Reverse Mortgage Loans

HOW DOES A REVERSE MORTGAGE WORK?

A reverse mortgage is a home loan that allows eligible older homeowners to borrow against available home equity. Unlike a traditional mortgage, the loan balance generally increases over time as funds are received and interest and fees are added.

The loan commonly becomes due when the last eligible borrower or protected eligible spouse sells the home, permanently moves out, or passes away. It may also become due if required property charges are not paid or the home is not maintained.

Ways a Reverse Mortgage May Help

• Supplement Retirement Cash Flow: Receive scheduled advances that may help support monthly cash flow.
• Establish a Line of Credit: Create access to available funds for future expenses, subject to the loan terms.
• Pay Off an Existing Mortgage: Reverse-mortgage proceeds may be used to satisfy an eligible existing mortgage at closing.
• Complete Home Improvements: Use available proceeds for repairs, accessibility improvements, or renovations.
• Purchase Another Home: A HECM for Purchase may help an eligible homeowner finance part of a new primary-residence purchase.
• Create Financial Flexibility: Access available equity for eligible needs while continuing to own and occupy the property.

REVERSE MORTGAGE OPTIONS

FHA-Insured HECM: A Home Equity Conversion Mortgage is the most common reverse-mortgage option and is insured by the Federal Housing Administration. The youngest borrower must generally be at least 62, and HUD-approved counseling is required before the loan can proceed.

Proprietary Reverse Mortgage: Some private reverse-mortgage programs may be available to homeowners as young as 55 in eligible states. Age limits, property values, proceeds, costs, and availability vary by lender and location.

HECM for Purchase: Eligible homeowners may use a HECM toward the purchase of a new primary residence. The borrower must contribute enough funds to cover the difference between the purchase price, closing costs, and available reverse-mortgage proceeds.

How a Reverse Mortgage Works

1. Review Your Goals: We discuss your financial needs, property, age, existing mortgage balance, and long-term housing plans.

2. Estimate Available Proceeds: The available amount may depend on the age of the youngest borrower or eligible non-borrowing spouse, the home's value, current interest rates, existing liens, and program limits.

3. Complete Required Counseling: HECM applicants must complete an independent session with a HUD-approved reverse-mortgage counselor before the loan can proceed.

4. Complete the Application and Appraisal: The lender reviews the borrower's financial qualifications, property charges, credit history, appraisal, title, and property eligibility.

5. Select a Distribution Option: Depending on the program, proceeds may be available through a lump sum, line of credit, scheduled advances, or a combination of permitted options.

Who May Qualify for a Reverse Mortgage?

Eligibility may depend on:

HECM borrowers must generally be at least 62. Certain proprietary programs may permit younger borrowers in eligible states, subject to lender requirements.

• The borrower's age and selected program
• The property being the borrower's primary residence
• Sufficient available home equity
• Completion of applicable counseling
• Ability to maintain taxes, insurance, association dues, and other property charges
• Ability to keep the home in acceptable condition
• Completion of the lender's financial assessment
• Eligible property type and condition

HOW CAN REVERSE MORTGAGE FUNDS BE RECEIVED?

Depending on the program and rate structure, proceeds may be available through:

• A line of credit
• Monthly advances
• A lump-sum disbursement
• A combination of available options
• Funds applied toward a new-home purchase

When Is the Loan Repaid?

A reverse mortgage generally becomes due when the last borrower or eligible protected spouse:

The loan may also become due if the borrower fails to meet continuing obligations, including paying property taxes and homeowners insurance, maintaining the home, and occupying it as a principal residence.

• Sells the property
• Permanently moves from the home
• Passes away

Important Reverse Mortgage Considerations

The Loan Balance Usually Grows: Interest, mortgage-insurance charges when applicable, and other financed costs are added to the loan balance over time. As the balance grows, remaining home equity generally decreases.

Property Charges Remain Your Responsibility: You must continue paying property taxes, homeowners insurance, applicable association dues, and other required property expenses.

The Home Must Be Maintained: Failure to keep the property in acceptable condition may result in default.

Costs May Be Higher Than Other Financing: Reverse mortgages can include origination, appraisal, title, servicing, mortgage-insurance, and other closing costs.

Future Housing Plans Matter: A reverse mortgage may be less suitable for someone expecting to move soon because of its upfront costs and repayment structure.

Other Household Members May Not Be Protected: Family members or other occupants who are not borrowers or eligible protected spouses may not have the right to remain in the property after the loan becomes due.

Reverse Mortgage Myths and Facts

Myth: The lender owns the home. Fact: The homeowner retains title. The reverse mortgage creates a lien against the property, similar to other mortgages.

Myth: The lender can make you leave your home at any time. Fact: An existing mortgage may be paid off with reverse-mortgage proceeds at closing, provided sufficient proceeds are available.

Myth: The borrower or heirs must repay more than the home is worth. Fact: FHA-insured HECMs are non-recourse loans. The borrower or heirs generally will not owe more than the applicable value of the property when the loan is resolved.

Myth: Reverse mortgages are only for financial emergencies. Fact: Homeowners may use them for cash-flow planning, future access to funds, home improvements, or purchasing another primary residence.

Myth: There is never anything to pay. Fact: Required monthly principal-and-interest payments are generally not required, but the homeowner remains responsible for property taxes, insurance, maintenance, and other applicable charges.

See Whether a Reverse Mortgage Fits Your Plans

A reverse mortgage is an important long-term financial decision. I can help you review your estimated proceeds, existing mortgage, available program options, costs, continuing responsibilities, and possible alternatives.

Reverse mortgages are loans secured by the property. Borrowers remain responsible for property taxes, homeowners insurance, maintenance, applicable association charges, and compliance with occupancy and loan requirements. Interest and financed costs increase the loan balance and reduce remaining equity. Program availability, minimum age, proceeds, rates, and terms vary. HUD-approved counseling is required for an FHA-insured HECM.

Contact Information

Phone: (702) 866-9612

Address: 8485 W Sunset Rd, Suite 202, Las Vegas, NV 89113

Loan Officer: Robert St. John | NMLS #1578510

Company: Barrett Financial Group, L.L.C. | NMLS #181106

Licensing: AZ 0904774 | CA60DBO-46052 & 41DBO-148702 | MI fl0022342 | NV 5091 | TX (view complaint policy at barrettfinancial.com/texas-complaint)