Last week I had the pleasure of speaking to a wonderful senior from San Luis Obispo, California. To protect her identity, we will call her Ms. Smith. Mr. and Mrs. Smith have lived in San Luis Obispo for over forty years. Mr. Smith was a medical doctor and gave his life to helping people. Ms. Smith had been to a financial planner who had recommended to Mr. and Mrs. Smith that they should protect their assets. Part of the financial planner’s recommended plan was to get a reverse mortgage. Mrs. Smith did not understand how it worked and clearly stated she wanted the basics.
So for those of you, who like Mrs. Smith, want to know the Reverse Mortgage Basics, here they are.
A reverse mortgage is a loan that is guaranteed by the Federal Housing Authority (FHA), a government agency.
All parties on the title must be at least 62 years of age.
The general rule of thumb is 50% equity in order to qualify.
All seniors on title will need to go through a reverse mortgage counseling session.
The two upfront costs of a reverse mortgage is the counseling session (approximately $125) and the appraisal (approximately $450).
As long as you and/or your spouse live in the home you will never need to make a mortgage payment.
You are required to keep the home in good repair, pay homeowner’s insurance, and property taxes.
Depending on the amount of equity, you can eliminate your monthly mortgage statement, obtain a line of credit, receive a monthly payment from the reverse loan, or receive a large payment up-front.
While a reverse mortgage is not for everyone, many seniors’ lives can be positively changed. Its best to talk to a reverse mortgage specialist to see if you would be a candidate.
If you have any questions about a reverse mortgage, please feel free to call me directly at 559-994-3692.