reverse mortgages are not for everyone, and they do have a bit of negative connotation. Also be aware that a lot of folks that are considering reverse mortgages include their children in the decision – you need to be able to explain why the reverse mortgage can benefit your potential client.
Network at your Chamber of Commerce. Check out Activerain.com -this is a social network for real estate/mortgage professionals. Do a search for reverse mortgage and find out what the top mortgage people are saying and doing.

Sign up and start a blog. This will not bring you immediate business, but if you keep up at it, you will gain some referral business and get some exposure over time – this social network is very well liked by Google. I once was interviewed by a reporter from from a local news station as a result of an article I posted about a real life reverse mortgage scenario!

James asks…

Reverse mortgage – how quickly do family members have to leave the house after the owner dies?

My grandfather has a reverse mortgage on his home. One of my aunts lives with him as his caregiver. He’s in the hospital now and may not survive. We’re all wondering how quickly she would have to move/we would have to clear the house of belongings. No one in the family intends on refinancing or buying the house and I believe it’ll be fully under bank control.

Immediately? 30 days?

Thanks.

admin answers:

It won’t be immediate. Technically, you are supposed to notify the lender within 30 days. Otherwise, they have service providers who keep track of death records and they will find out within 1-3 months. Regardless of what you plan to do (refinance, sell or turn over the keys), the lender will most likely begin foreclosure proceedings right away. Since it typically takes about 6 months to foreclose, they need to start the clock running; so don’t be upset when you get nasty form letters. It is unfortunate, but it gets sent out automatically, even when you are working with them. Many a lender have been burned as well from relatives staying on or folks dragging their feet.

If you don’t intend to keep the home but you need the time, your Aunt could theoretically stay on for the 6 months it will take to foreclose. However, if your Aunt chooses to stay through the final foreclosure, she will, in essence, be evicted. If you don’t need much time and the lender is willing to work with you, then you can sign a Deed in Lieu of Foreclosure wherein you give the bank the title to the house and they will be responsible for selling the home and all it entails. The family is not liable for the loan, nor is the estate.

If the house is worth more than what is owed, even if you don’t want to refinance and keep it in the family, you may want to consider selling it so you can keep the net proceeds. If the heirs have any huge tax bill for 2011, you may be able the write off the interest paid to date on the reverse mortgage. Check with your tax advisor. As long as you are making a good faith effort to sell it, the bank will give you at least 6 months to sell it, with maybe two 3-month extensions, for a total of one year. But you need to be communicating with the bank to get these extensions.

Sorry to hear your grandfather is not doing well. If he has a line of credit with funds available, you may want to consider withdrawing money now to help pay for any of his future expenses. Once he passes, you will no longer have access to it.

Linda asks…

How long between reverse mortgage appraisal and closing?

Does anyone know how long it takes between the appraisal and closing when doing a reverse mortgage? My father is doing one and the lender (Wells Fargo) got the appraisal back yesterday. How much more time until my father receives his money?

admin answers:

There is no exact time for all loans, however, generally the average is about 4-5 weeks from the time of the application. Usually the appraisal is about a week after the application, so probably about 3-4 more weeks. That is the average for most loans. If there are any problems or issues in underwriting, then anything can happen from a day or so to a couple of months. Rarely do they have such problems, but it can and does happen from time to time. The only other major exception to this rule, is if there is a foreclosure in progress, in which case the time frame usually goes to about 1-2 weeks from application as they are moved to the top of all other applications.

Sandra asks…

what is a reverse mortgage and how do people benefit from them?

What exactly is a reverse mortgage? Why don’t people have to pay it back?

admin answers:

A reverse mortgage is a loan that allows people ages 62 and up to get the money they need for any expenses they may have. Unlike traditional mortgages, there are no monthly payments on a reverse mortgage. The reverse mortgage isn’t paid until the person who took out the mortgage moves, sells the home or passes away. At that time, the reverse mortgage is paid out of the proceeds of the home sale.

Joseph asks…

What is reverse Mortgage, What is its benefits and Eligibility?

What is reverse Mortgage, What is its benefits and Eligibility?

admin answers:

A Reverse Mortgage is a loan, but in reverse. You still retain title, ownership, and control of your home. With a Reverse Mortgage you can never be forced from your home and there is no time limit on the loan. The lender sends cash to you and you never have to make a payment for as long as you live in the home.

A Reverse Mortgage is a ‘non-recourse’ loan. The Federal government guarantees all Reverse Mortgages and the lender can only look to the home to satisfy the loan. This means there is ‘no personal liability’ to you or your heirs. Repayment is due after all homeowners permanently vacate the home (pass away, sell, or permanently move out).

A Reverse Mortgage does NOT affect the appreciation of your home. Your home will continue to increase in value while you enjoy your Reverse Mortgage. Click here to learn about the Reverse Mortgage process.

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Your Questions About Reverse Mortgage

William asks…

How does a reverse mortgage affect medicaid qualification?

My 66 year old mother is considering a reverse mortgage, but even with that supplemental income potential, she will still need to apply for Medicaid to cover prescription expenses. Will a reverse mortgage affect her qualification for Medicaid?

admin answers:

Factoid:
Most people move out of their home at age 82 with a reverse mortgage.
If she is typical she will have nothing to her name when she sells the home.
To me – reverse mortgages are a scam that needs regulation by the federal goverment.
Reverse mortgages are robbing the trusting and elderly.
Just like ARM loans did.
Sell the house – get the cash out – buy a small condo or rent.
/

Richard asks…

Reverse mortgage, what are the payback options and how is the money accessed and distributed?

The reverse mortgage will be for my mother who is unable to manager her funds. How can I protect her funds and administer her monies safely? Is it possible to put restrictions on where and how much money is used?

admin answers:

Payback option – pay it off at death or permanent move. If you can pay it back earlier, you don’t need a reverse mortgage. You need to form a trust with the proceeds of the reverse mortgage. The trust can say virtually anything your mother wants to say about how to administer and what restrictions. A trust attorney can do this relatively easily.

Sandy asks…

My deceased father has a reverse mortgage – the amount owed is less than the value of the property?

I would like to take out a mortgage to repay reverse mortgage. Do I have to take out mortgage for value property or just what’s owed on the reverse mortgage? I’m 1 of 3 heirs and we are to divide the assets equally. But the only asset is the house. So my question is do I need to take out a loan for value of house so heir can get their 3rd?

admin answers:

You would need to pay off all liens on the property, before you can transfer it into your names. A mortgage is a lien. So in order for all heirs to be able to get their third, the house would have to be mortgaged for the amount of the lien(s), and then be sold which usually has fees associated with the sale.

Or, the executor could simply sell the property to one of the heirs or someone else and the equity could be split amongst the heirs at the closing table.

Ruth asks…

What happens to a reverse mortgage after the person have to go to nursing home. How does that work?

What happens to a reverse mortgage after the person have to go to nursing home. How does that work?

admin answers:

Generally, the loan ends when the homeowner dies, sells the house, or, depending on the loan conditions, moves out of the house for 12 consecutive months (for example, to go into an assisted living home or due to physical or mental illness the borrower is not able to live in the property on which the loan has been taken. At that point, the reverse mortgage can be paid off with the proceeds of the sale of the house, or if the borrower has died, the property can be refinanced by the heirs of the homeowner’s estate with a regular mortgage. If the proceeds exceed the loan amount including compounded interest and fees, the owner of the house receives the difference. If the owner has died, the heirs receive the difference. For cases where the proceeds are not sufficient to pay off the loan, then the bank (or insurance which the bank has on the loan) absorbs the difference. So, in your scenario, it would depend on the loan conditions.

Laura asks…

Can someone get a reverse mortgage if they already have a mortgage on their house?

If my house is worth $250,000 and I have a first and second mortgage that adds up to about $135,000 can I still qualify for a reverse mortgage? Does it depend on how much equity I have in the house or liens on the property?

admin answers:

Yes but you have to be 62 or older.

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