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Reverse Mortgages for
Seniors
Frequently Asked Questions
What
is a Reverse Mortgage?
Designed for seniors, a
reverse mortgage is a loan that allows the homeowner to convert
some of the equity in their home into cash or monthly income, while
retaining home ownership. Reverse mortgages work much like
traditional mortgages, only in reverse. Rather than making
a payment to the lender each month, the lender pays the borrower.
Who is eligible?
All persons on the title
must be at least 62 years old and must occupy the home as their
principal residence. You must own your home "free and clear"
or have a very small mortgage balance. Income is not
required to qualify.
How much cash
can I get?
The amount of cash available
from a reverse mortgage depends on your age, your home's value and
location, and current interest rates. You can select to receive
your money through monthly payments, a line of credit, a lump sum,
or some combination.
How do people
use the money?
You can use the money for
any purpose. Most people use the proceeds from reverse mortgages
for home improvements, for in-home health care, to pay taxes and
insurance, or to generally improve their standard of living over
Social Security.
When do I have
to pay it back?
Reverse mortgages do not
have to be paid back until the last surviving borrower dies, sells
the home, or moves out. The total amount owed at the end of
the loan equals all of the cash advances you've received, plus the
accrued interest.
Are reverse mortgages
safe?
The reverse mortgages offered
through the NEA Home Financing Program are provided by Wells Fargo
Home Mortgage, the largest reverse mortgage originator in the U.S.
These loans are regulated by the federal government (HUD) and are
surrounded by more consumer protection laws than any other financial
product.
You can never owe more than the value
of your home at the time the loan is repaid. And you hold title
to your home, so you do not give up home ownership.
What are the
rates?
The interest rates are calculated
using a formula set by the federal government. The interest
rate at the time of closing is the initial rate for the loan. Members
have the option of choosing a monthly adjustable rate or an annually
adjustable rate. All interest rates for reverse mortgages are adjustable.
What are the
costs?
The costs associated with
a reverse mortgage are very much like those for a traditional mortgage. There
is a loan origination fee, the cost of a property appraisal and
credit report, an FHA mortgage insurance premium, and various other
costs. All costs except for $300 of the loan origination fee
can be financed into the loan. A reverse mortgage representative
can provide you with a personalized cost estimate.
While reverse mortgages can
be a great alternative for seniors, they are not for everyone.
Please consult your tax advisor regarding your individual financial
situation and estate planning needs.
For more information:
Call toll-free 1-800-NEA-4-YOU
(1-800-632-4968)
Mon-Fri 8:00 a.m. – midnight (ET)
Saturday 9:00 a.m. – 5:30 p.m. (ET)
The NEA is not offering or originating
any loans in connection with this program and does not approve or
deny loans.
*Offer valid for new purchase,
refinance or reverse mortgage loan applications taken on or after
January 1, 2005 and closed through this program. This offer is available
for first mortgages through Wells Fargo Home Mortgage and not available
on home equity loans and lines of credit and cannot be combined
with any other program or offer. Contact your mortgage consultant
for additional details, terms and conditions. The offer is administered
by BI, which is not affiliated with Wells Fargo Home Mortgage, and
is subject to change without notice.
NEA Home Financing Program is a registered mark of NEA's Member
Benefits Corp. Wells Fargo Home Mortgage is a division of Wells
Fargo Bank, N.A. © 2005 Wells Fargo Bank. All rights reserved. Information
is accurate as of date of printing and is subject to change without
notice. Credit subject to approval. |
