Frequently Asked Questions

What is a Home Equity Conversion Mortgage (HECM)?
A Reverse Mortgage is a loan that allows people over the age of 62 convert some of their home equity into tax-free cash. With a Reverse Mortgage, clients can choose to receive monthly payments for life, have a growing line of credit or receive a lump sum distribution at closing. The only obligation clients have, is to continue making payments of their property taxes, homeowners insurance and HOA dues if applicable. With a Reverse Mortgage, clients also retain full ownership of their home.

Is it similar to a home equity loan (HELOC)?
Not at all. A HELOC requires borrowers to make monthly payments once they start using it and when their line of credit “resets” (usually within a 5 or 10 year period), you’ll be making larger monthly payments. So why does this happen? There are two periods with HELOCS called the “draw period” and the “repayment period” that determine the amount of monthly payments you’ll be making and the availability of the funds to you. Under the “draw period”, you can borrow from the line of credit as many times as you want and you only make interest-only payments on your loan. The “repayment period” starts once your loan resets and at that time, you won’t be able to borrow anymore money against your HELOC. Not only that, at that time you’ll also have to pay interest and principal which usually means larger monthly payments and what many people call a “payment shock”. If you need to borrow more money when this happens, you need to apply for a new line of credit and qualify for the loan all over again. Lastly, a HELOC can be frozen or terminated at the lender’s discretion if there were to be a crisis like the one we saw during the financial meltdown of 2008. At that time, many banks froze of ended their client’s HELOCS without warning.

A Reverse Mortgage line of credit on the other hand, does not reset since it requires no monthly payments as long as the borrower lives in the house. Furthermore, the Reverse Mortgage Line of Credit is the only Line of Credit that offers a growth feature which means that any unused portion of the line of credit, will grow overtime giving borrowers more access to their home equity by having more money available each year that the line of credit is not used. When the loan becomes due, borrowers or their families are responsible to pay back only the amount that was used and the accrued interest. Since most Reverse Mortgages are federally insured, their line of credit is guaranteed to continue to grow and they won’t have to worry about deadlines to use their line of credit or entering a “repayment period”.
Is a Reverse Mortgage Expensive?
Reverse Mortgage vary from the federally insured HECM to the proprietary Reverse Mortgage, also known as JUMBO Reverse Mortgage. In most cases, the JUMBO Reverse Mortgage has no origination fee and low closing costs while the federally insured Reverse Mortgage has costs that are determined by the value of the home. Generally speaking, the longer you keep a Reverse Mortgage, the lower the loan costs will be.
Can I use a Reverse Mortgage to purchase a home?
Yes. You can use a Reverse Mortgage to purchase a home as long as you make it your primary residence.
Are there limits on how I can use the money?
You can use the Reverse Mortgage any way you want. However, borrowers should be aware that using the money from a Reverse Mortgage to purchase financial products is not advisable and they should always consult with family members and/or their trusted advisors when it comes to financial products. Borrowers also need to make sure that they have the financial means to continue making property tax and homeowners insurance payments.
Why are there no monthly mortgage payments?
The reason there are no mortgage payments with a Reverse Mortgage is that that’s how it was created. In 1987, Congress passed an FHA Insurance Bill called the Home Equity Conversion Mortgage Demonstration, which was a reverse mortgage pilot program to insure reverse mortgages. In it, monthly payments were not required, allowing seniors to defer mortgage payments to the end of the loan which was either when the last surviving borrower passed away, vacated the home, or permanently moved away.
Do you have any special reverse mortgage loan offers currently?
Yes we do! We offer discounts for veterans, first responders, law enforcement officials and their families. Call me for more information.
Is it safe to consider a Reverse Mortgage during the Covid-19 pandemic?
At Lazerus Properties we have taken the initiative to improve our systems to adapt to the COVID-19 pandemic. We offer virtual meetings via Zoom, Skype, and Facetime to adapt to our client’s needs while being able to make full presentations of your options from the comfort of your own home. All you need is a computer, a tablet, or a smartphone to connect with us. We also offer in-person consultations and to ensure your safety, we have adopted all recommendations made by Federal and State authorities for in-person meetings. Contact us for more information.
Are Reverse Mortgage safe?
Are Reverse Mortgage safe?
Yes, they are and in order to make sure you get the best reverse mortgage experience, it is important to understand how they work and what are some of those features that make them safe.

Federally Insured.
One of the program’s biggest protection is that it is insured by the FHA. (Federal Housing Administration). This means that if something were to happen to your lender, The Department of Housing and Urban Development would automatically assume the lender’s obligations towards you under the terms of your reverse mortgage contract, ensuring there is no interruption of your monthly payments, Line of Credit or any other plan you may have chosen at closing. This Mortgage Insurance also protects you and the lender in the case you were to outlive your loan, if the loan balance were to exceed the value of your home or both. In such cases, the Mortgage Insurance Fund would pay the difference to your lender without imposing additional obligations to you. In simpler words, you will never owe more than what the house is worth.Lastly, an FHA Reverse Mortgage while being insured by the Federal Government, is issued and serviced by a lender who makes all the cash advances to the borrower.

Non-recourse feature. Non-recourse feature. Another borrower protection built into the Reverse Mortgage loan is that it is non-recourse in nature. That means that if your Reverse Mortgage ends up exceeding the value of your home, you will never have to repay more than what your home is worth at the time of sale. The non-recourse aspect applies to your estate as well: If you own other properties and have other assets, your home is the only collateral for the loan which means that the lender can’t come after any other assets you leave behind.

Required Counseling. All prospective HECM borrowers are required to first undergo a counseling session through a Department of Housing and Urban Development-approved, third-party counseling agency. The purpose of the counseling is to make sure you understand how the loan works and how it could apply to your particular situation. Counseling sessions also give you the opportunity to ask any questions you might have. Counselors will assess your knowledge of the product before granting a certificate that enables you to move forward in the loan application process. Because counseling is conducted by a third-party agency, you can rest assured you are getting objective information from someone who has your interests at heart.The counseling is meant to educate you so you can make an informed decision.

Cross-selling ban. Reverse mortgage originators are forbidden from “cross-selling” certain financial products, under the Housing and Economic Recovery Act of 2008.
In other words, they’re not allowed to originate a reverse mortgage and then require you to purchase a financial product or insurance investment with them.In addition, reverse mortgage lenders are prohibited from being associated with or participating in selling other sorts of financial or insurance products.