No Current Mortgage is the HECK the Right Answer?

Latterly I originated a loan for a gentleman, Mr. Smith for the purpose of this article, who at first was terribly evasive about what he owed on his home. When Mr. Smith applied on my internet site he input that his home was free and clear. In our 1st conversation he reiterated that his home was free and clear. Later, he interpreted his statement and said that his home would be free and clear before we closed his new loan. That statement struck me as odd, so in my subsequent conversations I sought to discover exactly what he was talking about. What I discerned was that though Mr Smith had a vast awareness of reverse mortgages from his research, somewhere along the line he was given the wrong info about one aspect of the loan. He was under the misconception that his home needed to be free and clear to get a reverse mortgage

Media coverage of reverse mortgages has grown tremendously in the past few years, yet even with assistance from NRMLA ( national Reverse mortgage corporations organisation ) there are still several misconceptions about the product. Mr. Smith’s plan was to have his boy pay off his existing $162,000 mortgage prior to originating his new reverse mortgage. He was happy to learn that was a pointless step. After it closed, he planned on repaying as much as possible to his child from the loan proceeds.

Mr. Smith didn’t qualify for enough cash with the reverse mortgage to repay his entire loan. He was fortunate that his boy had the money available to gift him the difference of approximately $19,000. Understand that with a reverse mortgage all liens against the property need to be paid first. If there’s money left over then the borrower has the option to use the proceeds however they see fit. If there is a deficit, like the case of Mr. Smith, the borrower will need to cover the difference at closing. That may be done by use of the borrowers own funds or present. With a HECM ( Home Equity Conversion Mortgage ), borrowers can’t attract new debt to obtain their loan.

These misconceptions must be cleared up because plenty of people who should be doing a reverse mortgage won’t be doing one, simply because they had been given fake info at some specific point in their research or talks with pals and family. If Mr. Smith’s son did not have the fiscal wherewithal to pay down his dads loan, I am awfully certain that Mr. Smith would have written off the idea of a reverse mortgage and perhaps would have lost his home. The point learned is to consult a professional reverse mortgage advisor to be certain all is understood about this product.
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