Absolutely not. Provided the homeowner pays the property taxes and homeowner’s insurance on time, and continues to maintain the property, the borrower can remain in the home for as long as he or she wants. Even if the borrower has exhausted all the funds from the reverse mortgage, or even depleted all of the equity in the home, the lender cannot ask the homeowner to leave the property or pay the loan at that time. The loan is not due and payable until homeowners no longer live in the home as their primary residence.
Reverse mortgages have traditionally been considered high cost loans, however, lenders have become increasing competitive with within the past year. This has resulted in a reduction in many of the fees associated with reverse mortgages. In a reverse mortgage counseling session, Clearpoint’s housing counselors are equipped to inform you of what fees may vary from lender to lender.
In October 2010, HUD introduced a new HECM option known as the “HECM Saver.” While this program reduces the amount of money available to borrow (when compared to the traditional HECM known as the HECM Standard, which is still offered), it also reduces the amount of the initial Mortgage Insurance Premium to 0.01% of the home value. This is a substantial savings when compared to reverse mortgages of just a year ago. The homeowner considering a reverse mortgage today has more options than ever before. Consumer understanding of the process and options available has never been more important than it is now.
The fees and costs of a reverse mortgage can be financed through the loan with no out-of-pocket costs for the homeowner. The only exception to this might be the cost of the appraisal, application and/or termite inspection. Many lenders, however, also allow these fees to be financed through the reverse mortgage. Homeowners should talk to their prospective lender and ask whether or not these fees can be financed before proceeding.
Because of the mortgage insurance, if your heirs intend to sell the home, they can never be asked to pay more on the loan than the value of the house at the time the loan becomes due. If your heirs plan on keeping the home, however, they will be required to pay the entire loan balance at the time the loan becomes due, even if the balance is more than the home is worth.
While it is true that you would receive more money through the HECM since the loan calculation is based on the age of the youngest borrower only, to leave your wife off the loan would mean she would be required to pay off the loan should something happen to you. She could not stay in the home after you were no longer living in it unless she repaid the loan, despite the fact that she may have been placed back on title to the home after the reverse mortgage closed.
Important Advisory: Clearpoint will NEVER text, email, mail or call to ask you to send or deposit money to any account other than your own (according to your chosen payment method associated with a Debt Management Program, or for specific services like housing education or bankruptcy counseling). If you receive any correspondence of this nature, please beware that it could be a scam. Do not respond or share any personal or banking information, and contact our office immediately at 877 877 1995, or by email.