Q–As a longtime reader, and a sales agent of reverse mortgages, I appreciate your enthusiasm for these excellent loans for senior citizens. But your recent advice to that couple, ages 81 and 76, missed the mark. You said their current loan of 50 percent of their home’s market value was too high to get a new reverse mortgage.
While younger reverse-mortgage borrowers are limited to about 35 percent net cash available, at this couple’s advanced ages they might be eligible for just over 50 percent net equity. FHA increased its reverse mortgage limits on Jan. 1, 2000, to $219,849 in high-cost areas. Fannie Mae’s reverse mortgage won’t meet that couple’s needs, but FHA’s might.
A good place to make a quick reverse mortgage calculation is at www.reverse.org. Just enter your birth date, the home’s market value and its ZIP code to find out how much is available under FHA and Fannie Mae reverse mortgages. I’m a former banker (20 years), and for the past three years, I’ve been originating reverse mortgages. I love what they can do for retirees.
A–Thank you for that valuable information. Yes, I often recommend reverse mortgages for senior-citizen homeowners because of all the benefits. However, the homeowner should plan to stay in the home at least five years. Otherwise, the reverse mortgage loan fee percentage is very high.
As you know, getting the word out to senior-citizen homeowners about reverse mortgages isn’t easy. Most potential users are not aware that these loans offer tax-free lump sums, credit lines, home down payments and lifetime monthly income. No repayment is required until the home is sold or the owner moves out or dies.
(More details are in my special report “How Senior Citizen Homeowners Can Receive Tax-Free Lifetime Reverse Mortgage Income,” available for $4 from Robert Bruss, 251 Park Rd., Burlingame, CA 94010, or by credit card at 800-736-1736.)
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Have a question about real estate? You can write to Robert Bruss in care of Tribune Real Estate Features Service, 435 N. Michigan Ave., Suite 1400, Chicago, IL 60611. Answers will be provided only through the column. Please note that laws vary from state to state and area to area. Consult an attorney for specific legal advice.
