Silverboat - Reverse Mortgage Loans

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A Reverse Mortgage loan is a home loan. It differs from a normal mortgage loan in three basic ways:

It's only available to Seniors 62 and older

No monthly payments are required

There is no set term for repayment. When the last surviving Senior passes on, moves out, or if the property is sold, the loan plus accrued or accumulated interest is then due in full. You can never owe more that the value of the property.

The difference between the value of your home and your current mortgage balance or balances. If your home is worth $200,000 and you have an existing mortgage balance of $50,000, your home equity amount is 150,000.

A consistent income stream or payment. In Reverse Mortgage terms this means a monthly payment of a predetermined amount.

Referring to interest that has accumulated but has not been paid

A report of home value based on similar properties and property condition. The appraiser must be approved by the lender and HUD.

For Reverse Mortgage approval your home must be structurally sound and in good condition.

Lenders required "clear" title which means there can be no impediments to providing your home as collateral for a loan. All liens or judgments must be paid, and your individual or joint ownership of the property must be clearly indicated.

An Independent ("third party") HUD approved counselor is required to review Reverse Mortgage options with a prospective Reverse Mortgage borrower.

A variable interest rate is one that may change at certain times depending on market conditions and the specifics of the loan program.

	What’s a Reverse Mortgage?
	Who’s Eligibile?
	Uses of Reverse Mortgage Loans
	Top Reverse Mortgage Concerns
	Saying No to a Reverse Mortgage
	Adult Children Involvement
	Loan Approval Process
	Annualized Growth Rate
	Rates, Margins, Adjustments & Caps
	Loan Payout Options
	Types of Reverse Mortgages
	Comparisons
	Loan Closing Costs
	FAQ
	How Much Can You Borrow?

Education

What is a Reverse Mortgage Loan?

A Reverse Mortgage is a home loan that allows a Senior to convert his or her home equity into income or cash. Money from loan proceeds can be taken as a lump sum, a line of credit, a monthly annuity or payment, or in any combination. Unlike a regular mortgage loan, there are NO monthly payments and the repayment of principal and accrued or accumulated interest is due in full only when the last surviving borrower moves out, sells the property, or passes on.

Credit status, health, income, and assets are not considered for loan approval. Lenders generally require an appraisal of the home, an acceptable standard of home maintenance, a clear termite or other wood destroying infestation report, and clear title. HUD, the US Department of Housing and Urban Development, also requires borrowers to receive third party counseling from a certified Reverse Mortgage Counselor.

Helpful Tip 1

ITEM	Regular Mortgage	Home Equity Loan	Reverse Mortgage
Loan Amount	Interest is charged on lump sum loan amount	Interest is charged on amount of money used or borrowed	Interest is accrued on amount of money used or borrowed
Payments	Yes. Interest or principal & interest payable each month	Yes. Interest or principal & interest payable each month	No payments are required
Repayment Term	Set. Term is preset to a certain number of years (i.e. 30 years)	Set. Term is preset. Varies according to lender	There is No set repayment term
Interest Rate	Fixed or Variable rate	Variable rate	Primarily Variable rate
When Loan is Due	End of term or when home is sold or refinanced	End of term or when home is sold or refinanced	When last surviving borrower moves out, sells the property or passes on
Amount of Home Equity	Generally increases over time as monthly payments are made	Generally increases over time as monthly payments are made	Generally decreases over time as payments are not being made
Payoff Amount to the Bank	Remaining loan balance plus interest due from last payment	Remaining loan balance plus interest due from last payment	Current loan balance plus accrued or accumulated interest

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