Ask the Expert
The Reverse Mortgage Times is proud to announce that Brian Cooper, a nationally recognized reverse mortgage expert, has agreed to be the moderator of “Ask the Expert”. Brian has been featured on numerous radio and television talk shows as a reverse mortgage expert/advisor.
BRIAN COOPER
THE FORUM
Ritu K. (Atlanta, GE)
Question: I have sufficient cash to meet my daily living expenses but my financial advisor suggested I look into a reverse mortgage for estate planning. I thought reverse mortgages were more for “cash-poor” seniors?
Answer from Brian Cooper: Even though some seniors may have a greater need than others for the cash or monthly income, a Reverse Mortgage can also be an excellent financial or estate planning tool to enhance the quality of life and/or to better manage our assets.
Sally L.
Question: What are the biggest advantages of a reverse mortgage?
Answer from Brian Cooper: There are many…but here are a few of the most significant:
1. Remain Independent. A Reverse Mortgage allows you to remain in your home and retain homeownership.
2. Stay in your home. It allows you to remain in your home and retain homeownership.
3. No monthly mortgage payments. You need not pay back the reverse mortgage loan nor make any monthly mortgage payments until you permanently move out of the home.
4. Tax-free money. Because the money you receive from a Reverse Mortgage is not considered income, it is tax-free and should not affect your Social Security or Medicare benefits (consult your tax advisor).
5. Freedom and flexibility. The money you get from a Reverse Mortgage is yours to use in any way you choose.
Juan E.
Question: Is there a choice how I receive the cash from my reverse mortgage?
Answer from Brian Cooper: Yes! With most Reverse Mortgages, you have a wide range of payment options, one of which should be ideal to meet your financial needs.
1. You can choose to receive your money all at once, as a lump sum.
2. You can receive equal monthly payments as long as one of the borrowers lives and continues to occupy the property as a principal residence.
3. You can choose to receive equal monthly payments for a fixed period of months.
4. You can get a line of credit which allows you to take funds at times and in amounts of your choosing until the line of credit is exhausted. This is the most popular option which is chosen by more than 60% of all Reverse Mortgage borrowers.
5. You can opt for a combination of the line of credit with monthly payments for as long as the borrower remains in the home.
6. You can choose a combination of the above.
Laura W. (Arcadia, CA)
Question:
Are all reverse mortgages the same or are there different types?
Answer from Brian Cooper: There are three basic types of Reverse Mortgages:
1. Federally-insured Reverse Mortgages. Known as Home Equity Conversion Mortgages (HECM), they are insured by the U.S. Department of Housing and Urban Development (HUD). They are widely available, have no income requirements, and can be used for any purpose.
2. Government-sponsored Reverse Mortgages. A Home Keeper is Fannie Mae’s conventional market alternative to the Home Equity Conversion Mortgage (HECM). It is a government-sponsored enterprise program and works like a HECM loan in many ways. However, a Home Keeper Reverse Mortgage addresses a few needs that are not met by HECM loans, such as individuals with higher property values, condominium owners, and seniors wishing to use a reverse mortgage to purchase a new home.
3. Proprietary Reverse Mortgages. These are private loans with unique features that appeal to certain kinds of borrowers. An example of such Reverse Mortgages, which are backed by the companies that develop them, is the Cash Account Plan.
Bob W. (Portland, OR)
Question: How much cash will I have to come up with to cover origination fees and other closing costs?
Answer from Brian Cooper: One of the real benefits of a Reverse Mortgage is that you can use the money you get from your home’s equity to pay for the various fees that are part of the loan costs overall. The costs are simply added to your loan balance, and you pay them back, plus interest, when the loan becomes due—that is when the last surviving borrower permanently moves out of the home or passes away. The upfront costs are typically the appraisal which costs between $300-$450.
Matt B. (Baltimore, MD)
Question: What is “TALC” and why should I know about it?
Answer from Brian Cooper: TALC is short for “Total Annual Loan Cost.” It combines all of the costs of a Reverse Mortgage into a single annual average rate and can be very useful when comparing one type of Reverse Mortgage to another. If you are considering a Reverse Mortgage, be sure to ask the Reverse Mortgage Specialist to explain the TALC rates for the various Reverse Mortgage Products.
Michelle K.
Question: I understand that I must meet with an unbiased counselor before completing my reverse mortgage application. What does that accomplish?
Answer from Brian Cooper: This is a federally mandated feature of the Reverse Mortgage process and is designed for your protection. The counselor, who is from an independent government-approved housing counseling agency, explains in detail the pro’s and con’s of all your Reverse Mortgage alternatives. He or she will discuss a Reverse Mortgage’s costs and financial implications, should tell you about any government or nonprofit programs for which you may qualify, and advise you on any proprietary Reverse Mortgages that may be available in your area.
Mitch F. (Los Angeles, CA)
Question: Are reverse mortgages safe?
Answer from Brian Cooper: Reverse Mortgages are insured by the US. Department of Housing and Urban Development and Fannie Mae. Payments to borrowers are guaranteed by the U.S. Government. These loans are only available through HUD approved lenders and independent HUD counseling is required prior to application.
