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Tips To Avoid A Reverse Mortgage Nightmare

by The Hat Team

Many times folks hear about a reverse mortgage on the television and they think it sounds like the best thing since sliced bread.  There are a few things you need to know about reverse mortgages before you decide to move forward with one and below we have listed a few tips on how to avoid a reverse mortgage nightmare.  

  1. One way to avoid even thinking about doing a  reverse mortgage  is to not wait until you simply don’t have any other option.  Do not go into something like a reverse mortgage without counseling with a HUD-certified housing counselor.  If you make huge decisions such as getting involved with a reverse mortgage during a time of financial stress, you will likely end up worse off than you started. 
  2. Another tip for avoiding a reverse mortgage nightmare is to search around for all that is offered.  You don’t have to settle for a reverse mortgage just because you think it’s the only thing you can do.  Talk to a financial counselor and find out what all of your options might be and then make an informed decision based off of the facts and not just what you think the facts might be. 
  3. If the lender you have chosen to move forward with suddenly starts telling you that your home needs a ton of repairs, be sure to find a new lender as quickly as possible.  HUD insures over 95% of reverse mortgages and they only require that the home be safe and functional.  Any small issues that your home might have shouldn’t even come into play during a reverse mortgage consultation. 
  4. If you feel pressured at all to sign on the dotted line to receive a reverse mortgage, do your part and do not sign the papers.  You don’t want to end up in a reverse mortgage nightmare just because you felt like you were being pressured into signing the papers.  Again, get up and leave the room if you feel any kind of pressure to sign on the dotted line for a reverse mortgage.
  5. Be sure to show up for the closing if you do decide to do a reverse mortgage.  If you are not present things may go astray and you might end up with a raw deal in the end. 

These are just a few tips to avoiding a reverse mortgage nightmare.  Do your part to pay close attention to detail so that you don’t end up living in the middle of a real nightmare.  

Courtesy of Montgomery AL Real Estate Expert Sandra Nickel.   

Is a Reverse Mortgage Right for Your Montgomery AL Home?

by The Hat Team

Because of today’s economic situation, rapidly rising health care costs, and falling retirement and savings account balances, many seniors are feeling financial stress. Looking for relief from their monetary woes, over 600,000 seniors have taken advantage of the FHA’s Home Equity Conversion Mortgage (HECM), better known as a reverse mortgage.

mortgageA reverse mortgage is a special type of home loan based on age, equity, interest rates, and the value of your Montgomery AL home, a reverse mortgage allows you to not only forego paying monthly mortgage rates but also to receive money (as long as at least one borrower lives in the home) on a continuous monthly basis, for a fixed period of time, or in unscheduled installments as needed.

To qualify for a HECM, the FHA requires that you own your home outright or have a low mortgage balance that can be paid from the loan’s proceeds, be at least 62 or older, and that you continue to reside in your Montgomery AL home. Single family homes and 1-4 unit homes with one unit occupied by the borrower are eligible. The same holds true for HUD approved condos and manufactured homes that meet FHA standards.

A reverse mortgage differs from a home equity loan in that you do not make monthly payments, and it is available to you regardless of your income. The amount of the HECM is based on your age, the current interest rate, and the appraised value of your Montgomery AL home.

When you or the last surviving homeowner moves from the house or passes away, you or your estate has approximately 12 months to repay the loan amount, with fees and interest, to the lender. Any remaining equity after a sale will belong to you or your heirs. If the proceeds of the sale are not enough to cover the loan, the lender, not you or your heirs, must take the loss.

There are four ways to receive your money:

  1. Lump sum--all the cash at closing
  2. Tenure--equal monthly payments as long as the house is the principal residence.
  3. Term--equal monthly payments for a fixed number of years.
  4. Line of credit--funds available to draw on at any time.

Note: the borrower can “mix and match” any of the above plans and can use the money for any purpose.

As with all government programs, you need to give careful consideration to all of your options. In fact, potential HECM borrowers are required to receive some type of consumer pre-counseling about the program. You can find an HECM counselor online at or by calling 1-800-569-4287. You can also contact the National Council on Aging at 1-800-510-030 or online at. BEWARE of reverse mortgage companies who charge a fee to refer you to a lender! It is best to work only with lenders who are members of the Better Business Bureau and the National Reverse Mortgage Lenders, organizations which adhere to a strict code of ethics and standards.

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