Q&A: Realtors

Q&A for Realtors

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Additional Q&A for SeniorsHeirsAdvisors and Realtors.

Realtors

Can my clients take out a Reverse Mortgage Loan on a second home or investment property?

No. Reverse Mortgage Loans can only be taken out on a homeowner’s primary residence that is, the residence where the homeowner spends the majority of his or her time.

What types of properties are eligible?

Eligible properties include: Single-Family homes, 2-4 unit properties, manufactured homes built after 1990, FHA Approved condominiums, Planned Unit Developments (PUDS) and newly constructed properties (Certificate of Occupancy must be issued prior to 1009 application date).

Does a Reverse Mortgage Loan require my client to make monthly payments?

No. Monthly mortgage payments are not required. Payment of property taxes, insurance and general upkeep of the home are the responsibilities of the homeowner.

 

Should my clients use an estate planning service to find a reverse mortgage loan?

No. Borrowers are prohibited from paying reverse mortgage loan proceeds to estate planning services in most circumstances.

 

Is there a document that provides a list of potential fees?

Yes. The Total Annual Loan Cost, or “TALC” disclosure.  Federal Law requires ythe lender provide the buyer a TALC which displays the total transaction costs over the projected life of the loan.

 

Are Reverse Mortgage Loans safe?

The FHA HECM Reverse Mortgage Loan is regulated, insured and backed by HUD, an agency of the Federal Government.  Due to strict HUD enforcement of its regulations and safeguards, HECM reverse mortgage loans are recognized as a safe financial product.

Who qualifies for FHA’s “HECM for Purchase” loan?

To be eligible for a FHA HECM For Purchase (Reverse Mortgage Loan), the borrower must be 62 years of age or older attend HUD counseling, use the property as their primary residence and occupy within 60 days of closing.  The HECM borrowers must also  provide a monetary investment (Down Payment) which will be applied to satisfy the difference between the HECM principal limit  (Max loan amount) and the sales price for the property, plus any HECM loan related fees that are not financed or offset by other allowable FHA funding sources.

What closing costs are associated with a “HECM for Purchase?”

Standard closing costs apply.  The only items than are “different” is the buyer MAY NOT receive credits of ANY KIND from ANY PARTY as part of the transaction!  Typically, we see a CREDIT for the Owners Alta Title Policy AND County Transfer Tax, however, under current HUD/FHA guidelines, these are NOT ALLOWED so be sure to “negotiate” these amounts in your offer.

How long does a HECM purchase take?

Approximately 30-45 days, however, depending on the circumstances, (financial advisors, contractual obligations, etc.).  additional time may be required do to the number of people who need to be involved to make sure the borrowers are fully informed at each step of the process.