Securing a Virginia Reverse Mortgage

If you’re a senior in the state of Virginia and you want to develop a stream of income to live on during the best years of your life, retirement, the Virginia reverse mortgage loan option can allow you to alter your own home equity into a form that is secure and spendable while keeping you financially independent.

What is a reverse mortgage?

When you take out a reverse mortgage, your lender assumes ownership of your home equity and pays you for it in spendable cash.  You don’t have to worry about losing your home or paying the loan back.  The money is your money.

How can reverse mortgage funds be used?

Do you simply need money to live on from day to day?  Are you facing rising medical costs?   Or do you simply want to take a nice vacation or finance the purchase of a vacation home?  Any of these aspirations can be accomplished securely and efficiently with money from your own home equity.

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 Virginia, 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?

In a reverse mortgage, your lender purchases your home equity from you and pays you for it in cash.  You can arrange to receive this money in a number of ways.

• You can get it as a lump sum.
• You can get it in monthly installments, like income.
• You can get it in whatever amount you need, when you need it, through a credit line.

If none of these options fits your financial needs just right, you can customize your own unique payout plan with your lender by combining any of the above choices.

Your lender takes over more and more of the equity of your home as the funds are paid out to you.  But you don’t need to worry about losing your home.  This is a concern that many seniors have about reverse mortgages.  Reverse mortgages are different than other mortgages.  Your lender cannot demand repayment from you.  Repayment isn’t part of the process at all.

Does the equity need to be repaid?

You don’t have to pay back your mortgage unless you move into a new home, sell your current home, or pass away.  When you pass away, the heir who inherits your home is responsible for paying off the reverse mortgage debt.  Most heirs choose to sell the homes they inherit in order to accomplish this.  The lender cannot collect more debt than what the home sells for at this time, which ensures that your heirs won’t have to pay for any debt that isn’t theirs beyond the value of the home.

Virginia Reverse Mortgage Lenders

No two lenders provide the same reverse mortgage loan package.  Each lender will charge you different fees and offer different mortgage rates.  It’s up to you to find the best deal available in your part of Virginia.

Contact as many lenders as you can and ask for price quotes.  Lenders will be glad to provide this information to you, because they know it could lead to a loan.  Once you’ve received these quotes, decide which lender to work with and go from there.  If you want to get started on this process today, fill out the form at the top of this page and we’ll match you with up to four qualified lenders in your area who can service your reverse mortgage.

You can also read through our reverse mortgage checklist to learn more about the process of finding a lender and applying for a mortgage.

Virginia Senior Resources

Virginia's Division for the Aging provides a list of area agencies that were built to assist seniors maintain their independence at home. Programs include meal, transportation, caregiver, and health assistance, and agencies are in Arlington, Urbanna, Marion, Fairfax, and many other cities. To find an agency near you, consult the Division for the Aging area map.

Lenders in: Virginia.