Yes. In most cases a homeowner who has put his or her home in a living trust can usually take out a reverse mortgage. A review of the trust documents would be made by the reverse mortgage lender to determine if anything in the living trust would be unacceptable.
Your reverse mortgage loan becomes due and must be paid in full when one or more of the following conditions occurs:
(a) the last surviving borrower passes away or sells the home;
(b) all borrowers permanently move out of the home;
(c) the last surviving borrower fails to live in the home for 12 consecutive months due to physical or mental illness;
(d) you fail to pay property taxes or insurance;
(e) you let the property deteriorate, beyond what is considered reasonable wear and tear, and do not correct the problems.
Seniors 62 years of age or older qualify. There are no income, health or credit qualifications. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. The funds you would receive in the reverse mortgage would be used to pay off whatever existing mortgages you have on the property.
There are three basic types of reverse mortgages:
- Federally-insured reverse mortgages. Known as Home Equity Conversion Mortgages (HECM), they are insured by the U.S. Department of Housing and Urban Development (HUD). They are widely available, have no income requirements, and can be used for any purpose.
- Government-sponsored reverse mortgages. A Home Keeper® is Fannie Mae’s conventional market alternative to the Home Equity Conversion Mortgage (HECM). It is a government-sponsored enterprise program and works like a HECM loan in many ways. However, a Home Keeper® reverse mortgage addresses a few needs that are not met by HECM loans, such as individuals with higher property values, condominium owners, and seniors wishing to use a reverse mortgage to purchase a new home.
- Proprietary reverse mortgages. These are private loans with unique features that appeal to certain kinds of borrowers. An example of such reverse mortgages, which are backed by the companies that develop them, is Financial Freedom’s Cash Account Plan.
First and foremost, the reverse mortgage must be on the borrower(s) primary residence, that is, where they live most of the year. Most reverse mortgages are taken on single family, one-unit homes. Some programs also accept two-to-four unit buildings that are owner-occupied. Some programs grant reverse mortgages on condominiums and manufactured homes built after June 1976. Mobile homes and cooperatives are generally not eligible for a reverse mortgage.
When the last surviving borrower permanently moves out of the home or dies, the reverse mortgage loan becomes due. The reverse mortgage principal, interest charges, and service fees (such as closing cost fees) are paid from the sale of the house or other assets of the estate.
A reverse mortgage is a loan that enables senior homeowners, age 62 and older, to convert part of their home equity into tax-free* income-without having to sell their home, give up title to it, or make monthly mortgage payments. The loan only becomes due when the last borrower (s) permanently leaves the home.
* Consult Tax Advisor. Not all products available in all states.
TALC is short for “Total Annual Loan Cost.” It combines all of the costs of a reverse mortgage into a single annual average rate and can be very useful when comparing one type of reverse mortgage to another. Reverse mortgages vary considerably in features, benefits, and costs. It’s not always easy to compare “apples to apples.” If you are considering a reverse mortgage, be sure to ask the lender or counselor to explain the TALC rates for the various reverse mortgage products.
Because reverse mortgages are considered loan advances and not income, the IRS considers them to be not taxable. Similarly, having a reverse mortgage should not affect your Social Security or Medicare benefits. If you receive SSI, Medicaid, or other public assistance, your reverse mortgage loan advances are only counted as “liquid assets” if you keep them in an account past the end of the calendar month in which you receive them. You must be careful not to let your total liquid assets become greater than these programs allow. It may be wise to consult your tax advisor on this. Another tax fact to bear in mind: interest on reverse mortgages is not deductible on your income tax returns until the loan is paid off entirely.
In general, the HECM product may offer a higher loan amount for a lower valued home (for example, under $500,000) depending upon the loan amount caps in specific counties/MSAs, the amount of equity in the home, and the age of the borrower. For a higher valued home with significant equity, a senior may be likely to qualify for a larger cash payout through a Cash Account Plan reverse mortgage.
Most reverse mortgages have an application fee (which may cover the cost of a credit report and an appraisal), an origination fee, closing costs, insurance, and a monthly servicing fee. These charges can be paid by the reverse mortgage itself, making them no immediate burden to the borrowers; the costs are added to the principal and paid at the end, when the loan becomes due.
There are many. Here are a few of the most significant:
- Remain independent. A reverse mortgage allows you to remain in your home and retain home ownership.
- Stay in your home. It allows you to remain in your home and retain home ownership.
- No monthly mortgage payments. You need not pay back the reverse mortgage loan nor make any monthly mortgage payments until you permanently move out of the home.
- Tax-free money. Because the money you receive from a reverse mortgage is not considered income, it is tax free* and will not affect your Social Security or Medicare benefits.
- Freedom and flexibility. The money you get from a reverse mortgage is yours to use in any way you choose.
* Consult Tax Advisor
This is a federally mandated feature of the reverse mortgage process and is designed for your protection. The counselor, who is from an independent government-approved housing counseling agency, explains in detail the pro’s and con’s of all your reverse mortgage alternatives. He or she will discuss a reverse mortgage’s costs and financial implications, should tell you about any government or nonprofit programs for which you may qualify, and advise you on any proprietary reverse mortgages that may be available in your area.
No. Repayment may be accomplished by refinancing the reverse mortgage with a traditional “forward” mortgage loan, or through the use of other assets.
It’s absolutely false. The borrower retains title to the property. The reverse mortgage lender is merely extending a loan to the borrower. Because the homeowners retain title, they remain responsible for the payment of property taxes, insurance, utilities, home maintenance, and other expenses – just as they would with a standard first mortgage or home equity loan.
No. You can never owe more than what your home is worth. What’s more, since the reverse mortgage is what is known as a “non-recourse” loan, the lender cannot seek repayment from your income, your other assets, or your estate. In other words, the house stands for the debt.
With most reverse mortgages you have a wide range of payment options, one of which should be ideal to meet your financial needs.
- You can choose to receive the money all at once, as a lump sum.
- You can receive equal monthly payments as long as one of the borrowers lives and continues to occupy the property as a principal residence.
- You can choose to receive equal monthly payments for a fixed period of months.
- You can get a line of credit*; which allows you to take funds at times and in amounts of your choosing until the line of credit is exhausted. This is the most popular option, chosen by more than 60% of reverse mortgage borrowers.
- You can opt for a combination of line of credit with monthly payments for as long as the borrower remains in the home.
- Or, finally, you can choose a combination of the above.
The funds from a reverse mortgage do not affect regular Social Security or Medicare benefits. You should discuss the impact of a reverse mortgage on federal, state or local assistance programs with a professional adviser, such as your local Area Agency on Aging (toll free at 1-800-677-1116), an independent reverse mortgage consultant*, or a tax attorney.
When you sell your home or no longer use it for your primary residence, you or your estate must repay the lender for the cash received from the reverse mortgage, plus interest and service fees. Any remaining equity belongs to you or your heirs. It’s important to remember that you can never owe more than the home’s appraised value when it is sold. None of your other assets will be affected by your reverse mortgage loan.
The amount you can borrow depends on several factors, including your age, the type of reverse mortgage you select, current interest rates, the location of your home, and the appraised value of your home and FHA’s lending limits for your area. In most cases, the older you are, the more valuable your home, and the less you owe on it, the more money you can get.
One of the real benefits of a reverse mortgage is that you can use the money you get from your home’s equity (dependent upon final calculations) to pay for the various fees that are part of the loan costs overall. The costs are simply added to your loan balance, and you pay them back, plus interest, when the loan becomes due-that is when the last surviving borrower permanently moves out of the home or passes away.
They differ in that with a home equity loan you must make regular monthly payments of principal and interest. However, with a reverse mortgage, you do not make any monthly mortgage payments for as long as you stay in the home.
You can use the money for anything you choose, from daily living expenses, home improvements, healthcare expenses, paying off existing debts, or simply enhancing your retirement years. For many people, the money provides a “financial security blanket,” in case unexpected expenses arise.
Yes. Refinancing can make sense if your home increases in value or interest rates drop.
No they cannot. And the loan is not due at that time either. In fact, you don’t need to repay the loan as long as you or another borrower continues to live in the house and keep the taxes paid and insurance in force.
All reverse mortgages have variable rates that are tied to a financial index and will vary according to market conditions.
No, all of our loan programs are structured for a simple modification at the time of the completion of the property. You and the builder will schedule an appointment with the construction loan department of Midland Mortgage Corporation and the finalization will occur at our office.
At the time of loan application, we will need copies of pay stubs for the last 30 days, the last three months’ bank statements for all bank accounts, account numbers of any outstanding debts, addresses of employers, and previous landlords for the past two years. FHA loans require proof of social security number and picture identification (such as driver’s license). If you do not have these at loan application, you can provide them during the process of your loan. There may be other items your loan officer needs, depending on your specific situation.
A. This is the formal process of transferring the title to the property from the seller to you.
B. Your lender should give you an estimate of closing costs when you apply for your loan. Some of these costs consist of: Origination Fees – this covers the lender’s administration cost of processing the loan. Loans are available with no origination fees but the interest rate is usually higher. Property appraisal – the lender needs to know if the value of the property is sufficient to secure the loan should you fail to repay the loan. The appraiser considers sales prices of comparable homes and other factors to determine value. Title Insurance charges – this protects the lender against loss due to problems or defects with the title. Owners title insurance is available, upon request by the buyer, to protect your equity. Attorney fees – you are required in South Carolina and North Carolina to use an attorney of your choice. Items paid in advance – this would include mortgage insurance, the first year hazard insurance, and flood insurance if required. Escrow accounts – these are the reserve amounts of taxes, hazard insurance, mortgage insurance, and flood insurance if required. (Not all loans require escrow accounts.) Recording and transferring fees.Flood Certification – this document verifies whether or not the subject property for a mortgage is in a Flood Hazard Zone. Exact closing costs depend on the type of financing you choose. The total costs may be between 2% to 6% of the mortgage loan amount.
The process may take one hour if you are prepared at loan application and have a credit score of 620 or higher. Other loans may take two to four weeks.
A. A home is generally a sound investment because each month when you pay your mortgage payment, you are building equity. The longer you stay in your home, the more equity you build. A home can often increase in value over the years, building even more equity.
B. The interest you pay on your mortgage can be tax deductible. Some of the real estate tax you pay may also be tax deductible. Consult your tax advisor for more information.
C. Pride in home ownership.
We recommend that you consider using a real estate agent as they can make the job of finding a home easier. The real estate agent is familiar with homes on the market in your area and can give you information about the community, present your contract to the seller, and give you advice in many areas of the purchase. The real estate agent, in most cases, represents the seller. Ask for recommendations when selecting a real estate agent. Talk with several agencies and select the one you feel most comfortable to work with.
There are many types of loans suited to just about any person’s situation, whether it be the owner occupied, investment property, second homes, problem credit, etc. For instance, someone that knows they will be moving in 5 years may be interested in a 5-year ARM rather than a 30-year fixed because the interest rate is lower for the first 5 years than the fixed rate would be.
The following is a very small list of the most popular loans available; however, Sweetgrass Capital offers just about any type of loan on the market.
A. Conventional Fixed
30, 25, 20, 15 & 10 Year
5-7 Year Balloons
B. Conventional ARM
C. Conventional Construction Perm
D. FHA VA Fixed ARM 203K
E. South Carolina State Housing – Lower rates
F. Rural Economic & Community Development – 100% Loans
G. Builder Speculative Loans
These programs are designed for the stick to a building, single-family dwellings with permanent foundations on land that is 5 acres or less and titled to the name of the borrowers who will be getting the financing. Should your circumstances fall outside these parameters, Sweetgrass Capital is anxious to help you find the financing program that best suits your needs. Please contact one of our loan officers if you have any questions regarding the eligibility of the property.
You need to put 10% down on the purchase of the lot. Our maximum time is 15 years, but most lot loans have a 5 year call (due and payable) on them. Lot loans are in general for only 3 to 5 years with the intent to build a house on that lot and pay off the lot loan.
Yes, you can get an FHA loan which is insured by the Federal Government. FHA will allow you to get a loan with just three percent down as long as you qualify for the debt, even if you are not a U.S. citizen.
If you have reestablished your credit since the bankruptcy and appear to be a good credit risk, FHA will allow you to finance a home with just 3% down.
Yes, we have income/no ratio loans. You must have good credit to obtain this loan. If you also have the down payment, and the property is acceptable, we can give you a loan.
Yes, we have construction loans that require a minimum of 5% down. We close the loan before the house is started and pay off the balance owed on the lot. As the builder builds the house, we pay him for labor and materials from this loan. You will get an interest bill monthly until the house is finished. When the house is 100% complete, you will start making regular monthly mortgage payments. We have ARMs and fixed rate construction/permanent loans.
Typically the construction loan period is nine (9) months. Should you know in advance that the property will take longer, we can make loans with a construction period of twelve (12) months. This is something that you should discuss with your builder and loan officer at the time of application.
Sweetgrass Capital will hold the cost to construct in a Loan Process or LIP account. At the time a disbursement is requested, we will send a construction loan inspector out to the property. He will report back to our office the amount complete and we will in turn disburse funds based on that inspection report.
Yes, 90% LTV max, this could be less depending on age and size of the single wide. There is a maximum term of 25 years, these guidelines depend on credit.
Yes, on mobile homes and land together, no title loans.
Yes, rate and LTV depend on credit.
Yes, rate and type of loan are dependent on credit. FHA financing requires the outside foundation to be bricked and underneath requires more detail. Conventional loans do not require this. It all depends on credit.
No, conventional loans require a minimum of 5% down. FHA loans require 3% down. All other loan types are dependent on credit history.
Yes, all our mortgages on manufactured homes require the tongue and axles to be removed. The appraiser must state that the home is permanently affixed to the property. It must also be taxed as a real property.
Yes, fixed rate construction loans are available at Midland Mortgage Corporation. You will need to contact your loan officer for qualification under this program and specify that you wish to have a fixed rate.
ARM stands for adjustable rate mortgage. The rate is fixed for a certain term, usually 1, 3, 5, or 7 years and can fluctuate up or down after that period. The rates on ARMs are usually considerably lower than fixed rates and the lower the period, the lower the rate.
This is a conventional loan that basically does away with a monthly mortgage insurance premium. The first mortgage would be for 80% the second mortgage would be for 10% and probably at least 1% higher rate, and the last 10% would be your down payment. The theory is that you can write off interest on your taxes but you can’t write off the mortgage insurance premium involved. On a 200,000 loan, the mortgage insurance premium could be as high as $72 a month.
A. Your gross income will be considered to qualify you for your mortgage payment. This may include overtime pay, bonus pay if it is guaranteed, and commissions. A good estimate of the total monthly payment is 25% of your gross monthly income.
B. How much debt you have is a very important factor. This includes your future house payment, car payment, credit cards, child support, alimony and other installment loans you make each month. You should spend approximately 36% of your gross income on all debt.
C. Mortgage Companies feel more comfortable lending money to applicants who have a consistent history of work in the same or related occupations. A steady history of employment and pay earnings is important. Stubs and/or verification from your ex-employers will be required. Self-employed applicants will be required to provide proof of income and work history, by way of tax returns.
D. The Mortgage Company will require a detailed credit report that has information on your repayment of debt. History of credit, balances of any debt, courthouse information (judgments, tax liens, etc.), residency for two (2) years, and collection information. It will also list who has inquired as to your credit. Lack of credit history or poor credit could prevent you from obtaining a mortgage loan. Lack of credit, in some cases, can be easily remedied by obtaining creditworthiness through rent and utility payments. If you have poor credit and can thoroughly explain these adverse credit items, such as illness, to the Mortgage Company, they may approve your loan. Any outstanding collection accounts, tax liens or judgments will usually be required to be paid in full. We have loan officers who specialize in loans for people with credit problems.
E. Qualifying ratios may be higher on certain loan programs – check with a Midland Mortgage Loan Officer for more details.
FHA prohibits property flipping, making it impossible for a borrower to obtain FHA financing on a home that the seller has owned 90 days or less, UNLESS the seller is a government agency selling a foreclosure or the seller inherited the house. If a property is re-sold between 91 to 180 days from seller’s purchase and the sales price is 100% higher than the initial price, FHA requires an additional appraisal. If re-sale takes place between 90 days to 12 months, FHA reserves the right to request an additional appraisal if the sales prices increases 5% over the last sold price. Conventional loans have other guidelines depending on the situation and the investor. Call us should you have a specific case!
You could always get a fixed rate mortgage, but an “ARM” may be more suitable to your situation. With a 5 year ARM you could get a rate that’s currently about 1% lower than current 30 year fixed rates.
You could always get a fixed rate mortgage, but an “ARM” may be more suitable to your situation. With a 5 year ARM you could get a rate that’s currently about 1% lower than current 30 year fixed rates.
You can get an FHA loan with 3% down. The money can be given to you as a gift by a relative. You need not have any of your own money in the purchase but must qualify for the house payment based on your income.
An ARM may be perfect for you since the payments are less in the first few years.
Yes, FHA will allow a down payment of only 3%. In order to be eligible for an FHA loan, the condo must be on the FHA’s approved list.
Until you have 20% in your property you must carry this insurance. The average life is about 10 years. You may, however, be able to get a new appraisal done in a few years showing 20% equity through appreciation or repayment. If this happens you will be able to drop the insurance.
Cannot find what you are concerning? Just ask us!
25 Cumberland Street, Suite 120
Charleston, SC 29401
33 East Schrock Road, Suite 9A
Westerville, OH 43081
Needed a refinance about a year ago and they delivered the results fast and effective !”
— GREY KINCAID —
Sweetgrass Capital were amazing to work with throughout my home buying process. They helped my dream become reality by owning a home.”
— KARA HICKS —
There are MY GUYS. They do whatever it takes (within the limits of the law) to get to the closing table, and ON TIME!”
— JOE TEDERS —