The answer is “yes”. Reverse loans are like any other mortgage with the exception the borrower does not have to make any mortgage payments. They simply must continue to live in their home, pay the property taxes and Homeowners insurance on time, just like they ordinarily would do anyway.
And there is no prepayment penalty on the loan being paid off, plus the borrower’s will receive a mortgage interest tax deduction in the year they complete the refinance.
Reverse loans are calculated on the age of the youngest borrower and the value of the home. The older the borrower is and the higher the value of their home, means that they might be able to refinance an older reverse loan, improve their interest and receive more money.
Mortgage interest rates are extremely low, and home values have “shot through the roof”, and many people have more equity in their residence than any other time in the past.
It could be a very good decision to refinance a loan to a much lower interest rate and receive more of their equity and additional money.
I have had many of my former reverse loan clients contact me to start the process, and now is the best time to do it before interest rates begin to increase in the future.
Don’t hesitate to find out if you can refinance or not, you don’t want to miss out on this opportunity.
The last 18 months of life for everyone has been very hard and uncertain due to the Covid-19 pandemic. It was particularly frightening for seniors because they were more likely to become ill with it and possibly die.
No one was left untouched by it, either by death or the loss of employment and most certainly the loss of structure and a feeling of safety.
I received many calls from seniors during this time, very afraid about running out of money and trying to take care of themselves, and at the same time, cut off from their families and feeling isolated.
Some had entered into forbearance agreements on their mortgages and the payments for them were paused, but they were now being notified by their Lender to resume them, and many did not have the income to start making payments again.
I received many calls for help, and I was able to provide everyone a reverse loan and at the least, make them feel a bit safer and and less anxious about what was going to happen to them.
It was challenging when we couldn’t meet personally, but I made it work for each client and we got through it together.
I am grateful that it seems we are moving forward with more confidence and less fear, and I am also grateful that I was able to help many seniors last year by providing them with more money and peace of mind and we survived the pandemic together.
What are the steps to apply for a reverse loan? Is it the same as applying for a traditional mortgage or is it different?
It is just like applying for a regular loan, except the borrower won’t have to make any mortgage payments but they will still be responsible for maintaining their home, paying the property taxes, and Homeowners insurance.
The loan application is standard, but there are many lender, state, and federal disclosures to sign in the application package. It does require quite a few signatures and a complete copy of it is left with the applicants to save and review.
Along with the signed application, copies of bank statements, Social Security card, Drivers License, Declaration page for Homeowners insurance, Trust ( if there is one), and any mortgage statements for the property, plus a signed HUD Counseling Certificate.
The file and documents are sent to a loan processor, Escrow is opened and a Title Policy is ordered, along with an order for an appraisal to be scheduled.
When the loan processor has all the necessary items to make the file complete, it is sent to a Lender for Underwriting.
They review it and make sure it is complete prior to giving it an approval. Sometimes they may request a few additional items, but nothing that is unusual.
The next step is to order the loan documents and coordinate with Escrow, assign a Notary to meet with the clients and have them sign the documents.
The documents are returned to the Closing Department of the Lender, they review them for all signatures, communicate with Escrow to finalize closing figures and after the 3-day Right of Recession, the loan funds and closes.
The entire process takes approximately 45 days as long as the borrower has provided all of the necessary documents that are needed for the file.
Appraisals can cause a delay, or issues with the Title of the property, and sometimes the lack of cooperation from the borrower will cause the loan to take longer to complete.
Applying for a reverse loan is generally not difficult and can be completed in a reasonable amount of time.