Ahhhh, obtaining a mortgage. Reams of paper, undecipherable legalese, fluctuating interest rates, multiple types of mortgage loans, and credit checks.
You’ve made the decision to purchase a home – probably one of the most significant expenses you’ll ever have.
Or you’re an older couple. Love your house and where you live: close to the kids/grandkids, friends, the City and a selection of excellent local restaurants and A&E venues. You don’t want to move, but how to stay?
We stopped by the offices of Family First Funding and spoke with loan expert Rob Lowe, Director of Reverse Mortgage at Family First Funding who explained the process of obtaining a conventional and a reverse mortgage.
Obtaining a mortgage of any kind can be daunting. For a conventional mortgage, which is typically your first-time home buyer, “The first step is to determine what their budget is and what they want to purchase (house, condo or townhome), and see if that is financially doable. Then getting all the documentation; tax returns, job history, qualifying them for the loan they want. Once prequalified they can shop with confidence. It’s a very tight inventory right now and realtors won’t even show a house unless they know that the buyers are prequalified.” said Rob.
Serving the senior market place, Rob stated that “What a reverse mortgage does in its most simplistic form is allow the senior homeowner to access funds from their home, using it for whatever purposes they need. They can set it up as line-of-credit and use it as a security blanket. Our clients typically take their time and we urge them to seek the advice of both their financial and tax consultants”.
To qualify for a reverse mortgage you must be 62 years of age or older, the home must be your primary residence and either owned free and clear, or the existing mortgage is required to be refinanced with the reverse mortgage proceeds. Additionally, educational counseling with a HUD-approved counselor is required and you or one of the borrowers must continue to live in the house, and taxes and insurance on the property must be kept current and the property maintained to FHA standards.
The advantages of a reverse mortgage “Gives the borrowers piece of mind knowing that they can stay in the home and it frees up cash flow so they can meet all the ongoing expenses in maintain a household.
The downside is if the market turns down as it did in financial crises of 2008, and there might not be any equity left. However, they will never owe more than what the house is worth, which is called a non-recourse loan. For example, if a couple took out a reverse mortgage loan on their house for $300k and even if the house loses the half its value, and they want to walk away do not have to pay back the $300k. They can’t get hurt”, said Rob.
When asked about what he likes best about his job Rob immediately said “Getting the personal satisfaction that you are helping the seniors who are always extremely grateful when we walk them through the process to the final closing.”
As in most things in life the Government is also your partner. Rob said that the most challenging is that “There are a lot of rules governing reverse mortgages, and its gotten more restrictive and borrowers must now credit and income qualify. This is where sometime obstacles pop up such as co-signed notes that they forgot about. E very loan is different.””
To see a satisfied reverse mortgage client video, click here.
If want to see the grandkids grow up and are thinking about a reverse loan, call the expert Rob Lowe who will competently and patiently walk you through the process and keep you golden in the years to come.
And....keep a sharp eye out on your TV and you may see Rob in forthcoming news and business shows!
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