Senior Equity Financial, Inc.

Understanding Reverse Mortgages

> How much can you get?

How much equity can I access? At Senior Equity Financial, we find this is the first thing most homeowners want to know. The fact is, everyone’s going to have a different situation, based on a combination of following factors:
(Just click on the link to learn more about each of these.)

– Age of the youngest borrower
– Property value or lending limit
– Closing costs
– Interest rates
– The type of reverse mortgage you are considering

Variables that can affect the monies available:

Reverse mortgages are not complicated. But there are variables that need to be taken into account when considering this type of mortgage. At Senior Equity Financial, we’ll help you learn the ins and outs of reverse mortgages — and understand your options — so you can make the best decision for yourself. Here’s a quick overview of some of the most important variables. We’ll be happy to help you understand what they can mean for you.

Age of youngest borrower:

You are eligible to apply for a reverse mortgage if the youngest borrower is age 62 or older. A larger percentage of equity is made available the older you are. This does not necessarily mean you will have more money if you wait and apply for a reverse mortgage in the future, as changing interest rates and home values could cause less money to be available then.

Property value or lending limit:

Your property value will be determined by licensed appraiser. The appraiser will look at what similar homes have been selling for in the last 6-12 months within a mile radius. Based on number of rooms, bedrooms, bathrooms, etc., you’ll receive an estimate of what your current market value is. This market value may be capped at a certain value based on what program you are considering. This is where Senior Equity Financial has the knowledge to help you consider all your options available.

Closing costs:

Like a traditional mortgage, closing costs can be paid out of pocket or financed into the loan. While costs vary based on the type of reverse mortgage you choose, your costs may include, but are not limited to, a mortgage insurance premium (for HECM only), a bank fee, title insurance, registry fees, attorneys fees, and an appraisal. Typical closing costs can range from $5,000 to $17,000. When determining which program suits your needs, closing costs should not be your only consideration. You need to factor in interest rates as well as closing costs since a loan with zero closing costs could cost you more in the future due to a higher rate.

Interest rates:

Interest rates may be adjustable or fixed. If rates are lower at the time you get a reverse mortgage, a larger percentage of your equity will be available. If rates are higher you will receive a lower percentage. Interest rates will vary based on the program you consider and are continuously changing in today’s market. At Senior Equity Financial, we have a commitment to understanding today’s market and helping you find the appropriate reverse mortgage with the best rate.

Type of reverse mortgage:

Federally Insured Home Equity Conversion Mortgages (HECM)

HECMs were the first regulated programs on the market. Today, they are the most popular reverse mortgages, accounting for an estimated 90 percent of the total market. Available since 1989, HECMs are insured by the federal government through the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development.

Fannie Mae Home Keeper®

In 1996, Fannie Mae developed its own proprietary Home Keeper® reverse mortgage as a conventional market alternative to offer homeowners more options. This program is not as popular as the HECM, but it does help in certain situations.

Jumbo Reverse Mortgages

Jumbo Reverse Mortgages, or what some call Proprietary Reverse Mortgages, were developed to address unmet needs that could not be served by the HECM and Home Keeper® programs, specifically addressing the situation for individuals with higher property values. Jumbo Reverse Mortgages are not insured by the federal government, but feature many of the important consumer protections and benefits of the government programs, including mandatory counseling.

If you’re interested in learning more about reverse mortgages, Senior Equity Financial has the experience to help you understand the options and find the reverse mortgage that’s specifically tailored to fit your financial needs.

With Senior Equity Financial, your needs come first. Just call us at (800) 261-8507.