A Reverse Mortgage is a loan against the equity you have built up in your home that you do not have to pay back for as long as you live there.
Homeowners who are at least 62 years of age and have paid off their mortgages or have small balances left to pay are eligible.
In Illinois Reverse Mortgages are allowed under the Illinois Banking Act that defines a home that you live in, along with the attached property, as a “homestead” (if you own and live in your own residence you may be eligible for a general homestead exemption under the Property Tax Code).
The home that you own and live in must be a single-family dwelling or a two-to-four unit property to be eligible for a Reverse Mortgage. Stand alone houses, townhouses, condominiums (if FHA-approved) and some manufactured homes are eligible. The home has to meet HUD minimum property standards and be in reasonable condition; in some cases, limited repairs to the property can be made after the closing of a Reverse Mortgage.
With a Reverse Mortgage, you can get cash from your home’s equity without having to move or repaying the loan each month. Lenders receive the loan principal, plus interest, when the home is sold. Money remaining from the sale after the lender is paid goes to the homeowner or his or her survivors. If the sale of the home doesn’t result in enough money to pay off the loan, HUD will make up the shortage to the lender through an insurance program all borrows must participate in.
There are several ways you can get the cash from a Reverse Mortgage:
No matter how this loan is paid out to you, the loan typically doesn’t have to be paid back until you die, sell your home, or permanently move out of your home.
The amount you can borrow depends on your age, the interest rate, and the value of your home. For example, at an interest rate of 9% (which is higher than most of today’s current rates) a 65-year-old person could borrow up to 26% of their home’s value, a 75 year old could borrow up to 39%, and an 85 year old up to 56% of their home’s value.
For more information on Reverse Mortgages you may wish to contact the Illinois Department of Financial and Professional Regulation at: 1-217-785-2900, or any of the following websites and phone numbers:
http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm
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Home Affordable Refinance Program (HARP)
Frequently Asked Questions about HARP
HARP is the Refinancing Solution You Need
HARP has been expanded to help more homeowners qualify for refinancing their mortgage—
even those with little or no equity available. With HARP you could take advantage of low interest rates and other refinancing benefits even if the value of your home has declined and you owe more than your home is worth. The questions and answers below will help you better understand how this program can help you.
What is HARP?
HARP stands for the Home Affordable Refinance Program. It was introduced by the Federal Housing Finance Agency (FHFA) and the Department of the Treasury in early 2009 as part of the Obama Administration’s Making Home AffordableÔ program. HARP provides eligible homeowners, who may not otherwise qualify for refinancing because of declining home values, the ability to refinance their mortgage into a lower interest rate and/or more stable mortgage product. The program was enhanced in 2011 to assist more eligible borrowers who could benefit from refinancing their home mortgage.
What does it mean to “refinance” my mortgage?
When you refinance your mortgage, you are applying for a new mortgage, which replaces your current home loan.
What enhancements were made to HARP that may make me eligible now?
There were several changes to HARP, but the primary enhancement removed the limit on the amount that homeowners could be “underwater” (owe more on their mortgage than their home is worth). With that change, many homeowners who were not eligible will now qualify.
Is HARP the only refinance program available?
HARP is one of several refinancing options available to eligible homeowners. But HARP is unique—it’s
the primary refinance program that enables eligible borrowers with little to no equity in their homes to take advantage of low interest rates and other refinancing benefits.
Making Home Affordable is a trademark of the United States Department of the Treasury.
How can I find out whether my loan is owned by Fannie Mae or Freddie Mac?
Only mortgages owned or guaranteed by either Fannie Mae or Freddie Mac are eligible for refinance under the enhanced and expanded provisions of HARP. You can confirm that your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites:
· http://fanniemae.com/loanlookup/
· http://freddiemac.com/mymortgage
What if I have an adjustable-rate mortgage (ARM)?
HARP allows you to replace your adjustable-rate mortgage and many homeowners opt for a more stable fixed-rate mortgage. Every adjustable-rate mortgage is different, but refinancing may still provide you with a lower monthly payment, and allow you to avoid the sometimes large payment increase that comes once your ARM initial rate ends. The stability of a fixed monthly payment will give you security in knowing what you’ll owe every month.
How does the HARP refinance process work?
Call us today at 773-499-6364. One of our mortgage professionals will help you understand how refinancing could benefit you. If you agree that HARP is right for you, we’ll help you through every step of the process.
Where can I learn more?
There is plenty of information about HARP on the Internet, but we recommend visiting www.MakingHomeAffordable.gov, which is the official website of the Administration’s initiative that helps homeowners get mortgage relief through a variety of programs. You may also visit our website at IllinoisFirstMortgage.com
Fannie Mae and Freddie Mac have adopted changes to the Home Affordable Refinance Program (HARP) and you may be eligible to take advantage of these changes. If your mortgage is owned or guaranteed by either Fannie Mae or Freddie Mac, you may be eligible to refinance your mortgage under the enhanced and expanded provisions of HARP. You can determine whether your mortgage is owned by either Fannie Mae or Freddie Mac by checking the following Web sites: http://fanniemae.com/loanlookup/ or http://freddiemac.com/mymortgage.