AboutYan Ross Expertise Reverse Mortgages are a financial tool available to homeowners of the age of 62 or older. They are not for everyone. Mr. Ross provides responses to questions regarding eligibility, terms, consumer protections, financial requirements, and all other aspects of HUD-sponsored and other private program Reverse Mortgages.
Experience In addition to my legal and general business experience, I have trained with John Bennett, of Home Lending Specialists, the leading and most experienced originator of reverse mortgages in the country. I have mastered both academic and practical aspects of the reverse mortgage business, with special emphasis on consumer protections.
Education/Credentials Author, Certified Home Equity Conversion Mortgage Specialist (CHECMS) course, Institute of Consumer Financial Education (ICFE)
Bachelor of Arts, Princeton University --
Juris Doctor, Yale Law School --
Accredited Educator in numerous professional disciplines
Question QUESTION: Would you please explain & help me to understand better how a "growth rate" that is attached to a line of credit if the value of the home should increase works.
It's confusing to me.
Much appreciated.
ANSWER: Hello, ang!
The "growth rate" feature is available on many Reverse Mortgage loans, such as the HUD-sponsored HECM. This calculated rate is applied to the unused portion of a borrower's line of credit, over time increasing the credit line balance available to the homeowner. It is like a savings account balance increasing due to interest earned.
Assuming you have access to a reverse mortgage calculator, and can get the "credit line available" figure for your home and your circumstances, you will be able to get a general idea of the likely growth in the credit line.
Recent trends in applicable interest rates indicate the expected growth rate would be about 6% per year.
Assuming, for instance, that you were able to access $120,000 from a reverse mortgage on your home after fees and costs, and decided to utilize only $20,000 at closing, you would have an unused credit line of $100,000, which would grow to $106,000 at the end of the first year, and so on, doubling to about $200,000 in about 12 years.
I hope that helps.
You may come back with a follow-up question if you need to.
Good luck!
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QUESTION: Hello Yan,
Gosh, you are so helpful with your complete & easy to understand replies !
There is just so much we need to know about HECM/HUD as they seem to be confusing for the average person , therefore your help is so very much appreciated.
Now, I understand that I should get 3 estimates before making my decision.
Do I need to get this RM here in Connecticut where I reside ?
Can I get the estimates prior to making any kind of commitment ?
Lastly, where do I find 3 reputable Lenders to focus on or do you have some recommendations ?
Many thanks !
Answer Do I need to get this RM here in Connecticut where I reside ?
Since your home is in CT, the lender would have to be licensed to do business there.
Can I get the estimates prior to making any kind of commitment ?
Yes, you should receive specific "good faith estimates" from proposed lenders.
Lastly, where do I find 3 reputable Lenders to focus on or do you have some recommendations ?
I can't recommend specific lenders, but my personal approach would be to stick with name brand organizations, and RM loan officers who have already closed at least 100 RMs (you don't want to be a guinea pig).
