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What Is the Money Used For?

The Bethlehem borrower in the PBS Report (above) said she was “feeling the pinch” of living on a fixed income. By far and away, most borrowers use a reverse mortgage as an additional source of retirement income. A reverse mortgage can replace a conventional mortgage or home equity loan and eliminate mortgage payments.

Some take an initial advance to buy a car or to pay some bills. Others take an advance each year to pay real estate taxes.

The National Council on Aging “Use Your Home to Stay at Home” program suggests using reverse mortgage proceeds for home modifications, ramps and other necessary expenses so you can stay in your home longer.

Financial advisors are finding reverse mortgages useful as part of a strategy to accomplish a financial objective and/or to save taxes.

Finally, new in 2009 is use of a HECM reverse mortgage for home purchase. Homeowners age 62 and over, including those with limited income, can now use a reverse mortgage to finance the purchase of a new home. For example, a couple living in a $300,000 home with a $100,000 mortgage can sell their home and use the proceeds as a down payment on a new home. A $150,000 down payment matched with a $150,000 reverse mortgage could result in a likely more accessible $300,000 new home and no more mortgage payments.

Are a Lot of People Doing This?

The number of FHA insured HECM Reverse Mortgages has increased dramatically in recent years, from about 14,000 in 2002 to over 112,000 loans made in 2008.

Should We Choose a Bank or a Mortgage Company?

Whether you choose a mortgage company or a bank, you will be getting an FHA insured “HECM” Reverse Mortgage that is ultimately funded by Fannie Mae or Ginnie Mae. Some providers, such as AFC Reverse Mortgage, who specialize in Reverse Mortgages, offer programs from multiple servicers and may provide more and/or better options for the borrower. For example, rates for fixed rate HECM loans as of May 2009 range from 5.56% to 7.25% depending on the servicer. Many banks and mortgage companies can only offer the 7.25% rate because that is the only fixed rate program their servicer provides. Since all HECM Reverse Mortgages are Federally insured, it usually comes down to which of the providers being considered has the most experience, offers the best programs, and will provide the best service.

Why AFC Reverse Mortgage?

At AFC Reverse Mortgage, helping Pennsylvania senior homeowners pay for home, health and retirement expenses through an FHA insured Home Equity Conversion Mortgage (HECM) is our only business, and our staff has processed and closed hundreds of FHA HECM loans since 2004. You can call us any time day or night and almost always speak immediately to one of our experienced staff members, not a recording. You will work with the same people from initial meeting through closing, and we will attend the closing. We are willing to come to you and will work with you and your advisors to help determine if a reverse mortgage is right for you. If you so choose, you never have to leave your home, and since we control the process, most of our loans close in as little as three to four weeks after FHA counseling. John Krajsa, Jr., President, is an attorney with over 25 years of mortgage experience, and has given reverse mortgage presentations to various senior groups and others, including county bar associations and officials of the PA Department of Banking in Harrisburg. Tiffany Shutta, Processing Coordinator, has over 12 years of FHA mortgage experience. We are among the small number of Pennsylvania lenders that are proud members of the National Reverse Mortgage Lenders Association (NRMLA) and subscribe to the NRMLA code of ethics.

Tax free income for life without risking your home. Extra income to repair your home, pay your bills and taxes, pay off your mortgage, buy insurance, take a vacation, go out to dinner, buy gifts for your grandchildren, or even buy a home or condo.