Real estate Q&A: Reverse mortgage changes looming

QUESTION: I have been thinking about getting a reverse mortgage for my home, but I heard that the rules have changed recently. What are the new rules?

—Arthur

ANSWER: A reverse mortgage is a loan for people age 62 or older. It gives you money from the equity in your home and does not require repayment of the loan until you move, sell the property or pass away. The homeowner is still responsible for property taxes and insurance. Congress recently passed legislation altering the guidelines for the Federal Housing Administration reverse mortgage program, which accounts for most reverse mortgages. The changes will make it harder to qualify for a reverse mortgage but will provide homeowners more protection if they get one.

Previously, borrowers could qualify with no financial assessment, but now senior citizens will need to show they can pay for their taxes and insurance. If the lender feels the borrower is a financial risk, it could still give the loan, but could hold aside a cushion to pay for the taxes and insurance. Also, the program now will set limits on how much cash the borrowers can receive at closing, leaving the rest of the proceeds available later.

In the past, some married couples would leave one spouse off the reverse mortgage to qualify for a higher amount. When that spouse passed away, the surviving spouse would need to either pay the loan in full or face foreclosure. The new rules will require both spouses to be on the loan to avoid this issue, but the change will cause decreased borrowing power for the couple. The changes will begin rolling out the end of September and over the following months, so you may want to start the process now.

Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar.

More in Herald Business Journal

Peoples, HomeStreet banks bump lowest salaries after tax cut

The banks with Snohomish County branches will raise minimum salaries for employees to $15 an hour.

Electroimpact cuts Mukilteo staff by 9 percent

“What we’re missing now is a monster anchor project,” the company’s VP said.

Exotic animals find compassionate care in Bothell (video)

At the Center for Bird and Exotic Animal Medicine, vets treat snakes, hedgehogs and even kangaroos.

How can you tell if you are getting good financial advice?

Assume that it’s still the same buyer-beware market that has always existed.

Amanda Strong (left) tries on an Angel of the Winds Arena hat as she and Courtney Brown hand out gift bags after the renaming ceremony Dec. 13 in Everett. The new name replaces the Xfinity name. (Andy Bronson / Her file)
Angel of the Winds to break ground on $60M casino expansion

“We think we’re on the cusp of becoming a major resort.”

In this Dec. 20, 2017, photo, a clerk reaches to a shelf to pick an item for a customer order at the Amazon Prime warehouse, in New York. (AP Photo/Mark Lennihan, File)
Amazon’s potential HQ2 sites leaves many cities disappointed

And yet, some municipal leaders are looking at the bright side of being rejected.

How do you retrieve an errant Boeing 737 from a muddy slope?

Turkish authorities used cranes to lift a plane that skidded off a runway.

Don’t take economic forecasts to the bank — or the casino

Air travel delays could spur a rebirth of passenger rail service.

Emirates orders 20 more Airbus A380 jumbos, saving program

The Dubai carrier also has options to buy 16 more. The program seems safe until 2029.

Most Read