Do double check with someone who is current on this, and get it in writing so you know you understand it and you are following the plan you devised correctly, and you can at least tell yourself why you took that particular course of action if you forget in the future.

the other person who answered may be right that the appraiser was lazy; it wouldn’t be the first time; but i prefer to give the benefit of the doubt. it could be that the extra room was built without a permit, and so it could not be officially counted. you didn’t say what kind of a room. as the other person said, a bedroom or bathroom would definitely affect the value; but if it was a small nook, he may have been too lazy to figure it into his drawing, or too in a hurry to go to his next appointment. unfortunately, some folks try to accept all the jobs they can and then are not able to do them well; vinyl vs wood may or may not have made a difference; i’ve seen appraisers whiz through in 15 minutes and take photos hoping the photos will remind them later of what was in the house when they make their report – and then forget a room or other details.

if you used a broker, or the bank officer had taken the time to go to your mother’s home, they should have had it corrected before it was turned in to underwriting. they are as much at fault. but if she dealt with someone online, out-of-state, or the local bank that doesn’t do house calls, then she may have gotten what she paid for. customer service is very important in reverse mortgages.

the lenders are many times out of state, and would not have necessarily known the details of your home; that is precisely why they must go by the appraisal, wherein a licensed professional physically looks at the home, and not by county records, which are often times wrong. they would not have known the appraisal was wrong unless someone questioned it, either based on the photos, or by the loan officer.

reverse mortgages are very conservative, and lenders will usually not give more than around 70% of the loan value, so the lender has a lot of room for error. not sure why you would call it manipulative. if anything, the lender gave your mother less money than she could have received, because they based it on a smaller and dated home. but as the other person said, even with vinyl and carpet, it is still a good investment. what is more important to the lender is that it is well maintained.

All she needs to qualify for a reverse is to be 62 years old by the time the loan closes and have substantial equity in her home. As a condition of the loan, it must be her primary residence, she must pay her property taxes and homeowners insurance and maintain her home. It doesn’t matter if she still works or not, what other assets she may have, if she has a lot of credit card debt, or if she had previous bankruptcies, or a low FICO score.

You never get 100% loan to value, as you can with regular “forward” loans. And as all liens against the property and federal liens must be paid off at closing, if you have an existing mortgage, you would need to have substantial equity to make it worthwhile. For some folks that are just looking to get out from under the burden of a monthly mortgage, it may mean that they will have to bring some money to the table in order to close (which is allowed); but they know that once the loan funds, they will never have another monthly mortgage payment as long as they meet the 4 requirements mentioned earlier.

How much she gets is based on home value, lending limit (current maximum is $ 625,500), age of the youngest borrower, and the current expected rate. Typically, the older you are the more money you are eligible for. But even a 100 year old will never get 80 or 100% loan to value.

Some of the other answers have errors (@ loanmasterone). Reverse mortgages by itself are not bad; but if it doesn’t solve your problem, then it obviously is not what you should do – but it doesn’t make it bad. All title holders must be at least 62 years old, and they must all be on the loan. All repairs required DO NOT have to be done before closing; you usually have up to 6 months to do the repairs after the loan closes, using the funds from the reverse mortgage. Also, you DO NOT get the difference between the appraised value and all mortgages that have to be paid off and closing costs. See above for the 4 factors that determine how much she gets. She does not have to withdraw all the money and place it in the bank; this will cause her loan balance to accrue interest much faster than needed while the money just sits in another bank earning almost nothing. If she leaves it in a Line of Credit (LOC), her LOC grows over time and her loan balance will only include the funds that she needed when she needed it plus accrued interest. The heirs can choose to refinance or sell the house themselves and keep the proceeds if there are any. The bank does not take legal action and foreclose unless the heirs choose to walk away from it. I personally would contact 3 brokers, not banks (yes, I work for a broker). The reverse mortgage program is highly regulated by FHA so it works the same from bank to bank, from coast to coast. What differs are the interest rates offered by each bank. If you go directly to the bank, they will only show you what they offer; a broker who specializes in reverse mortgages can show you what several banks offer and you can decide what is more important to you: lowest rate, more money, adjustable or fixed.

The primary requirement to obtain a reverse mortgage is that one or both of the seniors must be a minimum of 62 years of age.

If they are in a good financial condition and have planned well for retirement there is no need for a reverse mortgage.

A reverse mortgage is sort of expensive to obtain, so one of the first things you would want to do is find out the cost of your parents getting this reverse mortgage. You would also be required to get and pay for an FHA appraisal. All repairs to the house found by the appraiser will have to be repaired prior to the mortgage closing.

You might also want to know the amount of funds that would actually land in the seniors hand. We do know one thing all mortgages would be paid off, as well as any other liens found on the property, plus the expense of the reverse mortgage, so on a good day the seniors would wind up with approximately the difference of the appraised value minus any mortgages paid off, any liens and the closing cost in their hands.

They can receive this in one lump sum or monthly payments spread out over a period of time.

They no longer would be required to pay a monthly mortgage, they could payoff any debts that are owed, with the remainder of the funds being placed in a bank account of their choice.

The other part to this reverse mortgage is that the seniors will be able to stay in the house as long as they both are alive.

Once they are no longer with us the heirs of the seniors would have to decide if you wanted the house or not. If the heirs decide the want to keep the house then they would be required to pay off the mortgage company that gave your parents the reverse mortgage plus interest as with any other mortgage lien.

If the heirs decide they did not want or could not afford the house then the bank would take legal action to secure the property, such as foreclosure.

A reverse mortgage is an FHA product, therefore you simply have to locate a local FHA approved lender in your telephone book. You might also google reverse mortgage followed by the city in which you reside or where the property is located.

Before a reverse mortgage might be obtained the seniors would have to go through extensive FHA counseling concerning the reverse mortgage so they would understand exactly know the reverse mortgage work and the effect it would have on them either positively or negatively.

If qualified she may apply for a regular mortgage loan to consolidate her and pay her debts, as long as she is qualified with the correct credit scores, and is able to financially repay the mortgage loan.

I hope this has been of some benefit to you, good luck.

“FIGHT ON”

If you don’t intend to keep the home but you need the time, your Aunt could theoretically stay on for the 6 months it will take to foreclose. However, if your Aunt chooses to stay through the final foreclosure, she will, in essence, be evicted. If you don’t need much time and the lender is willing to work with you, then you can sign a Deed in Lieu of Foreclosure wherein you give the bank the title to the house and they will be responsible for selling the home and all it entails. The family is not liable for the loan, nor is the estate.

If the house is worth more than what is owed, even if you don’t want to refinance and keep it in the family, you may want to consider selling it so you can keep the net proceeds. If the heirs have any huge tax bill for 2011, you may be able the write off the interest paid to date on the reverse mortgage. Check with your tax advisor. As long as you are making a good faith effort to sell it, the bank will give you at least 6 months to sell it, with maybe two 3-month extensions, for a total of one year. But you need to be communicating with the bank to get these extensions.

Sorry to hear your grandfather is not doing well. If he has a line of credit with funds available, you may want to consider withdrawing money now to help pay for any of his future expenses. Once he passes, you will no longer have access to it.

Shortly after grandfather passes, the lender will be in contact with the executor of his estate. When they find out that no one plans on satisfying the reverse mortgage, the lender will begin foreclosure proceedings. The lender will most likely send someone to talk with your aunt about taking possession rather than going through the eviction process.

There will be notice, she will not be immediately required to vacate.

Let’s say Old Joe borrows $ 130,000 lump sum using his house as security. The reverse mortgage lender charges fees and interest, so while Old Joe got $ 130K, he really borrowed closer to $ 140K. Each month that the loan is outstanding, the amount owed goes up. (This is because on a reverse mortgage, you don’t pay anything until the end.)

If the loan is fixed rate, the rate could be 5%. At the end of one year, the amount of the loan to be paid back would grow to $ 147,000. At the end of 5 years, the total could be $ 179,000. At 8 years, it could be $ 206,000. If the house doesn’t go up in value, the bank is limited to what they could sell the house for (though, congress insures the loans, so it’s really the rest of us taxpayers who pay).

IMO, Joe would be better off selling now, putting the $ 200K in the bank and getting a small apartment.

IN this case, during the history of the loan, the borrower
gets money. EVERY month. AT the conclusion of the
history of the loan–when the mortgage payments are due
to cease, the home owner [whomever that is at the time]
re-finances the home or sells it to pay off the lender.

A reverse mortgage can be from near nothing [4%] of the valule of the home
to 100%, it is all negotiable.

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You can get approved for an online loan on same day.i advise you to pick loan from certified lenders .direct loan is the good choice so that you will get at low apr compared to different states…..