Reverse Mortgage for Senior Citizens is Now Available with Reputed Lenders

Posted by William Jones on June 18th, 2018

Reverse mortgage for senior citizens has been the subject of controversy with reports of lenders allegedly taking advantage of the unsuspecting elderly. Therefore, reputed lenders emphasize that senior citizens get counselling on all details of reverse mortgage loan for senior citizens before taking the next steps.

In reverse mortgage loan for senior people, the lender pays the borrower making it possible for the elderly homeowners to borrow equity. The lender may make the payment as a lump sum, through line of credit, monthly, or any combination thereof.

Adequate Equity Makes FICO Score Irrelevant

To avail of the reverse mortgage loans senior citizen, there are certain criteria that the borrowers need to fulfil. These include the borrower must own the house, should be above 62 years in age, and availability of adequate equity in the house. When there is enough equity in the house, FICO scores become irrelevant, helps pay off the existing mortgages, and deferred maintenance need to be completed.

Applicable Fees are Usually High

As with any loan, a reverse mortgage loan for senior attracts fees to get the loan. This fee is usually quite high and can either be paid separately or included within the loan. But, there are no standards and the fee vary from one lender to the other and depends on the type of loan chosen. The borrowers are usually required to pay mortgage insurance premium, monthly fee to the lender, application fee, and closing costs such as recording charges, escrow, title policy, and so on.

The amount of loan that elderly borrowers can get through reverse mortgage loan for senior citizens is dependent on the type of loan program chosen, available equity in the house, and the age of the borrower. Elderly borrowers can choose from fixed-rate mortgage or a loan with adjustable rate. Most reverse mortgage loans senior citizen are financed using adjustable rates, where the interest rate may be adjusted monthly or annually. Usually, interest rates come with a cap, which ranges between 5% and 6% on annual and 10%-11% for monthly adjusting rate.

Wells Fargo is the leading lender for reverse mortgage for senior citizens and the most popular program is the Home Equity Conversion Mortgage extended by US department of Housing and Urban Development. Fannie Mae also offers HomeKeeper mortgage. To learn about the lenders that extend reverse mortgage loan senior citizen, prospective buyers can look up the lists published by the National Reserve Mortgage Lenders Associations and Department of Housing and Urban Development.