Securing a South Carolina Reverse Mortgage

A South Carolina reverse mortgage can help you secure the income you need to pay for daily living costs and other expenses during retirement.  If you own a home and you’re over 62 years of age, you likely qualify to access your home equity through this specialized loan.

What is a reverse mortgage?

A reverse mortgage allows you to transform the equity you own in your home into spendable cash.  Few other financial instruments allow you to do this.  Your lender essentially buys the equity from you and pays you for it.  You can receive this payment in a number of ways. 

How can reverse mortgage funds be used?

Are you stuck with medical bills, large amounts of debt, or a lack of income?  A reverse mortgage can solve any of these issues by providing you with money that you already own, your home equity, in a liquid form that you can spend.

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 South Carolina, 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 choose to receive the money from your lender in any of the following ways.

• Monthly installments of a predetermined amount.
• A lump sum for the full amount.
• Through a line of credit.
• A combination of two or more of the above forms.

Though your lender owns the equity of your home, the home remains in your name.  A reverse mortgage does not affect the ownership of your home in any way.  Even once the equity is depleted, you can continue living in your home for as long as you want.  You won’t have to pay anything to your lender, and your lender won’t be able to repossess your property to recoup expenses.

Does the equity need to be repaid?

If you move out of your home or sell it, you’ll have to pay your lender back for the amount of equity that the lender owns.  If you remain in your home until you pass away, ownership of the home will transfer to your heirs, who will be responsible for paying back the debt.  This is nothing to worry about, though.  Your heirs can sell the home and pay the lender back using the proceeds from the sale.  The lender is not authorized to collect more money than what the home sells for.  This is true even if your reverse mortgage was for a higher amount.

South Carolina Reverse Mortgage Lenders

You should contact at least four or five lenders in your part of South Carolina before you decide which one to work with.  Why?  It’s simple.  Every lender you contact will be glad to administer your reverse mortgage, but each will charge a different rate than the others.  Find the one that offers the best interest rates and fees.

Fees can stack up fast when you’re taking out a reverse mortgage.  Make sure you find a lender who charges a fair price.  Learn more about this process by reading through our reverse mortgage checklist.

South Carolina Senior Resources

The South Carolina Office on Aging provides a number of resources to seniors looking to maintain their independence while living at home. Programs are available statewide but centers are sparse, and most prominent in Charleston and Columbia. For more information, click the link above to visit the official Office on Aging site. 

Lenders in: South Carolina.