Seven Reasons Why FHA Insured Reverse Mortgages Are Safer Than Conventional Loans

Here Are Seven Reasons Why FHA Insured Reverse Mortgages Are Safer Than Conventional Loans.
Seven Reasons Why FHA Insured Reverse Mortgages Are Safer Than Conventional Loans

An FHA insured reverse mortgage is called a Home Equity Conversion Mortgage, (HECM).  They have numerous safeguards built in to the process as well
as a few that have been added over the years. 

  1.  No Required Mortgage Payments – There are no monthly payments required with a HECM reverse mortgage.  Having said that,
    please note that the home is still in your name and you, the homeowner, must still pay your own property taxes and homeowners insurance.
    You must also maintain the home.  However, this is not new.  These are things you do anyway.

    While there is no monthly payment required, we in the industry like to say it is a payment optional loan.  You can make payments
    if you choose.

  2. FHA Insured – All HECM’s are insured by the Federal Housing Administration.  What this means for you is that you are protected
    in case of a servicer going out of business.  For example, if you have $100,000 available to you in your line of credit, or are receiving
    a monthly payment from your reverse mortgage, and the servicer goes out of business or, more likely, the service center is hit by a natural
    disaster, and cannot honor their commitment, FHA will step in and make sure that you have the money available.
  3. Independent Counseling – Anyone who wants to get a HECM reverse mortgage must complete a one-on-one counseling session with an
    independent counselor.  This has been required since reverse mortgages became an FHA product in 1989.

     It is not the counselors’ job to talk you into or out of a reverse mortgage.  They simply want to make sure that you understand how
    the program works as well as talk about other options, such as selling the home.

  4. Annual and Lifetime Interest Rate Caps – While there is a fixed rate option, most HECM reverse mortgages are set up on an annually
    adjustable interest rate.  The annually adjusted rate is tied to the one-year London Interbank Offered Rate (1-year LIBOR).  The
    annual cap for rate changes is 2.00% and the lifetime rate change cap is 5.00%. 

    For example, if you get a rate at 4.00% to start, and the LIBOR index increase by 0.50% next year, your rate will increase to 4.50%.  If the
    next year the rate dropped by 1.00%, your rate would decrease to 3.5%.  However, please note that any rate changes up or down do not impact
    you directly because you have no payment to make.  It does affect you indirectly in the amount of interest you are charged each month.

  5. 60% Limit on Initial Advance – All FHA HECM loans have limits on the amount of money the homeowner can withdraw during the first
    12 months of the loan.  This limit is 60% of the Principal Limit (PL).  The PL is the amount of money that is available from the
    reverse mortgage.

    For example, if you have $100,000 available to draw from the reverse mortgage, and you own your home free and clear (no mortgage or liens), the
    most you can take out during the first 12 months is $60,000.  The other $40,000 will be available after the first year.

    However, if you have a mortgage that exceed this amount, say $75,000, you can take an additional 10% of the PL above this amount.  This means
    that you can take $75,000 to pay off the current mortgage, plus $10,000 (10% of the $100,000 PL).  This is also known as the Initial Disbursement
    Limit.

  6. Non-Borrowing Spouse Protection – In order to qualify for a HECM, the homeowner must be at least 62 years old, live in the home
    and be able to afford to pay the property charges.  What happens though if only one spouse is 62 and the other is younger? 

    The younger spouse is known as a non-borrowing spouse (NBS), because he/she is not old enough to be a borrower.  However, the loan comes due
    when the last borrower passes away.  The NBS is not a borrower so he/she used to have to pay the loan off, usually by selling
    the home. 

    The NBS rule protect the younger spouse and allows him/her to continue to live in the home after the borrower passes away.  The NBS must continue
    to meet the obligations of the loan (keeping his/her name on title, paying property charges, and occupying the home as a primary residence).
    So even if you have a spouse under age 62 you can do a reverse mortgage and your spouse will still be able to stay in the home if you pass
    away.

  7.  Non-Recourse Loan – All HECM loans are 100% “Non-Recourse”.  What this means is that should the balance on the loan
    exceed the value of the home, the lender can never kick the homeowners out, nor try to collect from the borrower, the estate or the
    heirs.

    The actual verbiage from the agreement reads as follows:

    Your liability under the plan is limited to the net sale proceeds from the sale of the property.  You will have no personal liability for payment of the notes.  No deficiency judgement may be taken against you or your estate.”

The HECM reverse mortgage loan is the most regulated loan I have ever done in over 30 years of personal finance and mortgages.  Please feel free to
call me with any questions at 303-513-2748.

Picture of Bruce Simmons

Bruce Simmons

I absolutely love what I do - working with senior homeowners to help them live a more comfortable, flexible and secure retirement. I have the absolute best customers in the world, and even though I worked in the forward mortgage business for a number of years, I could never go back to doing conventional loans. I'm a 100% reverse mortgage specialist.

5.0

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

Gerald Cook
Gerald Cook
5.0

Bruce did our original reverse mortgage and has also refinanced it twice. He works hard to get the best deal possible while making it as easy for us as possible. When our first refinance received a low initial appraisal, Bruce helped the appraiser find better information and increase the appraised value. He's the best.

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!

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John Addante
John Addante

Left us a 5 star review

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!