Securing a West Virginia Reverse Mortgage

One of the most useful financial instruments available to seniors in the state of West Virginia is the West Virginia reverse mortgage.  A reverse mortgage is a loan taken out by a retiree or elderly homeowner against equity that has been built up in the individual’s home.  This loan converts equity into income, something few financial products do.

What is a reverse mortgage?

As a reverse mortgage runs its course, your lender takes over more and more of the equity in your home and pays you cash for it. 

How can reverse mortgage funds be used?

This cash can be spent on anything you need to spend it on, including medical bills, vacations, the down payment on a new home, other debt expenses, and daily living costs.  The money is all your money from the very beginning.

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 West 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?

You can choose from one of the following methods of income delivery.  Your lender will provide your money to you in one of these ways, according to your choice.

• All at once as soon as the loan goes through.  This lump sum option is best for those who don’t have much equity and simply want to take over managing their investments themselves.
• In a credit line, bit by bit, as you need it.  You don’t have to pay back the money you’re borrowing through this credit line, just like you don’t have to pay back the money you borrow through any other method.
• In monthly installments of a predetermined amount.  These payments function like tax free income.

You can also combine any of the above options to create your own unique payout model.

Your home remains titled or deeded to you during and after the reverse mortgage.  You never have to give up your home to your lender under any circumstances.  This is one of the primary benefits of the reverse mortgage structure.  Your lender owns only the equity in your home and not the home itself.  This allows you to continue living in the home as long as you want to without paying anything back to your lender until you move.

Does the equity need to be repaid?

You do not have to repay the equity unless you sell the home or pass away. If you choose to spend your life in the home, your heirs will inherit the debt after your passing. At this time, the reverse mortgage debt must be repaid. This is typically done by selling off the home. The government has established regulations that ensure that your heirs won’t have to pay back more than what the home sells for.

West Virginia Reverse Mortgage Lenders

West Virginia is home to many retirees and many mortgage lenders.  If you want to take out a reverse mortgage, you should get in touch with a lender near you who can service your loan.  But don’t simply work with the first lender you contact.  Compare different lenders.  Find out what fees they charge.  The rates and fees can add up to a hefty expenses on a reverse mortgage if you’re not careful.

To learn more about how to take out a reverse mortgage, check out our reverse mortgage checklist.

West Virginia Senior Resources

The West Virginia Bureau of Senior Resources in Charleston has a Help at Home page listing a number of services available to qualifying seniors that enable participants to continue living indepedently at home. Medicaid and Alzheimer's assistance number among them. Visit the site by clicking the link above to see if any services could be beneficial to you or a loved one. 

Lenders in: West Virginia.