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  • About Reverse Mortgages
    • Top 10 Reverse Mortgage Questions
    • Intro to Reverse Mortgages
    • How It Works
    • Reverse Mortgages FAQs
    • Reverse Mortgage Myths
    • The Reverse Mortgage Process
    • Choosing a Loan Originator
    • HECM For Purchase Guidelines
    • History of Reverse Mortgages
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    • Reverse Mortgage Resources
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    • Buying a Home or Want to Refinance?
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    • Let’s Address Reasons HECM's Have Bad Reputations the Reverse Mortgage!

Reverse Mortgages FAQs

How do I Become Eligible 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.

How much money can A Reverse Mortgage Loan Provide?

The amount of money that a lender will loan depends upon how old you are at the time of closing, how much your house is worth, the total amount of liens, and interest rates. The type of reverse mortgage product and the payment options can also affect the amount of money you will receive.

What Are The Payment Options?

There are several different options to choose from. You can take the money in a lump sum, set up a line of credit, monthly payment, or a combination of all three.

What costs are I Can Expect with a reverse mortgage?

The costs of a "forward" loan are very similar to a reverse loan. For example, an origination fee is paid to the broker/lender; A mortgage insurance premium (MIP) is paid to HUD on the Home Equity Conversion Mortgage (HECM), an appraisal fee, a flood certification fee, a doc prep fee, title and settlement fees, and other standard closing costs.

Is it required that I receive counseling before getting a reverse mortgage?

Yes. Counseling is required to protect borrowers from receiving incorrect information about reverse mortgages. The lender must be in receipt of the counseling certificate before they can close the loan. To locate a reverse mortgage counselor near you, contact your loan officer or your local HUD office.

Do I get taxed on the money I receive from my reverse mortgage?

The equity in your home is considered your money and not additional income. All the funds from a reverse mortgage are tax free. (Borrowers should seek professional tax advice regarding reverse mortgage proceeds.)

Do I have to pay any fees to the reverse mortgage lender during the course of my loan?

A reverse mortgage was created so borrowers don't have to pay fees during the course of the loan. For more information on the Escrow, or service set-aside, please talk to your Fairway Reverse Mortgage Advisor.

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. Minimal income and credit standards must also be met.

How Much Money Can I Get?

The amount of money that a lender will loan depends upon 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:

  1. 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…
  2. 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 the Principal Limit at the time of loan closing.

How Do I Receive My Money?

There are several different options to choose from. You can take the money in a lump sum (up to HUD’s first year maximum withdrawal), set up a line of credit, monthly payment, or a combination of all three. In the first year the Line of Credit or monthly Tenure Payments or monthly payments cannot exceed 60% of the Principal Limit. After the first year, the available Line of Credit or Tenure/Monthly payments will be increased when applicable.

What Costs Are Associated With A Reverse Mortgage?

The fees and cost of a reverse mortgage are based on a number of items. For example, an origination fee is paid to the broker/lender, a MIP (mortgage insurance premium) is paid to HUD on the Home Equity Conversion Mortgage (HECM), an appraisal fee, a flood certification fee, a doc prep fee, title and settlement fees, and other standard closing costs. Monthly servicing fees could apply.

What Are The FHA Mortgage Insurance Premium Charges?

The upfront Mortgage Insurance Premium (MIP) is calculated at 2.0% of your home's appraised value or a maximum of $679,650 (the national lending limit cap of $679,650). For example a home appraised at $275,000 would have a one-time upfront FHA insurance premium of $5,500. The ongoing FHA insurance premiums are .5% (one-half of one-percent) of each month's calculated outstanding loan balance.

Is It Required That I Receive Counseling Before Getting A Reverse Mortgage?

Yes. Counseling is required with an independent third party HUD-approved counselor to protect borrowers from receiving incorrect information about reverse mortgages. The lender must be in receipt of the counseling certificate before they can close the loan. To locate a reverse mortgage counselor near you, contact your loan originator or your local HUD office.

Do I Get Taxed On The Money I Receive From My Reverse Mortgage?

The equity in your home is typically considered as loan proceeds and not additional income. Typically the funds from a reverse mortgage are considered tax free. (This does not constitute tax advice. Borrowers should seek professional tax advice regarding reverse mortgage proceeds.)

Do I Have To Pay Any Fees To The Reverse Mortgage Lender During The Course Of My Loan?

A reverse mortgage was created so borrowers don’t have to pay most fees during the course of the loan. Typical upfront costs are for the appraisal and HUD-approved reverse mortgage counseling (some agencies waive counseling fees at their discretion). However, there may be a monthly servicing fee associated with reverse mortgages (which will be financed and added to the loan balance). For more information on the service set-aside, please talk to your loan originator.

How Does It Work?
Learn how a reverse mortgage could provide you more cash.
How It Works
What Do Family Members Need To Know?
Get informed about how everyone is affected by a reverse mortgage.
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NMLS#: 1499762
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ADA Notice
This information is not intended to be a substitute for legal, tax or financial advice. Consult with a qualified attorney, accountant or financial advisor for additional legal or tax advice. These materials are not from HUD or FHA and were not approved by HUD or a government agency.
* There are some circumstances that will cause the loan to mature and the balance to become due and payable. The borrower(s) must continue to pay for property taxes and insurance and maintain the property to meet HUD standards or risk default.. Credit is subject to age, minimum income guidelines, credit history, and property qualifications. Program rates, fees, terms and conditions are not available in all states and subject to change.

FAIRWAY INDEPENDENT MORTGAGE CORPORATION
FAIRWAY IMC HECM LENDING GROUP BRANCH NMLS#1499762
3550 Parkwood Blvd Bldg. G Suite #703
Frisco, TX 75034
Phone: 844-770-1285 op 1 or 2
Work: 214-618-5774

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 Copyright©2017 Fairway Independent Mortgage Corporation Copyright©2017 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4801 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency.  Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs.  This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. AZ License #0122547. Licensed by the Department of Business Oversight under the California Finance Lenders Law. Loans made or arranged pursuant to a California Finance Lenders Law License. California License #60DBO70590, Florida License #MLDB5583, Kansas License # MC.00011375_BR.202, Louisiana License #1499762, North Carolina License #L-133353-177, Ohio License #MB.802711.030, Oklahoma License #MLB10996, South Carolina License #BF_-MLB-1499762, Texas License #1499762, Washington License #CL-1499762,Virginia License #MLO-34275VA, http://nmlsconsumeraccess.org

 

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  • Home
  • About Us
    • About Us
    • Disclosures & Licensing
  • About Reverse Mortgages
    • Top 10 Reverse Mortgage Questions
    • Intro to Reverse Mortgages
    • How It Works
    • Reverse Mortgages FAQs
    • Reverse Mortgage Myths
    • The Reverse Mortgage Process
    • Choosing a Loan Originator
    • HECM For Purchase Guidelines
    • History of Reverse Mortgages
    • FHA-Insured
    • Reverse Mortgage Resources
  • Who We Help
    • Seniors
    • Adult Children
    • Special Advisors
  • WHO WE SERVE
    • Buying a Home or Want to Refinance?
    • Financial Solutions for Seniors
    • For Consumers
    • For Financial Planners, CPA's and Attorney's
    • For Realtors and Builders
    • Let’s Address Reasons HECM's Have Bad Reputations the Reverse Mortgage!