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Securing a Idaho Reverse Mortgage

If you’re a senior in Idaho, you have a unique opportunity to secure a steady stream of retirement income for yourself.  An Idaho reverse mortgage can provide you with the funds you need to keep up a healthy lifestyle without leaving or selling your home.

What is a reverse mortgage?

Reverse mortgages enable lenders to pay you monthly or in a lump sum via your own home equity, leaving you debt free and financially independent during your retirement. You must be 62 or older in order to take advantage of this loan type. You must own a home and have some equity stored in it. But if you meet these qualifications, there’s little that will keep you from getting a reverse mortgage in Idaho.

How can reverse mortgage funds be used?

The funds you receive from your reverse mortgage can be spent in any way that you choose. It’s your money. Many choose to spend their reverse mortgage money on medical expenses, vacations, other debt, or simply day-to-day living. You can even use the reverse mortgage to pay off your current mortgage and to make a down payment on a new home. 

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 Idaho, 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 elect to receive your funds in a number of ways:

  • You can receive it all at once, as a lump sum payment.
  • You can receive a set portion of it each month as a steady income stream.
  • You can spend it as you need it through a credit line.

If none of these is appealing, you can arrange your own method with your lender. Reverse mortgages are highly customizable.

Does the equity need to be repaid?

You won’t have to pay back your mortgage equity at all unless you want to move or sell. Your lender takes over the ownership of your home equity when you take out a reverse mortgage, but they will never own your home, and so even after equity depletes you may continue living in the home without any cost.

In the event a reverse mortgage homeowner passes away, whoever inherits the home will also inherit the debt. Heirs may either sell the home and use the proceeds to pay off the reverse mortgage or refinance the reverse mortgage into a standard mortgage and pay it off over time while living in the home. The government has mandated that lenders cannot collect debt beyond the home value, which protects heirs from taking on any debt a home sale cannot cover.

Idaho Reverse Mortgage Lenders

While a reverse mortgage simply transforms your home equity into spendable cash, you will need to pay some fees and interest to take out the loan. Find a lender to work with who won’t charge you too much. Compare mortgage rates offered by multiple lenders in your part of Idaho to find the best reverse mortgage rates available.

It’s also important to compare the fees that different lenders charge. The fees are where they get you. Identify which lender offers the lowest origination fee and closing costs. You can get started researching lenders by filling out the form at the top of this page. Read our reverse mortgage checklist to get additional information on finding lenders and applying.

Idaho Senior Resources

The Idaho Commission on Aging provides a number of resources for seniors looking to remain in their homes while maintaning utmost independence. Services range from nutrition and wellness, to transportation, disability services, legal aid, caregivers, and more. There are no restrictions on area, so these services are available from Twin Falls, to Boise, and Coeur D'Alene.

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