Reverse Mortgages

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ABOUT

For borrowers age 62 or older to utilize the equity in their home, Principle Home Mortgage offers a mortgage product specifically designed for them.  In Williamsport, PA or the Lycoming County region, a reverse mortgage provides the borrower flexibility in their retirement income sources.  There are options in acquiring money from the equity in your home, including cash out with a lump sum, monthly stipend payments, or an open line of credit.  These options do not require the homeowner to make payments to the bank until the homeowner passes away or the home is sold (whichever comes first).  A reverse mortgage does have monthly interest costs and mortgage insurance, but this money is added to the balance of the mortgage.  No matter the reason for obtaining a reverse mortgage, such as supplementing retirement income, buying a second home, or travelling the country, many homeowners age 62 and older do qualify.  To better understand the reverse mortgage product contact Principle Home Mortgage and continue reading below.

PRODUCT HIGHLIGHTS

• Agency: Federal Housing Administration
• Also known as: Home Equity Conversion Mortgage or HECM
• Max Loan Amount: In of January 2019, the FHA lending limit on a HECM was increased to $726,525; your maximum loan amount will change due to several factors.
• Mortgage Insurance Premium: 0.5% annually and is required for the life of the loan
• Upfront Mortgage Insurance Premium: Required 2% of the lesser of the maximum lending limit or the home’s appraised value; can be financed
• Max Income: No restrictions
• DTI Requirement: No restrictions
• Credit Requirement: No restrictions but a credit report is necessary to assure the lender of no outstanding tax liens against the property

BENEFITS

• Required counselling: Part of the process of obtaining a reverse mortgage is counselling provided by a HUD-approved counselor due to the reverse mortgage industry being plagued by confusion and predatory lenders.  Principle Home Mortgage sees this to be a huge benefit to the homeowner as they may better understand the product before committing to the mortgage.
• Money how you need it: A great advantage to the homeowner is the ability to draw against their home equity how they would like or need to.  Funds are available in monthly amounts, a lump sum, periodic advances through an open line of credit, or any combination of these.
• Your home can qualify even if you have a current mortgage: A common misconception is that the borrower must own the home free-and-clear.  This is untrue.  If there is enough equity in the home to generate the funds needed to cover the existing mortgage balance, a homeowner may qualify for a reverse mortgage.
• You still own the home: Another common misconception is the bank owns the home.  This is also untrue.  The homeowner still holds the title to the home, and when the mortgage becomes due (either through the death of the last borrower, or the sale of the home), the homeowner or the estate of the homeowner can pay the reverse mortgage through a forward purchase mortgage or sell the home and the proceeds beyond the reverse mortgage balance will be inherited.  As a reverse mortgage is a “non-recourse” loan, you and your heirs never owe more than the loan balance or the value of the property, whichever is less. Also if the borrower passes away, and either there are no heirs, or the heirs want nothing to do with the home, there are no legal actions taken against the heirs and the bank will foreclose.

HOW DO I APPLY?

Principle Home Mortgage welcomes prospective clients and their families in Williamsport, PA and the Lycoming County region to discuss reverse mortgages with us.  To apply for a reverse mortgage loan, you will need proof of income and 2 forms of ID at a minimum.  To determine how a renovation mortgage could benefit you, reach out to Principle Home Mortgage at (814) 308-0959 to discuss your home financing needs.

RESOURCES

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