Reverse Mortgage Question:

[J Grant]

Refinance is an umbrella term referring to an owner taking out a loan on their property. The fact that they may own it outright or bought it for cash and thus are technically "financing" for the first time is besides the point. The lending industry, and appraisers (those with common sense) refer to it as a refinance. A reverse mortgage is an owner applying for financing on their own property, and thus is a refinance.

 

[JSmith43]

A reverse mortgage is an owner applying for financing on their own property, and thus is a refinance.

Or it is a RM for purchase, but in that case it would not be applying for financing on their own property.

http://portal.HUD.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/faqs_hecm

 

[Meandering]

Refinance is an umbrella term referring to an owner taking out a loan on their property. The fact that they may own it outright or bought it for cash and thus are technically "financing" for the first time is besides the point. The lending industry, and appraisers (those with common sense) refer to it as a refinance. A reverse mortgage is an owner applying for financing on their own property, and thus is a refinance.

They are not financing it at all.

This is a REVERSE mortgage.

They are SELLING their equity to the GOVERNMENT, FHA in this case, one month at a time.


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[TJSum]

They are not financing it at all.

This is a REVERSE mortgage.

They are SELLING their equity to the GOVERNMENT, FHA in this case, one month at a time.


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Disagree with your take on this, yes they are still financing the home with the lender, but instead of getting all the money up front, instead they choose to take monthly payments on it. When it comes time to sell, the owner is the seller, not the bank, and with the proceeds they pay off the outstanding balance just like any other loan.

 

[Meandering]

Disagree with your take on this, yes they are still financing the home with the lender, but instead of getting all the money up front, instead they choose to take monthly payments on it. When it comes time to sell, the owner is the seller, not the bank, and with the proceeds they pay off the outstanding balance just like any other loan.

But if they die, historically, the owner has been the bank. There are moves to change that now because many widows were put on the street when their husbands died.

The main difference between the Reverse Mtg and a Refi, is that the owner is paying on a loan to the bank monthly on the refi,

And the bank is paying the owner for their equity monthly.

There is no requirement for the owner to be credit worthy, because they are not "borrowing" anything.


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[TJSum]

But if they die, historically, the owner has been the bank. There are moves to change that now because many widows were put on the street when their husbands died.

The main difference between the Reverse Mtg and a Refi, is that the owner is paying on a loan to the bank monthly on the refi,

And the bank is paying the owner for their equity monthly.

There is no requirement for the owner to be credit worthy, because they are not "borrowing" anything.


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The bank is still loaning them money, the difference is the owners get it monthly instead of taking it all up front. It all depends on how much equity is left in the house when the borrower passes, of course if the house is underwater, then the bank would "own it". It probably depends on how the loan is written and who the borrower is, if the loan is only in one spouses name, and they pass, it probably does create problems for the surviving spouse as they then need to pay off the loan balance as they were not part of the loan. Most loan officers I have known through the years recommend against these reverse mortgages because of the potential pitfalls.

 

[Meandering]

AARP Sues HUD Over Shift in Reverse Mortgage Policies
http://www.aarp.org/money/credit-loans-debt/news-03-2011/aarp_sues_HUD_over_reverse_mortgages.html

AARP Sues Government Over Reverse Mortgage Foreclosures
http://www.elderlawanswers.com/aarp-sues-government-over-reverse-mortgage-foreclosures-9005


The Best Life
Reverse Mortgage Problems Raising Red Flags
http://money.usnews.com/money/blogs...2/reverse-mortgage-problems-raising-red-flags

Putting your bride on the deed doesn't put her on the mortgage loan. With a reverse mortgage, the loan becomes due when the last person on the loan dies or stops living in the house.

The good news is that reverse mortgages can be refinanced. It can be expensive and may not make financial sense.

The first thing that has to happen with the refinancing is to pay off the existing loan balance, which includes the interest expense to date.

But your goal isn't to find additional funds; it is to get your wife's name on the loan. I'd suggest you look into refinancing with the Federal Housing Administration's Home Equity Conversion Mortgage program.

Another possibility involves life insurance, which could help accomplish your goals. A life insurance policy that lists you as the insured and your wife listed as the beneficiary could pay off the reverse mortgage if you die.

It won't be cheap, but neither are closing costs on a new reverse mortgage.

Read more: http://www.bankrate.com/finance/mor...ortgage-keep-wife-in-house.aspx#ixzz2gWwtNSvS



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[Meandering]

You're right,

These fall under the HECM program.

Unlike other FHA loans, there are no income or credit qualifications for this type of loan. You will be required to have a current appraisal on the property as the amount of an FHA reverse mortgage is based on the home's value or the FHA insurance limit, whichever is lower.

http://www.FHA.com/fha_reverse


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