Securing a Nebraska Reverse Mortgage

A Nebraska reverse mortgage allows seniors who live in the state to transform their home equity into a spendable liquid asset.  These mortgages were designed to provide retirees with steady income during the best years of their lives.

What is a reverse mortgage?

Many retirees and elderly homeowners have taken advantage of reverse mortgages in Nebraska.  This popularity makes sense when you understand the way a reverse mortgage works.  In short, a lender purchases the value of the home equity from you and makes payments to you in return.  You can receive the money from your lender in a number of ways, which are outlined below.

How can reverse mortgage funds be used?

The best part of a reverse mortgage is that the money you receive can be spent in any way necessary.  It’s your money.  Now that it’s no longer tied up as an investment in a home, you can apply it to any financial obligations or desires you choose.  

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 Nebraska, 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, and for how long?

You can receive your reverse mortgage money in one of several ways.

• You can choose to receive all of it at once, as a lump sum.  This occurs immediately upon the closure of the loan.
• You can choose to receive it bit by bit in payments each month.
• You can use it as a line of credit and borrow money against your home as needed.

You can combine any of the above options to any extent you want.  For example, you can choose to receive a set amount each month but keep the rest in a credit line.  The choice is up to you.

Even though your lender will own the equity of your home, the title or deed of the home will remain in your name and you will receive payment until equity is depleted. 

Does the equity need to be repaid?

You will have full ownership of the home until the day you pass away or decide to move into a new home.  When either of these events occurs, the loan amount becomes due.

In the event of your passing, your heirs will be obligated to pay back the reverse mortgage.  But this can be easily done by simply selling the home and delivering the funds to the lender.  The law mandates that lenders cannot collect more than what a home is worth at the time of sale, even if the reverse mortgage was taken out for more than this amount.

Nebraska Reverse Mortgage Lenders

A reverse mortgage loan is a very simple loan to take out.  The money is all yours and is already in place.  But finding the right lender can be difficult.  This part of the process will require caution and attentiveness on your part.

Reverse mortgages are not the cheapest loans available on the market.  You’ll have to pay an interest rate on your home equity amount, and lenders will charge you origination fees and closing costs to formulate the loan.  Research multiple lenders in your part of Nebraska and find the one that charges the lowest rates and fees.  This is the lender you should work with.

You can get more information about the application process from our reverse mortgage checklist.

Nebraska Senior Resources

The Nebraska Department of Health and Human Services (DHHS) offers Home Health care to eligible seniors to help them receive medical aid while maintaining their independence while living at home. Other services are also available, including transportation and meal assistance. To learn more about a loved one's or your eligibility for these services, visit the official Nebraska DHHS site in the link above. 

Lenders in: Nebraska.