TRUE OR FALSE: Reverse Mortgage Trivia!
A reverse mortgage is a specific type of home loan that turns equity into cash (without having to sell your home). Also known as second mortgages, these loans allow you to borrow against the part of your home that you officially own (in other words, the principle that you have already paid on your home loan). Reverse mortgages can be incredibly helpful for people trying to fund a child's college education or a big remodeling project, but it is important to fully educate yourself on every process first. Arrowhead Title, Inc. is here to help you test your knowledge of second mortgages with this true-or-false quiz.
1. I must have good credit to qualify for a reverse mortgage.
FALSE. The lender will run a credit report for tax and federal liens. All recorded liens must be paid off and property taxes must be paid and be current at the time of closing so the lender can take first position.
2. If I don't want to pay my taxes and insurance, the lender can set aside a portion of the loan funds and pay them for me.
TRUE. If you would like to impound the taxes and insurance, depending upon the lender, they can arrange that for you.
3. Even though I have done my research on reverse mortgages and fully understand the product, I still have to obtain reverse mortgage counseling.
TRUE. All programs require independent, third-party counseling by an approved entity. Counseling can be done in person or by the phone.
4. If I decide to sell my home, the bank will make me pay back the loan and will collect a portion of the appreciation.
FALSE. The lender will only collect the amount that is due to them. If the loan balance is larger than the home value, the lender will only collect the proceeds from the sale. You can never owe more than what your home is worth.
5. If I get a reverse mortgage, it means that the bank will hold title to my home.
FALSE. Title does not get transferred into the bank's name. Throughout the life of the loan, you will own your own home.
6. My house must be in prime condition if I am to be considered for a reverse mortgage.
FALSE. However, the lender requires that the home meet certain guidelines. If you are considering a Home Equity Conversion Mortgage, it must meet HUD requirements. You may also qualify for a repair set-aside if work needs to be done on your home. Check with your lender for more information.
7. I am not allowed to hold title in my trust.
FALSE. The lending institutions will allow you to hold title in your trust as long as you meet all of the lender's and/or HUD guidelines.
If you have other questions about reverse mortgages, you can always talk to your lender or other real estate professionals, such as your title insurance agency at the Lake of the Ozarks. We would be happy to assist you in any way we can!
The Lake of the Ozarks' Most Trusted Title Company
1. I must have good credit to qualify for a reverse mortgage.
FALSE. The lender will run a credit report for tax and federal liens. All recorded liens must be paid off and property taxes must be paid and be current at the time of closing so the lender can take first position.
2. If I don't want to pay my taxes and insurance, the lender can set aside a portion of the loan funds and pay them for me.
TRUE. If you would like to impound the taxes and insurance, depending upon the lender, they can arrange that for you.
3. Even though I have done my research on reverse mortgages and fully understand the product, I still have to obtain reverse mortgage counseling.
TRUE. All programs require independent, third-party counseling by an approved entity. Counseling can be done in person or by the phone.
FALSE. The lender will only collect the amount that is due to them. If the loan balance is larger than the home value, the lender will only collect the proceeds from the sale. You can never owe more than what your home is worth.
5. If I get a reverse mortgage, it means that the bank will hold title to my home.
FALSE. Title does not get transferred into the bank's name. Throughout the life of the loan, you will own your own home.
6. My house must be in prime condition if I am to be considered for a reverse mortgage.
FALSE. However, the lender requires that the home meet certain guidelines. If you are considering a Home Equity Conversion Mortgage, it must meet HUD requirements. You may also qualify for a repair set-aside if work needs to be done on your home. Check with your lender for more information.
7. I am not allowed to hold title in my trust.
FALSE. The lending institutions will allow you to hold title in your trust as long as you meet all of the lender's and/or HUD guidelines.
If you have other questions about reverse mortgages, you can always talk to your lender or other real estate professionals, such as your title insurance agency at the Lake of the Ozarks. We would be happy to assist you in any way we can!
The Lake of the Ozarks' Most Trusted Title Company
Where Accuracy Matters!
Thank you for sharing such great information.
ReplyDeleteIt is informative, can you help me in finding out more detail on
reverse mortgage.