Reverse Mortgage Requirements
Reverse Mortgage Requirements, Eligibility, and Qualifying? Building up equity in a home is no small feat. For seniors who have built equity in their homes and would benefit from a stable monthly income, reverse mortgage is worth consideration. Also known as a home equity conversion mortgage (HECM), a reverse mortgage translates home equity into monthly payments, while seniors stay living in their homes. At Reverse Mortgage Alabama, we guide seniors as they navigate through the process of exploring and obtaining a reverse mortgage. Covering the greater Birmingham area and surrounding areas such as my home town of Chelsea, AL. Because of their unique, federally backed opportunities, reverse mortgages have certain requirements and are not available to everyone.
Eligibility for Reverse Mortgage & Requirements for Your Property
To qualify for an HECM loan, your property must be:
- A single-family or 2-4-unit home that you will continuously occupy.
- A Housing and Urban Development-approved condominium.
- A manufactured home that meets HUD requirements.
Getting Started with Reverse Mortgage
For more information on the eligibility requirements of a reverse mortgage, contact Reverse Mortgage Alabama today. We have helped hundreds of clients in Birmingham, Hoover, and Chelsea, AL achieve financial security while continuing to live in their homes with reverse mortgage.
Reverse Mortgage Eligibility & Requirements.
To be eligible for a HUD reverse mortgage, HUD’s Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; you own your home outright, or you have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive counseling from HUD-approved counseling sources prior to obtaining the loan. You may find one in person near Birmingham or counseling can also be done over the phone. A personal, one-on-one consultation with “Alabama’s Reverse Guy”, Scott Underwood will analyze your needs to ensure that one of our many reverse mortgage options is a practical solution. My local office is fine, but I still make house trips to your area, places like Homewood, AL. We then share a detailed cost analysis and comparison breakdown. We provide each candidate with a printed version of the Reverse Mortgage Comparison Breakdown as well as review the breakdown with each senior candidate to ensure they understand the options and benefits of different Reverse Mortgage scenarios.
We strongly encourage all senior candidates to reach out and seek advice from loved ones: family and friends, as well as financial and/or legal advisers regarding their decision to move forward with a Reverse Mortgage.
Before a Reverse Mortgage application is written, we will provide you with the name of a professionally trained HUD approved counselor and arrange for them to furnish you with an expert objective overview and discuss with you all the Reverse Mortgage options.
Upon your acceptance and approval, we will submit the Reverse Mortgage application to our processing team, who once again reviews the selected program to further ensure a proper and educated decision has been made.
Our processing team then submits the application to our underwriting department. Underwriting will perform a secondary review of the program and product choice.
Once the final review is conducted and closing is complete, a “Reverse Mortgage Loan Report Card” is mailed to each senior client to provide them with a thorough breakdown with objective opinions and comments.
Ultimately, our goal is to help our senior clients find the perfect solution for their needs. To do so, we firmly believe in educating our clients to the utmost, and allowing them access to straightforward, objective information, answers, and requirements. Please call Scott Underwood – Alabama’s “Reverse Mortgage Guy” (205) 908-2993 in Birmingham or (256) 677-9767 in Huntsville, Alabama.
Steps to Obtain a Reverse Mortgage
1) Counseling and Application – The first thing I do is talk to you, either over the phone or in person, about whether a reverse mortgage is right for you. We talk about the pros and cons of the program, how it works, how much money you might receive and anything else you’d like to know about. Then you need to make an appointment to receive independent counseling from a certified, HUD-approved counselor to make sure that you have had all your questions answered and that there’s been no confusion. Some may even ask you about monthly bills to help you see your financial picture before and after the reverse mortgage. It’s a protection device that the government has built into the process of obtaining a reverse mortgage and required prior to the application being started or appraisal ordered.
2) Appraisal – We arrange for an appraisal to determine the objective market value of your home, and whether any repairs will be required to meet Federal Housing Administration guidelines. We always make sure it is someone close by Homewood to be familiar with your area.
3) Underwriting – After the appraisal and inspection reports are completed we go through all the normal processing procedures that you might find in any mortgage.
4) Closing – The final step of the program is the closing where you sign the final paperwork. After that you get a 3 day right of recession in case you change your mind. Then you receive the proceeds from your reverse mortgage either wired to your bank or a check sent over-night (Fed-Ex or UPS) to you. You can choose to receive the payment in one of three ways: as a lump sum, as a monthly payment or as a line of credit. Then it’s up to you: pay bills, fix up the house, help a family member, or use the money to enjoy your life.
List of Counseling Agencies
This is a FHA/ HUD requirement that each borrower applying for a reverse mortgage loan to receive counseling prior to completing a reverse mortgage transaction.
- Call the Counseling Agency of your choice and say, “I would like to schedule reverse mortgage counseling.”
I would call more than one on the list I can furnish you, some may have a 1 week wait and the next may have a 1 day wait! Also, depending on Government Funding, some may ask to be paid around $100 up front!
Can I apply if I didn’t buy my present house with FHA mortgage insurance?
Yes. It doesn’t matter if you didn’t buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan. What’s the out-of-pocket cost? The out-of-pocket cash cost to you is most often limited to an application fee that covers a property appraisal (to see how much your home is worth) and a minimal credit check (to see if you are delinquent on any federally-insured loans). Most of the other costs can be “financed” with the loan. This means that you can use reverse mortgage funds advanced to you at closing to pay the costs due at that time, and later advances to pay any ongoing costs. The advances are added to your loan balance and become part of what you owe – and pay interest on.
Utilizing Your Reverse Mortgage
If you meet reverse mortgage requirements, you have the power to choose how you receive payment in exchange for your equity. You may choose to receive your payments on a regular basis over time. We can help you determine what type of payments will suit your lifestyle and for how long you would like to receive them.
You may also choose a lump sum for your HECM payment. While you will receive only a percentage of the value of your loan, some seniors choose this option to pay off immediate debt, or because they have different financial goals.
Lastly, your reverse mortgage payout can come in the form of a line of credit. You may use this credit when appropriate to maintain your lifestyle or to cover unexpected expenses.
Call Scott Underwood with any other requirement questions. I make house calls in between offices Birmingham and Huntsville offices, such places as Gardendale, Decatur, Cullman, and Huntsville, AL.