By Sara Rawlins
LAWRENCEVILLE, Ga. | Let me advise those who are thinking about using their home for its equity, that is, get a reverse mortgage.
There are two types of home equity, a HELOC or HECM.
The HELOC can be obtained by anyone who has equity in their home. They can borrow money against the home, but it has to be paid back in a certain time.
In contrast, the HECM allows you to live in your home until death. The HECM has three or four rules that a person must follow.
- The homeowner taking out the HECM must be age 62.
- The homeowner must be able to pay the home insurance.
- The homeowner must be current in paying the property taxes.
- The Homeowner’s Association dues must be current. (I don’t live in an area with such an association.)
Searching for information, I went online looking for a company that does reverse mortgages. There are many. You must be vigilant and ensure such a company is backed by government guarantees.
A gentleman who works for a reverse mortgage company in Alabama was my guide. We kept in touch via email and phone. He is what is called the “originator” of the reverse mortgage. He sent me a package via email of what my home was valued at, an amortization chart based on the value of the home, numerous graphs showing growth on money, the value of the property, the annual percentage rate, and what the total estimated settlement cost I would receive after all the fees were paid. They advise you on what you are willing to spend. There is also a required home appraisal fee that is out of pocket. If they find a problem with your home, you are granted a year to fix it, but money will be withheld until the problem is corrected.
There are a couple of things you must pay for out of pocket before you get started. One of them is counseling about the mortgage. The fee for counseling was $600, which included the home appraisal. There is one more fee, the originating fee, which was $5,000 and included at the settlement.
We had two problems. One we fixed ourselves to ensure that the closing would go through. The other we could have waited because you are given a year to fix it, but we decided after closing to fix the second problem and got reimbursed for the fix.
Then there was the closing. A notary came to our house with his own printer and cell phone with all the documents to be signed by us and notarized by him. I opted for him to email me copies of all the documents we signed instead of printing 240 pages! He stuffed the pages in a FEDEX package and off they went.
I’m 71 and Jeff is 72 and we are both retired. I retired from Gwinnett Medical Center before it became Northside and Jeff retired from the phone company after AT&T took over and before they started using sub-contractors.. We will have money without struggling as well as pay off some of our high-yield bills.
Would I do this again, yes. Now I don’t have to worry about our children having to sell our house. All they have to worry about is what to do with all our worldly possessions.
Estate sale anybody?
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