Hi, good morning, everybody. This is Erin Fountain with Suncoast Social Security advisors and typically, I’m talking to you about retirement benefits for Social Security. But there are so many things that impact us when we start to retire, like selling a home, “How can we finance – what availabilities do we have to fund our retirement?” One of those is reverse mortgages and today, I have a special guest, Erin Morey, who’s a loan officer with Custom Mortgage servicing and Florida Georgia, Tennessee and Kentucky, and she helps many ways and mortgage concerns. But today I’ve asked her specifically to share some concerns that around ways to help Seniors or those approaching retirement.
So, Erin, thank you very much – but can I start out with the first question for you here?
Thank you for having me.
The first question, you probably get this all the time. What do you need to qualify for a reverse mortgage?
Well, the first thing you need to qualify is that you have to take a class that takes you through all the process so that you are an educated buyer because essentially, you’re pulling all the equity out of the home you already own. So we go through a class that no Mortgage Officer has any connection with, it’s a third party. They put you through that class, that class has to be completed and you have to feel comfortable with what you’re doing before we can move on with the process. Once that’s complete it is very much the same as any FHA loan. So, we’re looking at your debt-to-income ratio, but in this case, we use the equity of your home. So, how much do you have paid off in your house?
I didn’t realize that they had you go through class. I think that’s excellent.
Yeah, because we really want educated buyers and we want, you know, at Custom Mortgage, we just have a high level of integrity, and we want everyone to know what they’re getting into. We’ve seen the markets in the past and people get very hurt financially and that’s what we lookout for, for our customers. So, the whole mortgage industry requires it, but we definitely help customers along the way as well.
And do you have any sense how long it takes? Is it a one-day class or an hour class – just to let someone gauge how much time they might need to allow to do that?
When you sign up there are different ways; they can take it depending on how savvy Internet and whatnot and where they’re located. So, it’s kind of a twofold answer and not a one-size-fits-all but depending on your area and how computer savvy you are, we will put you in the best-case scenario for you.
In that case, very customized. So then once you get through the class, the next thing I’m thinking is where the principal limits that you can borrow.
So, you can borrow up to 80% of your equity and what happens is when you get your money back in three ways. They can do a lump sum, they can give you a monthly payment, or they can do a combination of both. The house has to go under an appraisal, and that’s one of the terms. It’s different when purchasing a standard home with alone in this case is to have a good working condition and it has to be maintained. So, the house has to be well maintained and kept up overtime. Another thing we come in contact with is maybe family members trying to help their parents do this. We definitely want to make sure that the person(s) whose name(s) are on the deed is comfortable and we have private conversations with them to make sure that this is a situation that they’re fully comfortable with and their own decision making. So, there’s quite a few levels of nuances that we take care of our clients.
Well, I’m sure we’re just, you know-it’s just the tip of the iceberg because when I asked you initially, you had volumes of information and that’s so important to share. But just to get people started and have an awareness of it is the purpose of our conversation today – and with that I have just one final question if you can briefly respond to this, too. So, there’s good and bad and everything, right? There’re always considerations and one of those would be: So, what are the downfalls? Are there of any of a reverse mortgage?
Yeah, and that’s one of the things that they go through in the class. But in reverse mortgage you are not the owner of the home – you cannot pass down to your family. So, it’s not allowed to be willed to them. If they can buy it back, they can have it back, but they would have to purchase the home. So that’s the biggest hurdle for people, and I understand why. I mean, it’s a big thing and a lot of people want to leave a home to someone, but in many cases, siblings are gone, unfortunately. They have homes they’re not interested in, the area that they grew up in or their parents are in. Financially, it’s a decision that has to be made and the family has to come to terms with that. All of those are very hard, hard conversations for families to have.
Alright, I know that from casual conversation when I speak with folks, they’ve said that ‘You know, the children tell us that they’re fine, they have their own homes and they’re doing very well.’ They just want to take care of Moms and Dads, and it’s a great solution, too.
It is, and in many parents don’t want to burden their kids and sometimes the house can be a burden to their children. So, in this case, the house does go back to the bank and the bank will sell it.
So, very good-this is great information. I thank you so much for elaborating on this today. I look forward into delving into future conversations as we layer through this.
So, if anyone wants to hear more from Erin, please contact her. She’s here in Englewood, FL.
Her number is 941.221.1909 or firstname.lastname@example.org as well.
Thanks so much Erin and we’ll be talking to you soon!