Connecticut Reverse Mortgages

What is a reverse mortgage?

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It is a mortgage designed to allow people over 62 who have equity in their homes to take that equity out and use for almost any purpose. [Back to Top]

How is a reverse mortgage different from a regular mortgage?

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A reverse mortgage does not require monthly payments like a conventional loan. Instead the principal amount of the mortgage grows monthly. In general, that principal amount is paid off when the homeowners pass away, sell their property or move. [Back to Top]

How do I get paid?

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Borrowers can choose to take their money by:

• Monthly payments
• Lump sum
• Line of credit
• Home repair, or
• A combination of the above

Does the lender take my home?

No, a reverse mortgage is merely a loan against the home. The title remains in the borrowers’ name.

When the loan is over, you or your heirs must repay all of your cash advances plus interest.

Lenders don't want your house; they want repayment. [Back to Top]

 

What will I be responsible for?

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You are still responsible for paying your property taxes and homeowner insurance and for making property repairs.

When title to your property passes from you either through your estate or otherwise, the principal amount you borrowed, plus interest, must be repaid. The leftover equity passes on per the borrowers’ will or instructions. [Back to Top]

 

Financing: How do I pay for the loan?

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You can use the money you get from a reverse mortgage to pay the various fees that are charged on the loan. This is called "financing" the loan costs. The costs are added to your loan balance, and you pay them back plus interest when the loan is over. [Back to Top]

 

What interest rate is charged on the loan?

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US Treasury Securities adjusted to a constant maturity of one year plus 1.5%. [Back to Top]

 

Probate: What happens when I die?

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With a reverse mortgage, you remain the owner of your home just like when you had a forward mortgage. Just like a regular mortgage, your estate will likely sell your home, payoff the mortgage and distribute the remainder to your estate and heirs. [Back to Top]

 

Loan Amounts: How much money can I get?

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The amount of money you can get depends most on the specific reverse mortgage plan or program you select. It also depends on the kind of cash advances you choose. Some reverse mortgages cost a lot more than others, and this reduces the amount of cash you can get from them.

Within each loan program, the amount you can get generally depend on your age, the current interest rate, your home's value and where you live. Reverse Mortgage Calculator. [Back to Top]

 

Current Mortgage:

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Reverse mortgages generally must be "first" mortgages, that is, they must be the primary debt against your home. [Back to Top]

 

Debt Limit

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The debt you owe on a reverse mortgage equals all the loan advances you receive (including any you used to finance the loan or to pay off prior debt), plus all the interest that is added to your loan balance. If that amount is less than your home is worth when you pay back the loan, then you (or your estate) keep whatever amount is left over.

Your estate will not be required to pay debt beyond the fair market value of your home because you buy “mortgage insurance” as part of your closing costs. For example, say your home is worth $100 in 2004 when you take out a reverse mortgage for $50. If your debt increase to $110.
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Repayment

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All reverse mortgages are due and payable when the last surviving borrower dies, sells the home, or permanently moves out of the home. (Typically, a "permanent move" means that neither you nor any other co-borrower has lived in your home for one continuous year.) [Back to Top]

 

Right to Cancel: What if I change my mind?

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After closing a reverse mortgage, you have three days to reconsider your decision and may cancel the loan without penalty. [Back to Top]

 

For more information, please contact us for an appointment.