Ron Scott of Bark & Company Realty, Inc., recently interviewed Terry Bivins, a reverse mortgage specialist with Next Generation Financial Services.

Q. Terry, what is a reverse mortgage?

A. It is a program for senior home owners age 62 and over that allows them to access some of the equity in their home, but unlike traditional loans, they never have to make a payment as long as they live there.

Q. How does it get paid back Terry?

Terry Bivins

A. When all the borrowers  are no longer living in the property as their primary residence the loan is due, typically the home is sold, the reverse mortgage balance is paid off and the rest of the proceeds go to the borrower or their estate.

Q. What are the qualifications?

A. That’s the great thing about a reverse mortgage, since you are not making payments, there are no income or credit qualifications.  The loan is based on the homes’  value, the interest rate and their ages.

Q. What if they already have a mortgage, can they still get a reverse mortgage?

A. The reverse mortgage will pay off their existing loan eliminating their mortgage payment but they will still be responsible for paying the taxes, insurance and maintaining the property since they still own the house.

Q. How does the borrower get the money Terry?

Ron Scott

A. They can take a lump sum, receive monthly payments for life, set up a line of credit and draw money as needed or any combination.

Q. How may the money be used?

A. The reverse mortgage converts a dormant asset, the homes’ equity, into a liquid asset that may be used as the homeowner chooses.  It’s their money and it is tax free.

Most often I see existing mortgages being paid off eliminating mortgage payments thus increasing disposable income.  Reverse mortgages are also used for home improvements.

Reverse mortgages may also be used to purchase a new home but let’s leave that discussion for another interview.

Q. Terry, what is your background?

A. I have been in the mortgage business for 28 years and for the past 7 years I have worked exclusively with seniors and reverse mortgages.

Q. How do our readers learn more?

A. Give me a call at 1-877-707-9696, I only need the zip code, date of birth and the estimated home value to create a reverse mortgage proposal.  So, please call 877-707-9696 for a no obligation quote.  I can send them a free CD or DVD on reverse mortgages.  I can also be reached at tbivins@1stmarinerbank.com and my web site is www.reversemortgagenation.com/tbivins.

Next Generation Financial Services is a division of First Mariner Bank that is federally regulated and supervised by the FDIC and Next Generation is an Equal Housing Lender.

Ron Scott of Bark & Company Realty, Inc., recently interviewed Terry Bivins, a reverse mortgage specialist with Next Generation Financial Services.

Q Terry, I recently read that reverse mortgages may now be used to purchase real estate.  Is that true?

A  Yes, reverse mortgages have been around since 1989 but were only for refinancing a seniors’ home.  In 2009 HUD allowed FHA to insure reverse mortgages used to purchase a home.

Q  How does that work?

Terry Bivins

A  A reverse mortgage is for homeowners and home buyers age 62 and over. It allows them to access some of the equity in their home or to use the proceeds to purchase a new home, but unlike traditional loans, they never have to make a payment as long as they live there.

Q  Can you give us a simple example?

A  Sure.  Assuming a person is buying a $400,000 condo in Manatee County they would net after origination fees, closing costs and FHA insurance between $200,000 and $300,000 depending on their age.  They would have to pay the balance from other resources.

Q  So the older you are the more money you can receive with a reverse mortgage.

A.  That’s right. The amount they can receive is based on the age of the youngest borrower, current interest rates, the value or purchase price of the property.

Q  Is there any limit on the size of the loan?  What if they are buying a five million dollar beach front property?

Ron Scott

A  This is a great program but FHA has a current limit of $625,500 on the amount of insurance they will issue.  So in your example the borrower could get a portion of the $625,500 based on the age of the youngest borrower and then have to pay the balance from cash resources.

Q  Can they borrow the difference between the purchase price and the proceeds from the reverse mortgage?

A  No.  You cannot incur any new debt in conjunction with obtaining a reverse mortgage.  I would assume that a senior buying a home in Florida has proceeds from the sale of another property.

Q  Can you use a reverse mortgage to buy a second home or purchase an investment property?

A  No, a reverse mortgage can only be used in conjunction with the borrowers’ primary residence.

Q  What types of properties qualify?

A    Eligible property types include:  single family homes, condos, townhomes, 1-4 unit multi family homes and manufactured homes meeting strict guidelines.

Q. How does it get paid back Terry?

A  When all the borrowers  are no longer living in the property as their primary residence the loan is due. Typically the home is sold, the reverse mortgage balance is paid off and the rest of the proceeds go to the borrower or their estate.  If the owners are deceased and their heir wants to keep the property, they would need to obtain title and then pay off the reverse mortgage balance with cash or obtain their own mortgage.

Q  What are the qualifications?

A.  That’s the great thing about a reverse mortgage, since you are not making payments, there are no income or credit qualifications.  The loan is based on the homes’  value, the interest rate and their ages.  The owner is responsible for paying the taxes, insurance and maintaining the property since they still own the property.

Q  How do our readers learn more?

A.  Give me a call at 1-877-707-9696, I only need the zip code, date of birth and the estimated home value or purchase price to create a reverse mortgage proposal.  So, please call 877-707-9696 for a no obligation quote.  I can send them a free CD or DVD on reverse mortgages.  I can also be reached at tbivins@1stmarinerbank.com and my web site is www.reversemortgagenation.com/tbivins.

Next Generation Financial Services is a division of First Mariner Bank that is federally regulated and supervised by the FDIC and Next Generation is an Equal Housing Lender.