Bakersfield Reverse Mortgage Checklist
Are you a senior, or do you have a senior loved one in your life? This reverse mortgage checklist can help you understand the process better and learn how to tap into home equity and forgo monthly mortgage payments.
If you need assistance with your reverse mortgage application, you can contact us at Accelerated Lending Group, your preferred reverse mortgage lender in Bakersfield, CA.
Here are the steps required:
Get familiar with reverse mortgage terms.
Before making a major financial decision, study everything about reverse mortgages and how they work. If you are having problems understanding the details, you can inquire about reverse mortgage services by Accelerated Lending Group.
Talk with a qualified mortgage lender.
The federal government requires that you meet with a HUD-qualified counselor for reverse mortgage counseling. This aims to remove all confusion about the particular guidelines of reverse mortgages.
Start the application process.
You don’t have to worry about providing any credit information when you apply. Your lender will do the research and evaluate mortgages tied to your property.
During this time, ask your lender for an estimate on closing costs and origination fees. Once documents are complete, your application moves to underwriting. Once done, you’ll know whether you qualify for the loan or not.
Don’t worry. Most seniors who apply for reverse mortgages with Accelerated Lending Group qualify without any issues. Typically, the only reason that one may not qualify is that there isn’t enough equity in the property.
Finalize the reverse mortgage decision
Understand your reverse mortgage process fully.
To qualify, seniors must meet the age requirement. Typically this is 62 though it can sometimes be lower. When applying as a couple, both applicants should meet the age requirement.
Keep in mind that when you receive cash through a reverse mortgage, you are removing equity from your home, diminishing your heirs' inheritance. To retain the ownership of the property, heirs must pay for the withdrawn equity.
Know the pros and cons of reverse mortgages.
A reverse mortgage benefit gives a borrower access to funds through home equity. The funds can be used for anything, though most seniors use them to help pay for medical expenses or supplement their retirement income.
It’s critical to know that the borrower must remain living in the home. This can create an issue if they need to move out. When the borrower no longer resides in the home, the loan may become due. Without proper planning, problems may arise with repayment and homeownership.
Have you considered alternatives to reverse mortgages?
Selling your home and buying a smaller one is cheaper and less risky than a reverse mortgage.
A home equity loan is another option seniors can consider as it has less risk and costs less overall.
Discuss with your heirs since they will be responsible for either the following:
If your heirs decide to sell the property, they may sell the home and use the proceeds to pay off the reverse mortgage loan. If the selling price is more than the amount owed, they can keep it as profit.
However, if the home sale price is less than the amount owed, the heir will not be held responsible for the difference.
If your heirs decide to keep the home, they must apply for a new mortgage to pay off the reverse mortgage loan. Once paid off, the heir must continue payments on the new mortgage.
Know the terms dictating when the loan is due.
If the borrower moves out of the property or is out for 12 months or more, the reverse mortgage loan will be due immediately. Seniors should decide to stay in the property long term when doing a reverse mortgage.
When a borrower passes away, the reverse mortgage loan will be due to the heir, who may pay it off from the proceeds of a sale or get a new mortgage loan. Take note that the deceased's spouse can’t remain living in the home unless the loan is paid.
Note that reverse mortgages run in conflict with the following government programs:
- Medicaid
- Social Security Supplement
What are the potential consequences of non-compliance?
Seniors who default on property taxes must pay back the reverse mortgage loan balance. If an unexpected illness occurs and the borrower needs to relocate, the loan also becomes due.
Reverse Mortgage: End Process
Go to the closing and accept your funds.
Sign and verify all contracts and paperwork to officially accept the loan when closing time arrives. Fees and closing costs will also be due at this time. You receive your funds either in a lump sum or installments.
Use the money as needed.
You can now use the money to eliminate all other mortgage debts.
Stop worrying about repayment.
Seniors don’t need to worry about repayment with a reverse mortgage loan. Even when home equity gets depleted, the bank will not take ownership of the home, which means the borrower can live there until they pass away or decide to leave the home to live with their heirs.
Based on federal regulations, the loan amount due can never exceed the amount of the home itself, which provides peace of mind for seniors as their heirs are not held responsible for any debt beyond the home's value.
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.