Reverse Mortgages Information - Age 62 and older | Ventura Ca | Simi Valley Ca

Reverse Mortgage

Frequently Asked Questions (FAQs)

What is a reverse mortgage?

It is a home loan similar to a home equity loan except payments are not required. It allows homeowners to convert home equity into cash.

Who is eligible?

Borrowers must be at least 62 years of age and either own their home free and clear, or pay off, from the proceeds of your new reverse mortgage, any existing balance on the previous mortgage. The home must be the principal place of residence.

How safe is a reverse mortgage?

A reverse mortgage is one of the safest mortgages available. Title to the property remains with the homeowners or their trust. There is no obligation to make payments, as long as the home is occupied by the borrower. A reverse mortgage is non-recourse, the lender only looks to the home for repayment. The Home Equity Conversion Mortgage (HECM) is guaranteed by the Federal Department of Housing & Urban Development (HUD) through FHA mortgage insurance.

Are there fees involved in getting a reverse mortgage?

As with most other mortgage loans, there is an origination fee, closing costs, and a mortgage insurance premium. Usually, the borrower does not pay any fees out of pocket. A servicing fee sum is set aside up front and charged monthly over the life of the loan. Charges are incurred during the loan process such as appraisal and pest inspection fees and paid through loan proceeds at the close of escrow.

Does the borrower have to make any payments?

The borrower doesn't have to make any monthly mortgage payments during the life of the loan. The reverse mortgage becomes fully repayable upon: the death of the borrower, sale or transfer of property, a permanent move from the home (after 12 months if away due to medical reasons), failure to maintain property or nonpayment of property taxes or homeowners insurance.

How are funds received?

• A line of credit to draw from at any time.

• Regular monthly payments made each month for lifetime or a specific period of time.

• A combination such as a lump sum, a line of credit and a regular monthly income for the life of the loan.

Payment options can be changed throughout the course of the loan. All payments are handled by a disbursing agent, an FDIC-insured bank.

Why is it called a reverse mortgage?

It is opposite or reverse of a conventional mortgage where the homeowner borrows a large amount and makes monthly payments until completely paid off. With a reverse mortgage, money is advanced and payments are not made until the homeowner permanently leaves or sells the home.

What is involved in the application and loan process?

An application is completed and payment options determined. Documents necessary to process the loan are photo ID or driver's license, social security or Medicare card, information on any existing mortgages, living trust (if applicable) and original counseling certificate. Appraisal and termite inspections are completed by independent, local inspectors and a preliminary title report is issued. After receiving all pertinent information, the loan package is submitted to underwriting for final approval. Initial and expected interest rates are set and loan documents and signed by borrower or their attorney-in-fact. After a three-day rescission period the loan is disbursed and homeowner gets access to the funds. Any existing debt on the home is paid off and a new lien is placed on the home.

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Valley Wide Mortgage Services

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805 582-0750