Introduction to Reverse Mortgages

Reverse Mortgage information brought to you by SMG Mortgage headquartered in Birmingham, AL. We have offices in Birmingham, Huntsville, and Mobile, Alabama. We have state licenses in Alabama, Tennessee, Mississippi, and Georgia. We hope to give you all the information you need to help make an informed decision. Our Reverse Mortgage team has a combined 20 years of experience in the Reverse Mortgage industry!

What is a Reverse Mortgage or Home Equity Conversion Mortgage (HECM) and how does it work? Our team will be happy to answer any questions you have about the pros and cons. We can send you example illustrations, requirement information, and explain the counseling requirement. HUD requires that seniors complete Reverse Mortgage counseling prior to processing your mortgage. This is performed by an approved counseling agency. This gives you an opportunity to ask questions to someone other than a mortgage company. This lets you know that we are giving you good information.

We believe in trying our best to meet with you face to face. But if you prefer we can use mail, fax, or priority mail. We can travel to all counties in Alabama, Tennessee and Georgia.

Some of the common ways to utilize the Reverse Mortgage are: home improvement, immediate cash needs, in home health care, paying off a mortgage to eliminate a monthly payment, and supplementing retirement income. Retirement plans rarely last until age 90-100.

Reverse mortgage loans are a way for older homeowners to convert their home’s equity into tax-free cash without having to sell or move. The Reverse Mortgage is insured by the U.S. government, the Department of Housing and Urban Development (HUD) through the Federal Housing Agency (FHA).

Qualifying homeowners can choose to receive tax-free payments from reverse mortgage lenders either monthly, in a lump sum, or as a line of credit.

The mortgage is not repaid until the senior passes away or leaves the home. You can leave your home to anyone or charity that you chose. At that time, your heir has 12 months to decide what they want to do with the property. Commonly it is sold, the mortgage is paid off, and the remaining equity belongs to your heir.

There is no prepayment penalty. You can pay off the mortgage at any time you like. The Reverse Mortgage has FHA insurance that protects against the home not being worth enough to pay back the loan. You don’t need to worry about passing a debt to your heirs. The insurance will pay the difference if that becomes the case. The property stands as sole collateral for the loan.

The home owner continues to pay homeowner’s insurance and property taxes on the house. If you are exempt from property taxes, you will remain exempt. If you are not exempt, make sure you check to see if you qualify.

Social Security and Medicare benefits are not affected. There are no income tax requirements. The equity is not considered income.

 

Common Questions

Do I qualify for a reverse mortgage? You must be age 62 or older, must occupy the home as your primary residence, and have enough equity in the home. Borrowers must own the home outright or have a low enough balance on the existing mortgage that can be paid off from the proceeds of the reverse mortgage.

Does my home qualify for a reverse mortgage? This must be your primary residence and must meet HUD standards. The reverse mortgage must also be the only mortgage held against the residence. That means that if there is a current mortgage on the property, it may be able to be paid off with the proceeds of the reverse mortgage.

How is the loan amount determined? The amount of the loan is based on the age of the youngest senior and the appraised value of the property. There is a full appraisal report completed to determine the property value.

What are my reverse mortgage options? The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage that is insured by the Federal Housing Administration (FHA). If this program is not right for you, we can also assist you with other options. We would love to answer your questions. We look forward to working with you. Call us today!