Reverse Mortgage Loan Blog

For many older homeowners who see their retirement accounts go flat and are struggling in a weak economy, a reverse mortgage can be a lifeline to see them through.

According to experts the loans — which are only available to those over age 62 — are helping seniors get by with extra spending money and not having to make a h o u s e payment.

“There are a couple of reasons they are gaining in popularity,” said Tim McDonald, a reverse mortgage specialist with Wells Fargo Home Mortgages. “The original limit a homeowner could get in a reverse mortgage was $417,000, but the president increased the limit for one year up to $625,000 and just approved an extension into next year. And the aging population is becoming more and more aware of reverse mortgages as a way to stay in their homes and not have to make payments and have extra money for anything they want.”

He explained that the difference between a reverse mortgage and traditional home loan is instead of making monthly payments you can choose to receive them. That’s the “reverse” part of a reverse mortgage.

Besides being over 62, other requirements are that the home must be owned free and clear or have a remaining mortgage balance that can be paid off by the reverse mortgage. The home must also meet Department of Housing and Urban Development minimum property standards.

In the High Desert the average age of someone getting a reverse mortgage is in the early 70s.

An issue in the High Desert is that home values have dropped so much, most reverse mortgage lenders are getting out of the business.

A number of mortgage companies in the Victor Valley advertising reverse mortgages were contacted and they said they got out of the business because of the housing bust in the High Desert and the complexity of putting together a reverse mortgage.

McDonald says the market has fallen off in this area, but it is a niche market that requires such expertise that his company has enough reverse mortgages in the High Desert to continue the program.

Wells Fargo Home Mortgage in Victorville is one of the very few in the area still providing reverse mortgages.

Locally, Shannon Shannon, with Wells Fargo Mortgage, specializes in reverse mortgages and has been doing them for seven years.

“One reason that maybe some of the other lenders are not doing it is because it is such a specialized process that needs a lot of attention and more work than a traditional mortgage,” McDonald said.

Eligibility requirements are simple. There are no income, employment or credit score qualify restrictions. The amount that can be borrowed is determined by a HUD formula based on age, appraised value of the home, current interest rate and established lending limit.

McDonald explained that there is one additional process for a senior homeowner to go through to qualify for a reverse mortgage not normally associated with mortgages.

” They have t o go through counseling as part of the application for a reverse mortgage and receive a certification of completion,” McDonald said. “We have to make sure that all the ramifications and options are clearly explained because HUD believes the extra protection for some — one over 62 years old is needed.”

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