Reverse Mortgages in Plain English
Understanding a reverse mortgage is as easy as falling off a log.
What is a reverse mortgage?
A reverse mortgage enables the senior citizen homeowner (age 62+) to get cash from home equity. Unlike an
ordinary mortgage, you don't have to make a monthly mortgage payment. It is a government-sponsored loan, through FHA.
What if I have an existing mortgage?
As long as it's less than the new proposed reverse, you still qualify.
How much money can I pull out?
Depending on age and home value, generally 45-70% of the value of the home. Subtract the value of any existing mortgage.
When must the mortgage be paid off?
The mortgage is due when one of three things happens: when the borrower permanently moves out, sells the property, or dies.
But...what if the loan balance exceeds the property value?
Sometimes bad things happen to good lenders. It's their tough luck.
Aren't the costs of getting a reverse mortgage astronomical?
No. The upfront costs are the appraisal, about $460 and counseling. The closing costs are paid by your
estate when the loan is done.
How do I get the money?
You can get the whole thing as a lump sum. Or, you can have it paid out as a monthly income for as long as you
live in the home. Or, you can have a line of credit, which will increase every year until the limit has been reached.
Wait, I have more questions!
Indeed, don't we all. Call Martin Dekom at Jacob Dean Mortgage with your home value and age, and you'll get your mortgage options outlined: 516 850-2717 or mdekom@jdmtg.com. Alternately, complete the "Contact Us" form and we'll get back to you.
What have lenders NOT been telling you? That wasn't on the video...
But the closing costs are high...
The biggest single expense is the federal "Mortgage Insurance Premium", which accounts for 45% of total
cost. And it can't be changed. However...
SECRET #1 ...they don't have to be so high!
However, the next biggest cost is the origination fee. If asked, most lenders will give you a meager discount
of $50 to $500. We start by chopping $2,000 from the legal limit.
SECRET #2 Rate
All reverse mortgages are not created equal. They rate can vary a few points between ARM and Fixed Rate. Rate
shopping is your first step.
SECRET #3 Other Closing Costs
Some title costs are regulated, some are not. Here is where the unwary can get "nickel-and-dimed" for a few
$100. That's a lot of nickels.
I was told everyone has "the same thing". True?
FALSE. Now there are a number of different lenders and products. Being a broker, we choose from a mix to
find the best fit for you.
Any "hidden" fees?
The government charges one and a half percent, so your annual cost is your rate plus that. However, there is
no more monthly "service fee".
3 Secrets we use to lower your costs and increase your money!
We chop the origination cost, we squeeze our vendors and lenders, and we ferret out good rates for you.
The result is substantially lower costs and a dollar for dollar increase in your money benefit.
Sound a little too good? Shop and compare!
We have yet to see an original Good Faith Estimate from our major competitor that we didn't beat. They spend
a fortune on advertising so we compete on price and speed.
Which is better: Fixed rate or ARM?
Neither is better or worse, only different. It depends on how much you need to take out at closing and
how long you think the loan will last, and if you think rates will stay this low for the long haul.