Brenda Bonin has been a mortgage consultant in the DFW area for over 15 years. She views a mortgage as a financial instrument that can help people achieve their big picture financial goals. She is passionate about getting families the right mortgage when they purchase their home and when they can benefit from a refinance. This includes offering the HECM (Home Equity Conversion Mortgage), specifically for homeowners age 62 and above.
Brenda's business is 100% by referral. She is committed to serving her clients long after the closing of each loan. She has built an incredible network of professional resources that continue to support and add value to her clients, year after year. Her favorite question to ask is "how can I be of help?"
What is a reverse mortgage?
A reverse mortgage allows homeowners age 62 + to convert some of their home equity into cash, when and how they want to. Funds can be taken in a lump sum, monthly draws, standby line of credit, or combination of these.
This is a “payment flexible” loan. No mortgage payments are ever required, but homeowners can choose to make payments in any amount at any time.
If no payments are made, interest accrues on the loan balance until the endpoint at which the property is responsible for paying off that loan balance, usually through the sale of the home.
Payment can be 100% deferred until the end. Any remaining equity at that point flows to the homeowner or their heirs. As a non-recourse loan, the property can never owe more than the market value.
Homeowners must continue to pay property taxes, insurance and any HOA dues on the property.
How would someone get out of a reverse mortgage?
The borrower should first discuss their situation with their trusted mortgage professional. Homeowners with a reverse mortgage may qualify for a refinance to a traditional loan.
Depending on the reason for wanting out of the reverse, homeowners could sell their home and pay off the reverse mortgage with the proceeds of the sale.
The reverse mortgage is a non-recourse loan, which means the borrower is not personally liable, and the property is the ultimate source of repayment, therefore the property can never owe more than the market value at that time.
On average, how much money does someone get from a reverse mortgage?
The amount of funds available depends on three factors: the age of the youngest borrower, the value of the home, and interest rates and terms of borrowing.
On average, it is about 50% less mandatory obligations, which includes the pay off of any existing liens on the property.
The older the borrower is, the higher the principal limit, which is the key determent of the amount of funds available. Homeowners should work with a trusted mortgage professional to receive the most accurate information specific to their unique scenario.
Who can qualify for a reverse mortgage?
All homeowners age 62+ are age eligible for the reverse mortgage. Applicants must meet the financial assessment requirements which measure the borrowers' ability to pay for property taxes, homeowners insurance, HOA dues, estimated utilities, and general cost of maintaining the home.
While there is no minimum credit score required for this loan, credit history is reviewed. In some cases, a LESA, lifetime set aside for property taxes and insurance, may be required.
How much equity do I need to get a reverse mortgage?
Homeowners need a strong equity position, on average 50%, or be able to bring the amount necessary to closing. It is always recommended that you work with a trusted reverse mortgage professional who will help you evaluate all factors that contribute to answering "how much equity do I need?"
Many homeowners underestimate the value of their homes, so work with a professional to get the best information possible. When interest rates are low, as they are now, the equity needed may be less. There are many variables that can impact your unique scenario.
Can I pay off my reverse mortgage early? If so, how do I do that?
The home must be a primary residence and must meet FHA requirements for the FHA insured Home Equity Conversion Mortgage. In general, 1-4 unit primary residences are eligible, including townhomes, PUDS, FHA approved condos, manufactured homes built after June 1976.
Be sure to work with your trusted reverse mortgage professional to find out if your home is eligible.
The reverse mortgage can be used to purchase a home. One example is that a borrower can purchase a duplex with a reverse mortgage, live in one side and rent out the other for additional cash flow.
What happens to my reverse mortgage when I die?
If your spouse or other borrower is still living in the home, nothing happens. If you are the last surviving homeowner, the reverse mortgage becomes due and payable.
Your estate has up to 12 months to pay off the loan, which is usually done through the sale of the property. It is important for the heirs of the property to communicate with the loan servicer about the intentions of paying off the loan balance.
Heirs must show good faith efforts toward selling the property, if that is the intention. Any equity remaining after that sale of the property flows to the heirs of the property.
Further, the heirs cannot owe more than the property is worth, as the reverse mortgage is a non-recourse loan.