A reverse mortgage is a type of home equity loan that allows you to convert some of the existing equity in your home into cash while you retain ownership of the property. Equity is the current cash value of a home minus the current loan balance.
A reverse mortgage works much like a traditional mortgage, except in reverse. Instead of the homeowner paying the lender each month, the lender pays the homeowner. As long as the homeowner continues to live in the home, no repayment of principal, interest, or servicing fees are required. The funds received from a reverse mortgage may be used for anything, including housing expenses, taxes, insurance, fuel or maintenance costs.
To qualify for a reverse mortgage, you must own your home. You may choose to receive the reverse mortgage funds in a lump sum, monthly advances, as a line-of-credit, or a combination of the three, depending on the reverse mortgage type and the lender. The amount of money you are eligible to borrow depends on your age, the amount of equity in your home, and the interest rate set by the lender.
Because the borrower retains ownership of the home with a reverse mortgage, the borrower also continues to be responsible for taxes, repairs and maintenance. Depending on the plan selected, a reverse mortgage is due with interest either when the homeowner permanently moves, sells the home, dies, or the end of a pre-selected loan term is reached. If the homeowner dies, the lender does not take ownership of the home. Instead, the heirs must pay off the loan, typically by refinancing the loan into a forward mortgage (if the heirs meet eligibility requirements) or by using the proceeds generated by the sale of the home.
WSFOA Reverse Mortgage Disclaimer:
Wall Street Funding of America, Inc. (WSFOA), is a California Corporation, established in 2008, as a Mortgage Broker (NMLS# 367724 / Broker DRE# 1844287), and headquartered at 801 Park Center Drive, Suite 220, Santa Ana, CA 92705.
This material is not from HUD or FHA, and has not been approved by HUD or any government agency.
Reverse Mortgage means a residential mortgage transaction in which the lender provides loan proceeds to a borrower in a lump sum or in monthly installments with the exception that the borrower will repay the loan from the proceeds of a sale or transfer of the real property that secures the loan.
At the conclusion of the term of the reverse mortgage loan contract, some or all of the equity in the property will no longer belong to the borrower. The borrower might need to sell or transfer the property to repay the proceeds of the reverse mortgage.
The lender charges an origination fee, a mortgage insurance premium, closing costs, or servicing fees for the reverse mortgage. The lender will add these charges to the balance of the loan.
The balance of the reverse mortgage loan grows over time, and the lender charges interest on the outstanding loan balance.
The borrower retains title to the property. Therefore, the borrower is responsible for paying property taxes, insurance, and maintenance - and failing to pay these amounts might subject the property to a tax lien (or other encumbrance) or to a possible foreclosure.
Interest on a reverse mortgage isn’t deductible from the borrower’s income tax return until all or part of the reverse mortgage is repaid. (Or. Rev. Stat. § 86A.196).
WSFOA is established as a Mortgage Broker in the following states, to provide reverse mortgages to qualifying homeowners from the age of 62 and older: California, Oregon, Wyoming, Colorado, Georgia and Florida.