Reverse Mortgages

What is a Loan Term?

In the world of home mortgages, the word “term” indicates the life of a loan, or how long it lasts. Common loan terms are 30 years and 15 years. However, reverse mortgages do not have terms. They last for as long as the homeowners remain in the home and come due and payable only after you leave the home, sell the home, or pass away.

What is the Right to Rescind?

With a conventional mortgage, the deal is done immediately after closing. However, reverse mortgages can be confusing, and many borrowers have had second thoughts. The FHA now requires a three-day waiting period, or cooling off period, called the right to rescind period.

What is a Reverse Mortgage Lender?

A reverse mortgage lender is any lender that is approved to offer FHA HECM loans. Not all lenders in the US are authorized to participate, and not all who could be authorized choose to enroll. It is a voluntary program.

What is a Reverse Mortgage?

A reverse mortgage allows you to obtain a loan after your home has been paid off, or to pay off a small remaining mortgage balance. You are able to live in the home and maintain ownership of it, but do not have to make any payments on the loan until it comes due.

What is a Mortgage Insurance Premium (MIP)?

With an adjustable rate reverse mortgage, you can choose to have the lender pay your funds in monthly installments. You can choose to have monthly payments for a set period of time, or you can choose to receive set monthly payments for the rest of your time in the home.

What is a Lifetime Expectancy Set Aside (LESA)?

A lifetime expectancy set aside, or LESA, is an amount of money set aside at the beginning of a loan based on your anticipated life expectancy and ongoing expenses regarding the property. This money could be used to pay for property taxes, for homeowner’s insurance premiums, for homeowner’s association dues, maintenance on the home and more.