This guide addresses the misconceptions about reverse mortgages for veterans, providing the relevant information to help you make informed decisions. You’ll also learn about the role of the Department of Veteran Affairs in lending programs and what you need to get a reverse mortgage.
There is no such thing as a reverse mortgage for veterans. In other words, a reverse mortgage loan tailored for veterans and backed by the Department of Veterans Affairs (VA) does not exist. Numerous suggestions refer to veterans’ reverse mortgages as a distinct financial concept. However, most of those publications are misleading and, possibly, scams.
The Consumer Finance Protection Bureau (CFPB) has confirmed that the VA does not offer reverse mortgage loans. The agency further highlights that some publications make false promises to veterans about special deals, implying VA approval. Others claim to provide no-payment reverse mortgage loans to entice vulnerable people. This notice proceeds a 2012 press release by CFPB and the Federal Trade Commission (FTC) warning lenders against misleading veterans with non-existing programs.
The Federal Housing Administration (FHA) and VA do not directly offer loans to consumers. Instead, the FHA insures loans and regulates fees, whereas the VA guarantees a portion of loans. Private lenders are responsible for providing the actual loan and securing insurance and guarantees through the government.
Like traditional mortgages, reverse mortgages are lending arrangements that allow homeowners to borrow money using their homes as security. The difference is that the borrower is not required to make monthly repayments. Instead, the lender pays the borrower based on the home’s value and recoups the loan when the borrower permanently vacates the property. In other words, the loan becomes payable when the borrower dies, sells the property or moves out permanently. There are many payment plans, including:
Federal law requires lenders to structure that loan amount so it does not exceed the home’s value. If it does, the borrower will not be responsible for paying the difference. Also, the borrower must undertake an approved counseling program before getting the loan.
There are different reverse mortgages types, but the two common ones are:
Veterans can apply for reverse mortgages the same way other eligible applicants do. There are no added incentives or discounts:
The age requirement for FHA-backed reverse mortgages, like HECMs, is at least 62 years. Others, like proprietary reverse mortgages, may accommodate younger people at least 55 years old.
First, the borrower must be a homeowner. Second, the home used as security for the loan must be their primary residence and have sufficient equity. A primary residence is one that the homeowner lives in for at least six months of the year. Equity is the difference between the property’s value and any debt outstanding on the mortgage.
The property could be a single-family home, townhouse or condominium. Co-ops and multifamily homes with more than four units are disqualified.
The lending process includes a financial assessment and credit check. The financial assessment examines the borrower’s income, assets and monthly expenses to determine their ability to meet the terms. The credit check examines the borrower’s credit activity, there are no minimum credit scores required.
Borrowers must pay homeowners insurance and property taxes. They may also pay mortgage insurance premiums, depending on the loan terms. Like other mortgages, reverse mortgages have closing costs, including fees for origination, appraisal, title search and other third-party services, these costs can be financed into the loan.
There are four VA-backed loan programs, but they are not reverse mortgages. These are:
Here is some additional information on reverse mortgages for veterans that answers common questions:
The VA does not have a reverse mortgage program. Veterans can apply for HECMs or proprietary reverse mortgages following the normal process.
Yes, you can use a reverse mortgage loan to pay off the existing mortgage on your home if there are sufficient funds.
Each type of reverse mortgage has unique benefits. Assess your needs and the eligibility requirements of different programs to choose the option that best fits you.
We pride ourselves on being the leading HECM reverse mortgage company in the country. We are defined by our work ethic, integrity and willingness to educate. Our experienced professionals dedicate time and attention to understanding every situation and developing tailored solutions that suit the client’s needs.
For years, we have helped many eligible homeowners in Florida, Texas, California, Colorado and beyond to secure their retirements with reverse mortgages. We are licensed across multiple states.
Our solutions are flexible and practical, with a relationship-driven purpose at its core. Partnering with Senior Lending Corporation gets you and your family peace of mind. Our knowledgeable and patient team will guide you through the entire process and answer your questions. View our testimonials to learn how we can make a difference in your life.
Senior Lending Corporation helps older homeowners find security and financial stability in retirement. Our professionals can answer your questions and guide you through the reverse mortgage process. The ultimate goal is to help you get the support that suits your needs.
Our team has years of experience in the home equity conversion mortgage and proprietary reverse mortgage industry. We are honest and ethical and provide clients with the correct information to make informed decisions. Call us now at 800-822-1190 if you want to learn more or need guidance. We are ready to help!
