How We Can Help You With Reverse Mortgages
A reverse mortgage is a special type of home loan available to homeowners who are 62 years of age and older. Home Equity Conversion Mortgages (HECMs), the most common type of reverse mortgage loan, allows eligible homeowners to convert a portion of their home’s equity into cash without selling their home.
The decision whether to take out a reverse mortgage is an important one and involves serious consideration of the risks and benefits associated with a reverse mortgage. Reverse mortgage applicants are required to obtain counseling from a reverse mortgage counseling agency approved by the United States Department of Housing and Urban Development (HUD). The HUD approved reverse mortgage counseling agency will discuss your eligibility, the financial implications of the loan, and other alternatives.
Separate and distinct from your mandatory counseling from the HUD approved reverse mortgage counseling agency, the Bernard Law Group can represent you as your attorney during the reverse mortgage transaction.
In addition to having to be 62 years of age or older, to be eligible for a reverse mortgage, the following must be true, at minimum,
- Your home must be your principal residence, meaning you live there the majority of the year.
- You must either own your home outright or have a low mortgage balance.
- Owning your home outright means you do not have a mortgage on it anymore.
- If you have a mortgage balance, you must be able to pay it off when you close on the reverse mortgage.
- You can use your own funds or money from the reverse mortgage to pay off your existing mortgage balance.
- You cannot owe any federal debt, such as federal income taxes or federal student loans.
- You may, however, use money from the reverse mortgage loan to pay off this debt.
- You must have enough of your own money or agree to set aside part of the reverse mortgage funds at your loan closing to pay ongoing property charges, including taxes and insurance, as well as maintenance and repair costs.
- Your home must be in good shape.
- If your house does not meet the required property standards, the lender will tell you what repairs need to be made before you can get a reverse mortgage loan.
During the mandatory counseling with the HUD approved reverse mortgage counselor, you may also the provided guidance regarding alternatives to a reverse mortgage. For example, before taking out a reverse mortgage, it is important to consider whether other borrowing and housing options may be more appropriate for your circumstances. For example,
- Waiting
- If you take out a reverse mortgage loan when you are too young, you may run out of money when you’re older and more likely to have less income and higher health care bills.
- Other home equity options
- A home equity loan or a home equity line of credit might be a cheaper way to borrow cash against your equity.
- However, these loans carry their own risks and usually have monthly payments.
- Qualifying for these loans also depends on your income and credit.
- Refinancing
- Depending on interest rates, refinancing your current mortgage with a new traditional mortgage could lower your monthly mortgage payments.
- Pay attention to the length of time you’ll have to repay your new mortgage as it can affect your retirement plan.
- For example, taking on a new 30-year mortgage when you are nearing retirement can become a hardship later.
- In this circumstance, you may want to consider choosing a shorter-term mortgage, such as a 15-year loan.
- Downsizing
- In some instances, it may be better to consider selling your home.
- If this option is right for you, moving to a more affordable home may be your best option to reduce your overall expenses.
- Lowering your expenses
- There are state and local programs that may help with utilities and fuel payments as well as home repairs.
- Many localities also have programs to help with property taxes: check with your county or town tax office.
- Information about these and other benefit programs is available through www.benefitscheckup.org
The decision is yours to make and should not be rushed, pressured, or influenced by third parties.
If you decide that a reverse mortgage is right for you, the Bernard Law Group will be with you step by step during the process, to address your concerns and ensure that we provide relevant guidance to navigate the complexities of the reverse mortgage process and ensure that their rights and interests are protected ensure your protection in the transaction including but not limited to the following,
- Legal Review
- Review offers or solicitations to ensure they are legitimate and advise you on how to recognize and avoid fraudulent schemes connected with reverse mortgages
- Review of the reverse mortgage proposed loan documents to ensure that the terms are fair and that you fully understand the implications of the loan,
- Identification of potential issues or clauses that may be disadvantageous
- Clarification of Rights and Obligations:
- Explanation of your rights and responsibilities under the reverse mortgage, including the right to stay in the home as long as it remains their primary residence, the obligation to pay property taxes and homeowners insurance, and the consequences of defaulting on the loan
- Risk Assessment:
- Helping you to assess the risks associated with a reverse mortgage, such as the potential impact on your home’s equity, the accrual of interest, and the implications for your heirs, and whether a reverse mortgage is the right financial choice for your specific situation
Need Help With Your Real Estate Transaction?
We love helping families, individuals, and agents navigate the real estate closing process. Call the Connecticut real estate attorneys at The Bernard Law Group today to see how we can help you achieve your real estate goals.