Reverse Mortgages
New Hampshire Home Equity Conversion Mortgage (HECM) Consultants can guide you through the process and answer all your questions.
Find out how you can get the monthly cash you need in retirement!
Exploring the Benefits of Reverse Mortgages: Your Home, Your Choice
Our aim is to empower you with the knowledge you need to make an informed decision about this versatile mortgage option, ensuring it aligns perfectly with your unique circumstances and family’s needs. A reverse mortgage, also known as a home equity conversion mortgage (HECM), is a distinct type of loan tailored for homeowners aged 62 and above. It allows you to tap into the equity of your home, offering a range of payout options or establishing a line of credit.
Qualifications for Reverse Mortgage Loans
To qualify for a reverse mortgage loan there are some basic requirements, such as:
- At least one borrower (that will be on title) must be at least 62 years old (unless in the state of Texas, both borrowers must be 62 years old at the time the loan closes).
- The home must be maintained as the primary residence of the borrower/s for at least 6 months out of every year.
- There must be sufficient equity in the home. While there is no specific amount of equity required – as a general rule of thumb – you’d want at least 50% equity in your home since you will need to pay off your existing mortgage with the loan proceeds. The more equity you have the more loan proceeds you will have access to.
- A HECM’s (Home Equity Conversion Mortgage) underwriting standards are unique when compared to traditional mortgage loans. All applicants are subject to a financial assessment to determine their financial capacity and willingness to adhere to the loan obligations, such as paying taxes and insurance.
- You do not need to pay off your home to apply for a reverse mortgage loan.
*The homeowner always stays responsible for property charges such as taxes, insurance, maintenance and homeowner association fees.
Features of Reverse Mortgage Loans
Some of the key features of the reverse mortgage loan are as follows:
- While you will still need to pay property taxes and insurance and maintain the property, no monthly mortgage payments are required.
- There are multiple options to convert your home’s equity to support your financial goals, such as, receiving monthly payments, receiving a lump sum, or growing a line of credit over time.
- Proceeds you receive from a reverse mortgage loan are typically tax free, however, you will need to consult your tax advisor for tax advice.
- Borrower protection to help reduce the risk of foreclosure. An example of this is a guideline that limits the amount of equity the borrower can access during the first year of the loan. Also, the borrower/s must demonstrate that they’re able to pay property taxes and insurance and maintain the home during the time they have the loan. Furthermore, if a non-borrowing spouse under the age of 62 loses their borrowing spouse or their spouse permanently leaves the home, they will be allowed to remain in the home as long as they comply with the loan terms.
- If the borrower/s choose to access their equity via a line of credit, interest only accrues on funds that are used. Funds that are not used will increase over time at the same rate of your loan. This feature allows for growing the amount of cash you have access to should you need or want to access it later in retirement.
- The FHA HECM Loan is a non-recourse loan. This means that if your home sells for less than the loan balance, your heirs are not liable for the debt. Only the funds received from the sale of the home can be used to repay the loan.
At the time of application, your home mortgage balance does not have to be paid off to qualify. However, the reverse mortgage loan proceeds you receive must be used to pay off the existing mortgage or liens (if there is a mortgage balance owing). You will continue to hold title to your home subject to the mortgage securing the reverse mortgage loan.
Frequently Asked Questions
How Do I Qualify For A Reverse Mortgage?
To become eligible for a reverse mortgage, you must be at least 62 years old and own your home. You must have equity in the house to pay off any outstanding balances, and your home must be occupied as your principal residence. All applicants are subject to a financial assessment to determine their financial capacity and willingness to pay obligations as part of the qualification process.
How Much Money Could I Get?
The amount of money that a lender will loan depends on how old you are at the time of closing, how much your house is worth, the total amount of liens, and interest rates. The payoff of your existing mortgage and mandatory obligations along with the payment option chosen will affect the amount of money you will receive. HUD limits borrowers to using 60% of the available money (after closing costs & fees) in the first year. The remaining funds are accessible beginning year two. This maximum disbursement limit set by HUD allows for the GREATER of:
- 60% of the Principal Limit (amount of money available to the borrower in all years of the loan) in the first twelve months of the loan from your closing date OR…
- The sum of Mandatory Obligations (existing mortgage payoff, tax liens, closing costs, mortgage insurance premium) plus 10% of the Principal Limit. This total cannot exceed the total Principal Limit at the time of loan closing.
What Costs Are Associated With A Reverse Mortgage?
The fees and cost of a reverse mortgage are based on several items. For example, an origination fee generally ranging from $2500 – $6000 is paid to the broker/lender MIP (mortgage insurance premium) is paid to FHA and that is equal is 2% of the appraised value on the Home Equity Conversion Mortgage (HECM). You are required to attend FHA counseling by phone or in person and that fee ranges from $100-175. Other fees tend to mirror what they would for any other loan transaction: credit report, appraisal, flood certification, document preparation & recording with the county, title search & settlement (you can choose your settlement agent). All costs are clearly shown on the Good Faith Estimate (GFE).
Contact Renee by phone or text at 603-345-5644 to get a closing cost estimate for your scenario.
How does a reverse mortgage work?
With a reverse mortgage, you borrow money from the lender, based on the amount of equity you have in your home. The lender may send you the funds from the reverse mortgage in one lump sum payment, a series of monthly payments, or some combination of those.
The loan and interest are repaid only when you sell your home, permanently move away, or die.
Real Customer Success Stories
Renee Duval, Reverse Mortgage Specialist
Bookend Lending’s Home Equity Conversion Mortgage/ Reverse Mortgage Professional for NH. Renee Duval will guide you each step of the way! Contact her today! Renee@bookendlending or 603-345-5644
NH Reverse Mortgage Blog – learn more through the stories!
What Happens When a Reverse Mortgage Reaches Its End?
If you’re considering a reverse mortgage or already have one, understanding how it concludes is essential. In this article, we’ll explore the events and considerations involved when reaching the end of a reverse mortgage’s life. Maturity Events and Defaults A reverse mortgage typically concludes due to either a maturity event […]
A New Chapter for Mary: Navigating Life’s Twists with a Reverse Mortgage
Turning Loss into a New Beginnings and Security in Retirement In the golden years of their life, Mary and Larry were the epitome of a partnership built on love, dreams, and shared aspirations. Their home, nestled in the heart of a community they adored, was more than just a structure; […]
Reverse Mortgage Payoff: When, How, and Why It Matters
Navigating the Journey: Understanding Your Reverse Mortgage Payoff For many of us reaching the golden years, the idea of a reverse mortgage might seem like a comfortable cushion for our retirement strategy. But, as with any financial decision, it’s natural to wonder about the details, especially concerning when and how […]
When/How Does A HECM Mortgage Get Paid Off?
When a person or a couple takes out a reverse mortgage, what are the final considerations that must be made at the end of the loan cycle?The short answer is that when the last borrower on the loan decides to move out voluntarily or because they die or are in […]