Many people know that there is a "newfangled" mortgage called a reverse mortgage. However, the options, uses, guidelines, and benefits are not as well known. I know a specialist for reverse mortgages, Bob Tranchell, Director of Reverse Mortgages at Total Mortgage Services, who explained a recent package he put together for a borrower using a reverse mortgage to purchase a house.
How this was completed is best explained by Mr. Tranchell. So my first comment is to contact a specialist like Bob to get the straight, correct, and most current information. And, I would also comment that not all reverse loan specialists are as good as Bob is.
I like to add more ways to help buyers find useful financing to complete their purchase. This is one I didn't know about. It is not for everyone, but it may be helpful enough to be familiar with.
Here are some Reverse Mortgage basics that many people know or can find out easily:
¨All borrowers must be 62 years old or older.
¨Borrowers retain ownership and occupancy of the home.
¨Repayment isn't made until the home is sold or the last borrower permanently moves out or passes away.
¨ Borrowers will never owe more than the fair market value of their home at the time the loan becomes due.
¨No income qualification.
¨Interest and fees accrue until the loan is repaid.
¨When the loan is due, the owners or heirs have choices to either repay the loan using other assets and then keep the house, or sell the home to repay the loan.
¨Social Security benefits and Medicare are generally not affected by a Reverse Mortgage, but consult the appropriate government agencies.
¨Closing costs and fees incurred can be financed as part of the loan.
¨No monthly mortgage payments
Bob Tranchell also holds free webinars which explain how some of the less known and less understood options of a reverse mortgage can be implemented. Some of those are:
- Delaying taking social security benefits
- A Hedge Against Market Volatility
- And as I titled this blog - Buying a home using a reverse mortgage.
If you or someone you know is exploring mortgage options for their purchase - reverse or traditional - a specialist like Bob Tranchell is a good reference point to start with.