Reverse Mortgages in Santa Fe NM.
A reverse mortgage allows you to keep the title to your home and eliminate financial stress. There are a lot of myths regarding Santa Fe reverse mortgages as well as numerous misconceptions. We will try to clear some of this information up by providing relevant facts. We refer to Santa Fe reverse mortgage so people searching for the term can locate us on Google. Although there are state specific guidelines, for the most part reverse mortgage rules are consistent and in some cases the loans are insured by FHA. Below are guidelines for New Mexico reverse mortgages, the rules are consistent throughout the sate.
Reverse Mortgage Basics
- Government loan, designed for Seniors age 62 and up
- No income or credit quantification
- YOU keep the title to your home
- Regulations in place to protect borrowers
- Loan does not have to be repaid in your lifetime
- Loan amounts up to $4,000,000
Top Choices For Reverse Mortgage Funds
The money is yours and may be used for anything. It’s about creating choice and peace of mind for you. These are the top ways people are spending money from reverse mortgages in Santa Fe, NM The choice is yours!
- Paying off bills
- Purchase of long-term care and life insurance
- General living expenses
- Home repair and remodeling
- Prescription Drugs and healthcare costs
- Travel and other recreation
- Helping family members
The term reverse mortgage can be intimidating. I suppose anytime you hear the mortgage it evokes a sinking feeling. Then throw in the word reverse and it throws the entire thing upside down. That would be a normal reaction and it made worse when you listen to the guy at the coffee shop, telling you what he’s heard about the Santa Fe reverse mortgage. Not what he knows, mind you, but what he’s heard. He will likely fill your head with all sorts of inaccurate information. But let’s look at the facts regarding reverse mortgages.
Reverse Mortgage FAQs
Will the bank own my home? No! The title is all yours. The bank or lender will not own your home, nor have any rights. The lender will have a lien against the property, as they would in any other type of mortgage. Eventually when the mortgage is due (upon the death of the last remaining resident, the voluntary sale of the home, or moving out of the home for 12 months or more) the lender will want their money back. Remember the house is the lender’s collateral and is usually sold when the mortgage is due. At that point the banks get’s what is owed on the loan and the heirs get the remainder of the proceeds.
Isn’t a reverse mortgage prohibitively costly? This is a blanket statement and only true under certain circumstances. For example if you were to take out a reverse mortgage and sell the home within 3 years. If that was the case any prudent lender would advise against the loan, for the cost outweighing the benefit.
Will my heirs owe the bank? Reverse mortgages are known as non-recourse loans. This means that if under the circumstance where more is owed on the loan than the home is worth, the maximum amount the heirs will owe is the value of the home at the time of repayment. The bank cannot come after anyone for the difference. The Santa Fe reverse mortgage loan does have to be paid back at some point though (as all loans do) whether by the borrower or heirs.
Is income from a reverse mortgage is taxable? Money, whether lump sum or monthly payments) is not taxable and will not affect social security or Medicare.
Will I need good credit and income to qualify? Not at all. There are no credit or income qualifying for a reverse mortgage. The basic qualifications are being age 62 or older, and the home is your primary residence!
Are reverse mortgages only for poor people? No. Affluent people are taking advantage as well because a reverse mortgage can be an excellent financial planning tool. This is why homes with values over up to $4,000,000 are a growing segment of the of the reverse mortgage business.
Do I have to own my home free and clear to get a reverse mortgage? No, you don’t. In fact many people get a reverse mortgage to free themselves of the financial burden of the mortgage! You do have to have sufficient equity in the home, but we will cover that in more detail later.
Reverse mortgages in Santa Fe, NM have Government instituted checks and balances exist to insure you are making a good decision … Prior to obtaining a reverse mortgage, you are required to talk with a HUD approved reverse mortgage counselor to discuss the workings of a reverse mortgage. The goal is to make sure a reverse mortgage is the proper decision for you. This allows you to speak to a neutral third party and allows you, the consumer, to be more informed about the process. Additionally, HUD sets maximums on interest rates and the types of closing costs a lender may charge you for your Santa Fe reverse mortgage. Now that we’ve taken care of the preliminaries, let’s talk about how you can receive income:
Reverse Mortgage Payment Options
- Fixed Monthly Payments: This offers you a monthly, tax free, income for life. In this instance a calculation will be made, based upon your age, interest rate, and the value of the house, as to how much tax-free income you will receive, for life, on a monthly basis. You can give us a call for this calculation. It takes no time at all.
- Lump Sum: You may take entire amount out all at one time. Again, amount is based upon age, value of home and interest rates.
- Line of Credit: Allows you to take money out at any time, and interest is accrued only on moneys taken out. This is a very popular option for Santa Fe reverse mortgage borrowers because it allows you to take money out on an “as needed basis”, and any unused portion of the line of credit actually accrues interest and grows.
- Combination: Most people choose a combination of two or all three methods of payout. The reason is simple; every human being has a unique situation that doesn’t necessarily fit neatly into just one of the payout options. For example, most people opt to take out a sizeable lump sum immediately and use the remainder as a line of credit. Therefore, they solve a financial issue up front, and their credit line grows as it earns interest. Income from a reverse mortgage may be used at your discretion.
Paying Back Reverse Mortgages
You may be asking “So, when do I pay back the loan?” With a Santa Fe reverse mortgage, the money will, of course, need to be paid back to the lender. But not until:
- The last person living in the home passes away
- You choose to sell the home
- You voluntarily leave the home and have vacated it for at least 12 months.
The best part is the money to repay the lender typically comes out of the actual sale of the property. As we’ve said before, either you or your family receives the additional proceeds from the sale – NOT THE BANK.
Knowing your Options
Not knowing your options and thus, making hasty decisions is the biggest mistake you can make. We should preface this by saying that each person has a unique financial situation and specific needs. Those seeking reverse mortgages in Santa Fe, NM should not be pigeon-holed into one type of loan. If you’re needs are not assessed correctly you may choose the wrong reverse mortgage. Whether you’re in Santa Fe, NM or another area, this is good to keep in mind. You may choose the wrong mortgage simply because the other options were either not discussed properly or not discussed at all. On the surface level, this mistake may seem quite obvious to you, but the financial ramifications of knowing your reverse mortgage options can be huge. Make sure your loan officer thoroughly discusses multiple loans with you and how each can affect your financial position.
When it comes to Santa Fe reverse mortgages, never accept the first opinion of your loan officer without asking why, and how one loan compares with the other. And more importantly, how each would affect your cash position over time. You see, what happens to your cash position over time is the real trick to getting the right reverse mortgage. How your needs are assessed, and which reverse mortgage you choose, based upon you needs, will directly affect what happens to your cash position over time. The wrong decision could cost you many thousands of dollars. Getting a reverse mortgages in Santa Fe, NM is the 2nd biggest decision you’ll make with the home, so shop around and get the information you need!
Reverse Mortgage Lender Tips
Beware multiple product pushers: Some Santa Fe reverse mortgage lenders have ties or principle interest in companies offering large ticket items, like annuities, long term care insurance, or even home remodeling services. These lenders may suggest using the reverse mortgage to fund the purchase of these backend services. The lender would receive financial gain for the reverse mortgage and for any services you purchase on the back end. If a conflict of interest like this exists, you may not be getting the purest of advice. Santa Fe reverse mortgages should not be considered if you have been pushed into the decision. It’s very possible the cost of the reverse mortgage may outweigh the benefits of the back end product or products the lender offered you.
Inflated Mortgage Servicing Fee: When considering a reverse mortgages in Santa Fe, NM, be careful about accepting an inflated servicing fee for your reverse mortgage! All lenders charge a monthly mortgage servicing fee. This fee doesn’t come directly out of your pocket. It is financed into the loan instead. A competitive servicing fee is $30 per month. Most lenders default to the highest monthly servicing fee of $35 per month, which reduces the amount of money you can receive. What this comes down to is the loan officer, who quotes you, is simply making more commission by charging the higher fee. We have a set policy to charge $30 and do not attempt to maximize what we can get from customers that don’t know about this fee. With a Santa Fe reverse mortgage you should not agree to such fees. By the way … $5 dollars extra doesn’t sound like much, but over ten years it can eat into your equity by well over $1,000.00. Not to mention, when you get your reverse mortgage, the lender will qualify you to get less money if $35 servicing fee is charged.
If this sounds appealing and you want more information on Santa Fe reverse mortgages please contact us today.