Late this morning, agents in my office were introduced to a few reps from Wells Fargo, the topic they discussed referred to Reverse Mortgages and the great opportunities it has for our clients. I am so excited about what they shared that I had to let you know about it right away!
First let's start off with a little definition, what is a Reverse Mortgage?
The easiest way to describe a reverse mortgage is that rather than the traditional mortgages, where you pay a monthly mortgage payment, the reverse mortgage is just the opposite... the bank pays you!
I know what you're thinking- "That can't be right. Why would the bank pay me?"
First, in order to qualify for the FHA-insured loan, you need to be at least 62 years of age, and all parties involved in the transaction (specifically those placed on title) will need to be as well. The only thing you'll need to submit is documentation on your assets. There is no credit check or Loan to Value ratio necessary to qualify for the loan! You can choose to use the loan in 3 ways. You can take out the money as a lump sum, take out part of it as lump sum and use the rest as a line of credit, or you can draw out from the line of credit and pay yourself a monthly income. The line of credit can be expected to increase over time (as long as money remains in the line of credit). If you draw out any money and use it as income, the income is tax free.
To clarify, you must have equity in your house in order to qualify for this loan. But, if you've lived in the property for awhile you have probably accrued some equity. This is a great thing to do if you happen to be a homeowner over the age of 62 who finds they have equity in their property, but are finding it difficult to keep up with the payments of their current mortgage.
Let's discuss what property types are eligible for this loan...
you can purchase a Single Family residence, HUD-approved condo, Planned Unit Developement (PUDs), Two- to four-unit properties (one unit must be occupied as a primary residence), or a manufactured home built after June 15, 1976.
Requirements of the new home
The home must be the primary residence, must be occupied by the borrower within 60 days from close date, and construction must be complete, properly habitable, and a certificate of occupancy or its equivalent must be submitted prior to the loan application.
It is essential that if you receive a reverse mortgage that you pay your taxes, your insurance, your HOA dues, and is kept in good shape.
Wells Fargo wants to ensure you are not being pressured, so all seniors wanting to apply for a reverse mortgage must first attend a meeting with their local rep (which I can get you in touch with if you live in the Las Vegas/Henderson/North Las Vegas Valley), then a counseling session with a Hud-approved counselor. These counselors will send you a packet of information, and will then speak to you on the phone. The conversation typically lasts for about an hour, and is to ensure that no one is pressuring you into the application and you fully understand what this mortgage entails. Counseling is also required to be attended by all parties in the transaction, regardless if they will be on title or not.
Wells Fargo is the nation's leading originator of reverse mortgage loans. In December of 2010, here in Las Vegas, they closed 1,832 loans. Bank of America had only 837, which was the closest of their competitors. It is expected that more of these transactions will happen more frequently with the expected retirements of the baby boomers and the current economy we find ourselves in. They are here to help you and can answer any questions you have about the program, also known as the Home Equity Conversion Mortgage (HECM). If you would like more information about this loan, please contact me or contact your local Wells Fargo Home Mortgage rep.
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