What Happens to a Reverse Mortgage After the Owners Pass Away?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonOne of the most common myths surrounding reverse mortgage is that once the owners pass away, the heirs will be left saddled with debt or that the bank will own the home.  This couldn’t be further from the truth.  The home will transfer into the estate or a specific person according to the homeowners will, just as any home with a conventional mortgage would.  The major difference is that reverse mortgages are non-recourse loans and backed by the FHA, meaning no one will ever be held responsible for the debt.

Here are the options the heirs have after the owner either passes away or leaves the home permanently.

1.  Pay off the remainder of the loan

Depending on the amount of equity that still exists in the home, the financial situation of the family, and just the overall ability of those involved, this may or may not be a feasible option.  It’s not uncommon for a portion of life insurance to be used in this manner.

2. Obtain a conventional loan.

Many mortgage specialists are familiar with the reverse mortgage process and the right one  will be able to help those in need identify the best route in obtaining a conventional loan and keeping the home.

3. Sell the home

The final option is to sell the home.  When there is not a desire to keep the home, the heirs can sell the home.

One last note, as long as the communication lines remain open, the bank will typically allow up to one year to help with the transition.  This one year is allotted in three month increments.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

 

What Is Third Party Reverse Mortgage Counseling?

Posted on by Janis Layman

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonPrior to being approved for a reverse mortgage, HUD’s Federal Housing Administration (FHA) requires each borrow to participate in a counseling session with an approved agency. These third party, not-for-profit agencies are funded by the federal government and work closely with both the FHA and lenders to ensure a smooth process.

The goal of this session is not to steer a potential borrower in one direction or another, but to make sure they clearly understand all aspects of a reverse mortgage, as well as to answer any questions.

Here is what you can expect at your counseling session

The potential borrower will need to schedule an appointment directly with a counseling agency. The lender does not initiate or take part in the session, but can provide you with resources to seek out a counselor. The session will take place in person or over the phone – although the FHA recommends a face-to-face meeting whenever possible.

Prior to your appointment, the counseling agency will provide you with a packet of information to allow you to prepare for the session. During the session the counselor will discuss your immediate and long-term financial needs, your reasons for seeking out a reverse mortgage, address any questions or concerns you may have, and clearly educate you on the process as well as the pros and cons of a reverse mortgage. Again, they are not there to “sell” you on the product, but to educate instead.

Once you have completed the counseling session, you will be provided with a “Certificate of Completion”. This certificate verifies to your lender that you have completed the counseling session and that you understand the essentials of a reverse mortgage. Your counselor will also follow up with you to ensure you have no further needs, questions, or concerns.

About Reverse Mortgages

Reverse mortgage are available to seniors 62 and older, including married couples.  These non-recourse loans allow retirees to live mortgage payment free while tapping into the equity of their home.  How they use the funds is entirely up to them.

The money can be accessed in a variety of ways – including monthly installments, line of credit, and even can be used to purchase a home.  The loan will only come due when the last borrower leaves the home permanently or passes away, at which time the heirs will have several options when deciding what they want to do with the home, but because it is a non-recourse loan no one will every be “saddled” with debt as is a common misconception.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.

Tips to Finding a Reverse Mortgage Lender

Posted on by Janis Layman

 

Reverse Mortgage Seattle Lynnwood Edmonds Shoreline WashingtonFinding a reverse mortgage specialist is one of the most important parts of the entire process.  Not only do you want to work with someone knowledgeable and trustworthy, you want to make sure YOU feel comfortable with them.  Here are some tips to finding just the right person.

Where to look?

Reverse mortgages are marketed in every possible way.  Television, radio, mailers, internet, etc.  Although not all of these methods ensure trouble, some of them can be scams.  When seeking a reverse mortgage lender, it’s important to speak with people you trust.  Ask around at your bank or financial institution.  Speak with a financial or retirement adviser.  Talk with neighbors or friends who have utilized a reverse mortgage.  Seek information from the local Chamber of Commerce or Better Business Bureau.   Utilize other resources that may be available in your community.

What to look for?

Working with a reputable reverse mortgage specialist is critical.  The reverse mortgage industry is riddled with scams and flashy sales.  It can be risky to get involved with a lender who does not offer all the details or who is just looking to make a “quick sell”.   A reputable lender and valuable specialist will have strong connections in the community, working closely with a network of professional organizations.

Accreditations and ratings?

Seek out a specialist or lender that is a member of the National Reverse Mortgage Lenders Association (NRMLA).  Members of the NRMLA must conform to a strict code of lending ethic.  Look for a lender that is affiliated with the  Better Business Bureau (BBB), where you can also learn of any complaints against the company.

Follow your gut.

When it comes down to it, always follow your gut.  Just because a specialist may meet all this criteria doesn’t mean they will be right for you.  If you do not feel comfortable or feel your questions are not being adequately answered, there is nothing wrong with seeking out someone different.

Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington.  Contact Janis and learn if reverse mortgage is right for you.