Tim Boudis joins me to answer some common reverse mortgage questions.
Reverse mortgages can be a useful tool, especially in times like these. However, people have a lot of misconceptions about them. Today I’m speaking with Tim Boudis about reverse mortgages to clear any confusion about the topic.
First, what happens to your title if you get a reverse mortgage? According to Tim, the title stays in your name if you prefer. You can also put the title in a trust, which Tim recommends for security reasons.
Why do reverse mortgages have a negative connotation? They were very common during the housing crisis of 2008, so many people associate them with shady private investors. These reverse mortgages often contained high hidden fees and tons of extra costs that led many people to believe they were a trap. Now, reverse mortgages are FHA loans insured and guaranteed by HUD, so they are very secure and well-regulated.
Speaking of fees, many people don’t want to consider a reverse mortgage because they assume the costs will be through the roof. Tim says this certainly used to be the case, but after the last crash, reforms have changed reverse mortgages for the better. Now the only fees you’ll pay are standard for all mortgages, such as title, escrow, and mortgage insurance.
Older couples often use reverse mortgages, but what happens if one partner passes? The surviving spouse has the option to pay the mortgage or continue it. If both partners pass, the surviving heirs have 12 months to either refinance the loan in their name or sell the property and keep the equity difference. They can also send the bank a check for what is owed and keep the property without the mortgage. No matter what, the bank or government won’t be in control of what happens to the property.
There’s a lot we didn’t cover about reverse mortgages. If you’d like to learn more, just give me a call at (619) 948-2996 or email me; I’d love to put you in touch with Tim!