Securing a Georgia Reverse Mortgage

The reverse mortgage is a unique financial tool available to homeowners who are seniors in the state of Georgia. These loans operate in reverse through a payment program that provides income to individuals with equity in their homes. In a reverse mortgage, the lender provides money to you that can be spent on anything you choose.

What is a reverse mortgage?

There are no other mortgage products on the market similar to the reverse mortgage. Instead of reimbursing a lender with monthly mortgage payments, homeowners receive regular funds from the equity built up in their home. These mortgages are only available to seniors over the age of 62 who own homes.

How can reverse mortgage funds be used?

Reverse mortgages can provide the funds you need to pay for medical bills, debt obligations, living expenses, and other costs. These loans convert your home equity into cash, and you can use the income you receive through your reverse mortgage to pay off your current mortgage and other mortgage loans as well.

What types of reverse mortgages exist?

Reverse mortgages have three forms:

• Goverment-insured: FHA HECM (Home Equity Conversion Mortgage).
• Single-purpose: backed by nonprofits or state or local government agencies. 
• Proprietary: backed by private entities.

The most common source is the FHA HECM reverse mortgage, which is insured by the Department of Housing and Urban Development (HUD). This article will focus on HECM reverse mortgages.

Who can get a reverse mortgage?

Homeowners aged 62 and older who own their home outright and have most of their mortgage paid off. If the current mortgage is not paid off, the initial reverse funds or some combination with out-of-pocket cash must be used to deplete the remaining balance. Credit score is not a qualifying factor. 

What costs are associated with a reverse mortgage?

There are several costs associated with securing an HECM reverse mortgage in Georgia, including but not limited to:

• Upfront fees: include the lender's fees, and can be paid from the reverse mortgage funds. This means, however, that the money taken cannot be borrowed back. So a $200,000 reverse mortgage with $16,000 in fees paid via the reverse mortgage funds will leave the homeowner with $184,000. 
• Closing fees: include all the same fees required of a traditional mortgage closing. 
• Reverse mortgage counseling fees: HUD mandates all reverse mortgage homeowners attend reverse mortgage counseling. Fees are in the $100 range but can be waived for lower income seniors. 
• Mortgage insurance: an upfront mortgage insurance premium (MIP) must be paid for reverse mortgage borrowers. It can be as low as 0.5% and as high as 2.5% of the appraised home value, unless the home is over $625,500, in which case the upfront mortgage insurance is calculated by the lender. 

How will I receive my funds?

You can arrange to receive funds from your lender in a number of ways. The payout system is flexible and can be adjusted to fit your financial needs:

• You can receive a portion of the money on a monthly basis.
• You can receive all of the money up front in a lump sum.
• You can arrange to access the funds through a line of credit.
• You can combine any of the above options to create a customized payout arrangement.

Your lender takes control of the equity of your home when you start a reverse mortgage. This equity no longer belongs to you. It is owned by your lender. Your lender is obligated to provide this equity to you in the form of cash through whatever payout arrangement you have chosen.

Does the equity need to be repaid?

Even though your lender will own the equity in your home, they do not own your home and never will, even once the full amount of equity has been depleted. You can live in your home without paying anything for the rest of your life. However, if you choose to move or sell the home, the equity becomes due.

In the event you pass away, ownership of the home will transfer to your heirs. Your heirs will be responsible for paying off the loan.  Federal law ensures that your heirs won’t have to pay more than what the home is worth at the time of the payment, and so heirs often choose to sell the home in order to remunerate the lender in full.

Georgia Reverse Mortgage Lenders

No two lenders that you contact will offer you the same rates and terms on your mortgage. This is true of any mortgage loan type, but it’s especially true of reverse mortgages, which are customized to meet the needs of the individual senior. It’s essential that you conduct as much research as you can to find out what your mortgage options are before you select a lender.

The cost of your reverse mortgage will be incurred through fees paid at the time of closing and through interest deducted from your equity. Make sure you find the lowest mortgage rate on your reverse mortgage loan. Try to identify which lender will offer you the lowest rates, too. If you need more information about the application process, read our reverse mortgage checklist.

Georgia Senior Resources

Georgia's Division of Aging Services list a number of state-sponsored and other programs that enable seniors to live independently in their own homes. Services including nursing care, food delivery, emergecy response, chore maintenance, and more. These offerings are available throughout Georgia, including populous cities like Macon, Savannah, and Atlanta. 

Lenders in: Georgia.