Thursday, October 27, 2011
A reverse mortgage is a great tool to help seniors, 62 or older, buy a house and have no monthly mortgage payment. It does require a substantial down-payment depending on the age of the borrower(s). The minimum age for a reverse mortgage is 62, which gives about a 50% loan-to-value. The older you are, the higher the loan-to-value. The difference between the purchase price and loan amount has to come from documented funds from the borrower. They can be from savings or the sale of another property. You own the new home, so you are responsible for the property taxes, homeowners insurance and maintaining the property. You can sell the home and pay back the outstanding balance with no prepayment penalty. A couple wanting to move to Santa Fe sold their home is California. They netted about $600,000.00 from the sale. They used $330,000.00 as the down-payment and took out a reverse mortgage for about $400,000.00. This allowed them to put the remaining money from the sale of the California sale into their investment account. Now they can live in the Santa Fe home with no mortgage payment. Also, there are currently no income or credit requirements to obtain the reverse mortgage (you cannot have an outstanding federal tax lien or be in the middle of a bankruptcy). Any repairs on the property being purchase have to be paid for by the seller and completed prior to closing. This includes any repairs required by the appraiser or required by a home inspection. The underwriter does review the Home Inspection Report for any issues that need to be fixed because they pose a health or safety issue or could affect the integrity of the structure.