Reverse Mortgages: What You Need to Know

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With homeowners’ cash needs often outstripping their available financial resources, many people are tapping the equity in their homes. Although home equity loans are a popular choice, some older homeowners have turned to a reverse mortgage to generate cash from their primary home.

The reverse mortgage product has been around since 1961, and continued to be revised through 2017. Before jumping on the reverse mortgage bandwagon, however, take time to understand the upsides and downsides of this income generation method.

How a Reverse Mortgage Works

In a traditional home mortgage transaction, the homeowner is approved for a loan, and makes payments to the mortgage company for a specified period of time. The property serves as security for the debt, and the homeowner retains the home’s title. When the homeowner pays off the loan, the house officially belongs to him (or her).

A typical reverse mortgage loan has some similarities to a traditional mortgage. First, the reverse mortgage loan also uses the home as security, and the title stays in the homeowner’s name. The lender remits the funds to the homeowner in a lump sum or in monthly payments.

Traditional vs Reverse Mortgages

However, there are two big differences between traditional mortgages and reverse mortgages. With a reverse mortgage, the homeowner (the borrower) doesn’t make monthly payments to the mortgage company. Instead, the loan is repaid after the borrower no longer resides in the home, often through the person’s death or move to a long-term care facility.

In addition, a reverse mortgage’s loan balance keeps rising, as the mortgage company tacks on new interest and fees every month. The homeowner must continue to pay their homeowner’s insurance and property taxes. They must keep the home as their principal residence, and the house must remain in good condition.

Several Types of Reverse Mortgages

A Home Equity Conversion Mortgage (or HECM) is the most commonly used reverse mortgage. The Federal Housing Administration (or FHA) provides insurance for HECM mortgages.

Local or state governments, or perhaps non-profits, may also issue special-purpose reverse mortgages. In addition, certain private lenders may extend proprietary reverse mortgages to homeowners in the higher-value segment.

Do Reverse Mortgages Have Funding Restrictions?

The 62+ homeowner may choose to receive the reverse mortgage loan proceeds in a lump sum or in monthly payments. Either way, they’re free to use the money for several purposes.

At one end of the spectrum, homeowners with limited incomes may use the funds for bills, groceries, prescription medicines, or home repairs. More affluent homeowners may choose to travel, buy another property, or simply enjoy extra spending money.

Reverse Mortgage Processing Fees

Homeowners who obtain a reverse mortgage can expect to pay a laundry list of transaction fees. These fees begin with the loan application and conclude when the transaction finally closes.

These fees are similar to those for a traditional mortgage application:

  • Appraisal fee
  • Credit check fee
  • Home inspection fee(s)
  • Mortgage fees
  • Property survey fee
  • Recording fees
  • Title search fee

Reverse mortgage applicants must also pay several upfront fees:

  • HUD-approved loan counseling fee (required)
  • Loan origination fee paid to the lender ($6,000 cap)
  • First mortgage insurance premium

Ongoing reverse mortgage loan fees include:

  • Annual mortgage insurance premiums (.05% of the loan value)
  • Homeowner’s insurance premiums
  • Lender service fees
  • Loan interest charges
  • Maintenance and home repair expenses
  • Property taxes

Reverse Mortgage Qualification Process

To qualify for a reverse mortgage, homeowners must comply with some basic criteria. These requirements pertain to the homeowner’s financial situation and the property’s overall condition.

  • The homeowner must be at least 62 years of age.
  • The homeowner must possess “considerable equity” in their primary home. This number varies according to the lender.
  • The homeowner cannot have any federal debt delinquencies (e.g. student loans or federal income taxes).
  • The home must be in acceptable condition as defined by the lender’s requirements
  • The homeowner must be willing and able to pay for proper home maintenance, homeowner’s insurance, and property taxes
  • The homeowner must agree to complete a HUD-approved counseling session. This session pertains to reverse mortgage eligibility and the loan process logistics.

Credit Requirements

Because the homeowner is using their home as the reverse mortgage loan collateral, they may qualify for the loan even with substandard credit. The Federal Housing Administration (or FHA) secures these HECM loans to consumers who probably wouldn’t qualify for another home equity loan.

Home Equity Requirements

The HECM eligibility requirements state that applicants must own the financed property or have paid “a considerable amount” on the loan. Each lender has their own approval criteria that’s based on the applicant’s financial situation and other factors. Examples include the homeowner’s age, the home’s value, the loan type, and current interest rates.

As a guideline, homeowners should have at least 50 percent equity in their homes to qualify for a reverse mortgage, especially with an HECM financing vehicle. This requirement exists because the homeowner must first use the HECM funds to pay off their current home loan.

If the applicant doesn’t own at least 50 percent of the home, the reverse mortgage proceeds won’t be enough to cover the existing loan’s payoff amount. Taking that logic a step further, a homeowner with more equity and a smaller loan balance will have more money available for another purpose.

Can the Homeowner Still Leave the Home to Their Heirs?

The answer is a qualified “yes,” but there’s one very important condition. As long as a reverse mortgage exists, the heirs can’t receive clear title to the property.

To keep the property and receive clear title, the heirs must pay the outstanding loan balance. This usually means they’ll have to sell the home.

Reverse Mortgage Financing Process

Just like buying a home with a traditional mortgage, the reverse mortgage process requires several steps that must be completed in sequence. First, the homeowner should honestly evaluate his or her financial situation and see if it’s possible to raise the funds another way.

If a reverse mortgage seems like the right path, the homeowner fills out the mortgage application. This generally takes about 45 days, depending on the lender.

Next, the homeowner must complete a mandatory financial counseling session with a HUD-approved counseling agency. During this fee-based telephone conversation, the counselor will help to ensure that the homeowner understands the reverse mortgage’s financial implications.

The next step is a formal home appraisal, which determines the amount of money the reverse mortgage will generate. In addition, the appraisal ensures that the home meets the FHA’s standards.

Finally, the homeowner chooses their financing vehicle and decides how they want to receive their reverse mortgage loan proceeds. Once they have completed these steps, they can sign the reverse mortgage loan documents.

Reverse Mortgages: Advantages and Disadvantages

Every financing vehicle has its upsides and downsides, and that also applies to reverse mortgages. Homeowners should carefully consider the following pros and cons in light of their personal and financial situations.

Upsides of a Reverse Mortgage

  • Benefits 62+ homeowners with high home equity and limited cash
  • Homeowner receives a lump sum or monthly payments in exchange for equity in the home
  • Homeowner can use the loan proceeds for numerous purposes
  • Homeowners with subpar credit often qualify for a loan
  • The loan can include closing costs and additional fees
  • Loan proceeds are not regarded as taxable income
  • Homeowner can stay in the home as long as they’re able

Downsides of a Reverse Mortgage

  • The loan balance constantly increases over time
  • The owner’s home equity decreases as the loan balance rises
  • Homeowner (or their heirs) must pay back the loan later (often by selling the property or sometimes loosing it through foreclosure)

Because a reverse mortgage can profoundly alter a homeowner’s financial situation, it’s important to have a thorough understanding of the implications of this complex undertaking. Applicants are strongly advised to consult with an attorney, an accountant, and/or a trusted financial advisor before deciding to travel down the reverse mortgage path.

Whether you’re buying, selling, or exploring options like Reverse Mortgages, our murphy nc real estate agents can help you navigate the process with confidence.

The Poltrock Team – REMAX Mountain Properties – Murphy NC Realtors – ilovemurphy.com – Call us Toll Free at 1-866-Murphy-NC or 1-866-687-7496
Murphy’s #1 Real Estate Team

Seller Receives More than the Listing Price During Andrews, NC Home Sale

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When I made the decision to sell my Andrews, North Carolina home, I wanted to work with a successful realtor who would get me good results. I learned about The Poltrock Team by viewing one of their billboards. After speaking with the team members, I found them to be efficient, very helpful, and considerate. So, I asked them to assist me in selling my home.

Overall, I had a very good real estate experience. When I had concerns or questions, employees always responded in a timely manner.

The Poltrock Team was most helpful in advising me on the best approach to multiple offers. In fact, I was able to sell my home for more than the listing price. Based on my real estate experience, I would give The Poltrock Team a “10” for their outstanding client service. I would certainly work with them in the future.

If you’re planning an Andrews NC home sale, our trusted Murphy NC realtors are here to help you sell with confidence and success.

Vicki Pruitt
Murphy, NC

Efficient Team Helps Long-Distance Seller to Complete Murphy, NC Home Sale

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After owning my Murphy, North Carolina home for several years, I decided the time was right to pass the property to a new owner. I found out about The Poltrock Team because of their strong local presence. A friend suggested I work with this very successful agency to sell my home, and I took their advice.

Overall, I had a very good real estate experience with The Poltrock Team. Because I live in a different area, I appreciated their assistance in helping me to complete this transaction from a distance.

Looking back, I was very pleased with The Poltrock Team’s real estate client service. They were fair and worth the price. I would absolutely work with them again.

Whether you’re local or out of state, selling your Murphy, NC home is simple with trusted murphy nc real estate agents by your side.

Michael Smith
Charlottesville, VA

Satisfied Seller Gets Fair Market Value During Murphy, NC Home Sale

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When I decided to sell my Murphy, North Carolina home, I knew that working with a top-notch realtor was the key to accomplishing my goal. About that time, I received one of The Poltrock Team’s mailers. This market-leading agency had previously provided me with good service, so I enlisted their help in selling my property.

Overall, I had a very good real estate experience with The Poltrock Team. They were most helpful in getting me the fair market value for my home. I would definitely work with them again.

Ready to sell your Murphy, NC home? Our expert murphy nc realtors make the entire process seamless and stress-free.

Robert Barnes
Cochran, GA

Team Members Help Buyers to Smoothly Navigate Murphy, NC Home Purchase

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I had been considering the purchase of a home in Murphy, North Carolina. Finally, I decided that the time was right for buying a house there. I wanted to work with a realtor who would make the extra effort to find the right property for my needs.

I learned about The Poltrock Team through the Internet. Because of the agency’s connection to Carroll’s Construction, I decided to work with the team to purchase my property.

The Poltrock Team did a great job of helping us navigate the home-buying process. They provided us with excellent real estate client service. We would absolutely work with them again.

Searching for the right Murphy, NC home? Let our trusted murphy nc realtors guide you every step of the way.

Jay Davis
Sheboygan, WI

Sellers Appreciate Team Members’ Friendliness and Efficiency During Murphy, NC Home Sale

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We had owned our Murphy, North Carolina home for several years. When the time came to sell the property, we wanted to work with a very successful realtor known for getting outstanding results. About this time, we found out about The Poltrock Team by viewing an agency advertisement and obtaining an excellent reference.

We contacted The Poltrock Team, and interacted with several team members. We were impressed by everyone’s  friendliness and efficiency. So, we enlisted The Poltrock Team’s help in selling our mountain property.

During our real estate transaction, we most appreciated the team members’ patience and compassion. They really helped us during an especially difficult time.

We would rate The Poltrock Team a “10” for their excellent real estate client service. We would certainly work with them during a future transaction.

Selling your Murphy, NC home doesn’t have to be stressful—our compassionate murphy nc realtors are here to help every step of the way.

Bruce and Diana Rudd
Warren, PA

Meet The Poltrock Team’s Four Exceptional Realtors

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Preparing to buy (or sell) a home means you’re moving on to the next chapter in your life. To make the experience as seamless as possible, work with a realtor who knows the local market like the back of their hand.

A highly effective realtor knows about the changing trends that influence the local economy. This highly focused professional is also intimately familiar with the local real estate market. And, they combine that substantial knowledge with top-tier technology to get results – every single time.

Perhaps most of all, this extraordinary real estate professional has unparalleled concern for their clients. When other agents might say, “that’s good enough,” your realtor rolls up his or her sleeves and goes the extra mile without a second thought.

Meet The Poltrock Team’s Four Exceptional Realtors

Here at The Poltrock Team, Murphy’s Top-Selling Real Estate Team, that’s simply the way we do business. Although each of our four high-achieving realtors has their individual style, each professional goes above and beyond to get the desired results for their clients. To sum it up: They love what they do, and it shows.

John Poltrock

Certified Residential Specialist (CRS)
Short Sales & Foreclosure Resource (SFR)
Mobile: 828-557-2270

Meeting John Poltrock is like reconnecting with a close high school friend you haven’t seen in years. John’s friendly Southern manner makes conversation a breeze, and you’re quickly chatting about every subject under the sun and then some. Simply put, even if you weren’t buying a home or selling a home, you’d enjoy spending time with John and come away smiling.

As The Poltrock Team’s Lead Listing Agent, John is known for his exceptional realtors service and sincere concern for his clients’ well-being. And, his many years spent in Murphy and Cherokee County give him the insider knowledge to be an effective advocate for his buyers and sellers.

In addition, John is deeply immersed in real estate market mechanics. In other words, he keeps a finger on the pulse of local real estate trends and the factors that drive them.

John is also a master of technology, and skillfully interprets data to shape the marketing strategies for his clients and for The Poltrock Team. To support these high-level endeavors, John relies on his Bachelor’s Degree in Financial Planning from Western Carolina University.

When John’s not engaged with the real estate world, he enjoys everything our beautiful mountain region has to offer. Hiking, camping, and boating are tops on his list. John and his wife Jessica have been married since 2005. They have a high-achieving daughter in college, and their energetic young son certainly keeps them on their toes.

Wayne CoferWayne Cofer
Mobile: 828-361-7603

The residential and commercial real estate markets are two different animals. Multiple factors affect each market at any given time. Getting results in each arena depends on whether a realtor has the skills to meet those market-specific challenges.

Fortunately, our Universal Realtor Wayne Cofer has the extensive business and management background to excel on both playing fields. And, he’s adept at working with both buyers and sellers. When obstacles arise during a real estate transaction, Wayne’s proven negotiation skills are essential to finding a “win-win” solution.

Whether you’re ready to buy (or sell) a small mountain cabin or a large commercial building, having Wayne in your corner makes good business sense. And, he combines his impressive knowledge base with a personable manner that makes him an ideal business partner.

Outside of the office, Wayne enjoys mountain life with his wife Kathy. He also spends as much time as possible with his three grown daughters and four grandchildren. Wayne frequently explores our region on his touring motorcycle, and he’s an avid United States and world history buff.

Paige McKnightPaige McKnight
Mobile: 828-557-1234

The Poltrock Team’s newest realtor, Paige McKnight combines 14 years of experience with an unfailingly positive attitude. Although she’s a seasoned realtor with many successful closings under her belt, Paige views every property purchase or sale with a fresh perspective.

Naturally, every real estate transaction comes with its distinctive challenges. Financing, home inspection, and documentation issues are common hurdles. Contractors sometimes drag their feet on required repairs, and other issues may threaten to derail the process entirely.

That’s where Paige McKnight’s well-known perseverance and follow-through make the difference. She’s dedicated to meeting (and conquering) every challenge, and she goes to great lengths to support her clients throughout the process. And as you might expect, this determined lady gets results.

An Exceptional Realtors Team Makes the Difference

A highly effective support team enables our top-tier realtors to perform at their absolute best. First, our real estate professionals are backed by Re/MAX, the world’s largest real estate company. That coveted status means our support team can access Re/MAX’s proprietary software and management systems.

In addition, the Re/MAX website is the world’s highest-ranking real estate agency website. This gives The Poltrock Team unparalleled market visibility compared to our competitors.

On the local level, The Poltrock Team’s support staff includes a Client Concierge, who provides immediate assistance to potential buyers. Our highly efficient Listing Coordinator, Closing Coordinator, and Marketing Associate round out this top-notch group.

Every member of The Poltrock Team truly respects and supports each other. And, they’re all committed to achieving the best possible results for our clients. With countless testimonials from satisfied buyers and sellers, they’re confident they’re on the right track.

Looking to work with truly exceptional realtors? Let our trusted murphy nc real estate agents help you buy or sell with confidence.

The Poltrock Team – REMAX Mountain Properties – Murphy NC Realtors– ilovemurphy.com – Call us Toll Free at 1-866-Murphy-NC or
1-866-687-7496 – Murphy’s #1 Real Estate Team

How to Get the Maximum Value from Your Real Estate Experience

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Preparing to buy or sell a Murphy, North Carolina home is an exciting proposition. You’re ready to progress to another chapter in your life, and you’d like the entire process to go as smoothly and efficiently as possible. Naturally, your realtor also wants you to have a good home-buying or home-selling experience.

To realize the best outcome, do your homework before you first meet with the realtor. Do some research, gather documents if needed, and generally “get your ducks in a row.”

When you take time to do that, your realtor can do the most effective job in the timeliest fashion. Whether you’re buying or selling, here are some valuable tips that will help you enjoy a good real estate experience.

Preparing to Buy a Home

Once you begin searching for a home, the process will probably go very quickly. Based on your stated preferences, your realtor will take you on numerous showings within a few days. While viewing all the houses will be fun, it’s also important to remember your underlying goal.

By giving your realtor clear direction before the process begins, they can target the homes that are likely to check all the boxes. And, that may also help you to feel more focused and better able to identify the “right” house when it appears.

Specify Your Time Frame

Tell your realtor about your home purchase time frame. If you’re crystal clear about your decision, and are ready to pull the trigger, share your commitment to a quick resolution.

On the flip side, you may be in the beginning stages of your search, and you won’t be ready to complete the purchase for several months or even a year. Either situation is fine, but your realtor needs that information so they can develop the best strategy.

List Your “Must Haves” and “Wants”

Before purchasing a product, you’re probably clear on why you’re buying the item and what basic functions it should perform. If you haven’t done that yet, it will be hard to focus your search and find the right item.

In the case of a blender, for example, this countertop kitchen appliance should be able to whip up your favorite smoothie in just a few seconds. That’s your “must have” factor.

Beyond that, you’d prefer a blender with 10 different settings, a super-powerful motor, and ice-crushing and nutrient-extracting capabilities. And because you have a small kitchen with minimal counter space, you’d like the blender to have a very small footprint. Those are the “wants” in the equation. Chances are, you’re not going to find all of them in a single machine.

The same analogy applies to buying a home. If you haven’t thought about your needs vs your wants, it will be difficult to know when you find the right property. On the opposite end of the spectrum, if you have too many “wants,” you won’t find the right house, either.

To avoid this maddening situation, list your ideal home’s “must have” attributes along with a list of your “wants.” And, also include things you really don’t want in a home. Your realtor will greatly appreciate this information, as that will save valuable time and streamline your home search process.

Consider Quality-of-life Variables

Along with a home’s specific attributes, other variables will likely factor into your home purchase. These “quality of life” considerations may relate to the home’s distance from your and/or your partner’s job. The home’s proximity to good shopping and dining venues may also be important.

For a household with school-aged children, a good-quality school district may be important. A safe walkable neighborhood, and nearby recreational opportunities, are also key factors for many families.

Obtain a Mortgage Pre-qualification

Before you begin your whirlwind home tour, ask your realtor to guide you through the mortgage prequalification process. There are two advantages to completing this step before you begin touring houses.

First, you’ll learn which homes are in your price range, and that will help your realtor narrow the search parameters. When you’re ready to make an offer, your pre-qualification status will establish you as a serious buyer.

For reference, there’s a difference between mortgage prequalification vs mortgage pre-approval. The pre-qualification (or the first step) is based on data that you submit, and tells you the amount of a loan you’ll likely be able to obtain. The pre-approval (the second step) is based on a live mortgage application, along with your submittal of data required for an official credit and financial history check. If everything goes well, you’ll receive a mortgage pre-approval up to a certain amount.

Record Details of Your Home Showings

While touring numerous homes in one day, it will be difficult to remember each property’s details. To keep them fresh in your mind, take plenty of photos and notes. If possible, jot down an overall impression of each home.

Throughout the day, compare homes to each other, and eliminate the “so-so” houses that don’t impress you. Again, that helps your realtor to hone in on that perfect property that magically checks all your important boxes.

If possible, leave time to revisit the top homes on the day’s list. You’ll leave each property with the details fresh in your mind, and you might even decide to jump in with an offer.

How Our Client Concierge Can Help

When you decide it’s time to purchase a home, you may wonder how to choose the right realtor and get the process started. Or, let’s say you call The Poltrock Team’s office to inquire about a listing we advertised.

Either way, you’ll have a pleasant conversation with Sarah Thompson, our gracious Client Concierge who expertly assists clients who are just beginning their search for the right home. Sarah will efficiently provide specifics on properties for sale, and she’ll bring each buyer together with the realtor who can best meet their needs. And, Sarah will also furnish relevant details on home purchase financing options.

While Sarah provides invaluable assistance to home buyers, her efforts also benefit our home sellers. By quickly handling buyer inquiries, Sarah sets the stage for home showings and eventual property sales.

Sarah Thompson is a lifelong Murphy resident and a Murphy High School graduate. She’s pleased to call the area home, and buyers will feel her enthusiasm right away.

Of course, Sarah Thompson is also a valuable member of our market-leading real estate team. Team members also include four well-regarded realtors with unparalleled market knowledge and proven results. Our skilled listing coordinator, closing coordinator, and efficient marketing assistant round out this impressive team. Whether you’re buying or selling, we offer a one-stop real estate resource to every client.

Preparing to Sell a Home

If you’ve made the decision to sell your house, doing your homework ahead of time can help to streamline the listing and selling process. Once our Listing Coordinator places your home on the MLS listings, our realtors (and other agents) can begin showing the property.

Estimate a Listing Price

Although your realtor will furnish you with a market analysis and listing price recommendation, your listing price input is also useful. Maybe you need to realize specific net proceeds to pay off the home’s mortgage.

Or, perhaps you’d like to invest the proceeds in another property, and you need a certain amount of money for that purpose. Either way, a current loan payoff number is very helpful.

Address Land Survey and Utilities Issues

If you have a recent land survey, that’s a definite plus. A professionally prepared land survey will document your property’s physical boundaries. And, providing us with your utility company details will give us needed information for the closing process.

Tell Us Where You’re Going

If you’re selling your home because you’ve found another one, please let us know the timeframe and any relevant details. If you’re moving out of the area, but haven’t yet firmed up the specifics, that information is also helpful. Any details on your post-sale plans will help your realtor (and our team) during the home sale process.

Whether you’re preparing to purchase a Murphy, North Carolina home, or selling a home to begin the next phase of your life, advance preparation is the key. When your realtor has all the relevant details up front, he or she can provide you with a truly satisfying real estate experience.

For a smooth, stress-free real estate experience, trust our expert murphy nc real estate agents to help you buy or sell with confidence.

The Poltrock Team  REMAX Mountain Properties  Murphy NC  ilovemurphy.com  

 Call us Toll Free at 1-866-Murphy-NC or 1-866-687-7496

 Murphy’s #1 Real Estate Team

Sellers Have Very Good Experience During Andrews, North Carolina Property Sale

Posted by murphylover on

We had owned our Andrews, North Carolina property for several years. Finally, we decided to sell it, and wanted to work with a realtor who would get the job done in a timely manner.

About that time, our daughter told us about The Poltrock Team. We believed that this market-leading agency could help us to achieve a quick sale, so we decided to work with them in selling our property.

Overall, we had a very good experience with the Poltrock Team. Throughout our real estate transaction, they provided us with advice on many aspects of the sale.

We would give The Poltrock Team a “10” for their excellent real estate client service. We would certainly work with them during a future transaction.

If you’re ready to sell your Andrews, North Carolina property, our expert murphy nc realtors are here to help you get results fast.

Roger and Deborah Roberts
Murphy, NC

Sellers Have Great Real Estate Experience During Brasstown, North Carolina Home Sale

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We had owned our Brasstown, North Carolina home for some time, and we decided the time was right to pass the property to someone else. We began looking for a very successful realtor to help us accomplish our goal.

We learned about The Poltrock Team through a referral. Because of this real estate agency’s strong track record, we decided to work with them in selling our home.

After we signed the listing paperwork, The Poltrock Team’s Listing Coordinator got busy. She requested professional photographs of our home, and placed the property on the MLS listings. Our real estate agent came to us with a buyer, and we had a smooth closing.

Overall, we had a great real estate experience with The Poltrock Team. Throughout the process, they kept us informed every step of the way. And,
they kept us calm.

We would rate The Poltrock Team a “10” for their outstanding real estate client service. We would definitely work with them in buying a home or selling a home in the future.

Ready to sell your Brasstown, North Carolina home? Our experienced murphy nc realtors will guide you every step of the way.

David and Merry Coalson
Fernandina Beach, FL