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Reverse Mortgages are complex financial transactions with lifelong consequences. You need independent professional financial and legal advice before signing a contract. The only reason to get a reverse mortgage is use as part of your financial strategy, meets your financial goals, and provides financial security through retirement. Only then can you consider the use of the proceeds from a reverse mortgage such as not having a mortgage payment. The borrower is 100% at risk so you must do your due diligence yourself. The salesperson and HUD counselor cannot give any advice but merely give you information about the product - not how it will impact you and your family. There is no suitability standard a critical element to know if this product will be beneficial or cause permanent financial harm. Sandy, Reverse Mortgage Suitability and Abuse Expert.
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Linda - yep, if you are going to do a RM, then HECM -FHA/HUD is the way to go

But bad news 4 u: MetLife has also pulled out of the RM business in May. My post earlier was in my file from last year. You might have to go to a credit union to get HECM w/FHA HUD assurance. I haven't dealt with credit union in forever, but they used to require a period of time of "membership" or having an account before you could apply for any of their services so ask about that.

I wouldn't be surprise if the "buying a new home/flip" gets excluded in the next update on RM rules. Still too much negative equity out there in real estate.
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I have obtained TWO reverse mortgages, one for my mother-in-law, and one for my mother. Both worked out great. There are a lot of things to know, but if you read what "igloo572" has posted here, and also go to HUD site (hud.gov, I think), you will find a wealth of information about the "HECM" (home equity conversion mortgage, a/k/a reverse mortgage). I used Wells Fargo both times, but as mentioned above, they stopped handling them. I recommend going to one of the big lenders directly (i.e. MetLife) and NOT using a middle man, as they just route them to one of those lenders in the end. Although I agree they are best utilized when the borrower is younger (I plan to get mine at age 62!), they still seem to be the best low-risk option for obtaining the funds that seniors need to provide for themselves. If "leaving an inheritance" is not a huge issue, they can spend their assets AND retain a life estate in the home - they will never be "kicked out." If catastophic illness occurs, the assets would possibly be used for those expenses anyway, so why not use them to live comfortably? I like the fact that, in the event of a health issue that requires nursing home placement, with an expected return to home, there is a full year before the mortgaged home can be considered as an asset. Anyway, the lenders have HECM specialists who can coach you through everything, and I found them to be very good. They follow federal (HUD) regulations, so the only variance between one to another will be the fees. They will give you all the HUD brochures and information too. There is a federally mandated phone interview (performed by a separate qualified agency of your choice, from a list provided by lender), and the senior(s) applying for the loan must answer certain questions to assure that they are competent and understand what the reverse mortgage is. Only after this interview takes place successfully (they will then provide an authorization number) can the mortgage application be legally processed. You are allowed to be present (and phone can be on speaker) during this interview, to help with details, if needed.
Also, regarding the issues about making sure the expenses are kept paid (property taxes, etc.), the lender can help to set up escrows and automatic payments, just like with any other mortgage, to assure these do not get neglected. You have options on how the funds are distributed also: lump sum, credit line, or combination of the two. There is also a new "Saver" program that they will explain, which distributes up-front loan costs. These loans have come a long way since initially offered ages ago, and in 2010 they even added an option to use the HECM to buy a new home and flip the loan over to the new property when the old one is sold. Look at HUD, then talk to a lender's Reverse Mortgage Specialist, then you can make an informed decision on whether it is right for your situation - there are no obligations for checking it out.
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I think the big ? is why you need the $ the RM would provide.

We looked into a reverse mortgage for my mom and it didn't work for her. imho RM work best if the property owner is more of a younger healthy retiree (65 retired and fully own home) the property is at least 300K in value and are likely to live in the property for a decade or two. But if the prospect is that the property owner will be needing to go into a NH soon is looming large then RM doesn't make sense.

I think you need to be careful with RM's. AARP has a easy to read booklet on this - it's publication D12894 (111)) called Reverse Mortgage Loans - Borrowing Against Your Home. AARP does not endorse any reverse mortgage lender or product, but wants you to have the information you need to make an informed decision about these loans and other, less costly, alternatives.AARP prohibits any company or individual from inserting a name or attaching any materials to their publication also. Please go over the agreement to see what the RM policy reads and what the options are, look for the costs for origination fees and servicing fees.
Also look for the "credit line growth". Personally I'd do it with your own attorney. HECM loans (FHA/HUD) usually have the best consumer situation.

When you do a RM there are 4 things that can be a problem:

1.FAILURE TO PAY - property taxes, homeowners/flood/wind insurance
. All those have to be continued to be paid by homeowner. You need to check to see if you can place the insurance or if it needs to be an insurer that the RM places.
2.MOVING TO A NEW RESIDENCE- if reverse mortgage property stops being your primary, you are required to pay your loan

3.BEING OUT OF THE HOME FOR MORE THAN 1 Yr - the loan will come due.

This can be an issue, if they need to go into a NH or AL.
4.ALLOWING THE PROPERTY TO DETERIORATE - being away for a while, like a 2 month vacation, is allowed but if the property gets run down while you are away or you do not do normal maintenance and take care of needed repairs, the loan could be called in. After Hurricane Katrina, some homeowners who had RM, got letters w/detailed questionnaire as to the status of the home, how it was being secured, status of repairs, utility information - this was all about calling in loans that looked like they were in areas with uncertainty. And that was in 2005 before the real estate market tanked.

Two of the big RM players, Bank of America & Wells Fargo, got out of the new reverse business in 2011. They were like 50% of the market too - they still service & honor the old loans but do not write any new ones. I imagine they did it because alot of the RM's now are negative-equity so they were taking losses on those RM's done in the go-go real estate years of the 1990's - 2005 when you could get a RM with a high % of value and home appraisal were inflated.I think the max now on a RM is 52% of value with upfront costs for RM about 12K.

I would recommend that you go and see a financial advisor or elder law attorney to
review the options before you sign anything. Good luck.
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I'm not sure what State you reside in, but in my field I have several extremely reputable reverse mortgage specialists who can advise as to whether or not a reverse mortgage is in your best interest. Our Company and myself are located in Connecticut so depending on where you are...
I can say this however, I have had many clients who not only benefited financially, but where able to remain happy, safe and at home for the rest of their lives using this wonderful financial tool.
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I have a resource who handles reserve mortages. She is very knowledgeable.
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I can't answer as to HOW to get a reverse mortgage started. But I CAN tell you, that my mom and dad were living off their reverse mortgage, and that has saved their financial bacon.
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