Mortgage interest rates are so low, the lowest they have ever been having caused Americans to rush into the very competitive Real Estate market and buy homes to take advantage of the interest rates as quickly as they can locate a property to purchase.
If you are a senior, you may be considering selling a large home that has become a burden in maintenance for you or no longer suits your lifestyle, and have started to look at Listings of homes in your area before you decide if you want to stay where you are or sell your home and move.
If you decide that you are ready to make a change and maybe you are considering moving into a 55+ community, a new Tract development, or a previously owned home, you can apply for a reverse loan rather than traditional financing.
A reverse loan is easier to qualify for, you will not have to be concerned about being approved using Debt to Income ratios or FICO scores. The Title will be in your name, you will be its owner, not the Lender.
And the best news? You will not have any mortgage payments.
Becoming approved for a reverse loan is much less difficult. Generally, when a reverse loan is used to purchase a new home, the buyer will put down approximately 50% of the sales price. Obviously the funds would come from the sale of their current home.
Find out early in your “search” how much you could be pre-approved for and receive a letter from a reverse loan lender ( me), that will help you to leverage your offer and “seal the deal”.
Contact me and we can chat about it and I will provide you with information to help you work with a Realtor and answer your questions on how to get started.
So what happens when the last borrower on the reverse loan passes away?
The terms of the loan state the borrower must occupy the property to avoid foreclosure, but if they have died, the loan is now technically considered to be in foreclosure.
However, as long as the Estate notifies Loan Servicing about the situation, they will be given ample time to repay the loan balance.
The Lender does not want to property, in spite of the myth in the general public’s opinion.
Assuming the borrower has family and they are considered to be the “estate”, they have two choices to repay the loan and the Lender will give them up to a year to satisfy repaying it.
List and sell the home. And that is what most family members do. They don’t want the home. They receive any remaining equity, plus a mortgage interest tax deduction for the interest that accrued on the loan ( There are no mortgage payments).
One or all of the family members apply for a traditional mortgage,( have the Title put into their names) and keep the property. They would still receive a mortgage interest tax deduction in the year they repay the loan back to the Lender.
I do have an excellent booklet for family members that was published by the National Reverse Mortgage Lenders Association that explains the process when it is time to satisfy the loan.
If anyone reading this post wishes for a copy of it, please contact me and I will send it to you.
Reverse loans have improved thousands of lives of seniors everywhere. They help with cash flow, paying for caregiving expenses, and eliminate living in fear of running out of money and they have brought comfort and peace of mind for seniors and their families.
They are not defined at predatory lending. They are well regulated and the protection of the senior is of utmost importance in our industry, and countless seniors and their families are relieved of the financial burden and worry about how to age in place.