If you’re a homeowner aged 62 or older, a reverse mortgage from Quicken Loans may help provide financial flexibility and peace of mind in retirement But how exactly does a reverse mortgage work, and is it the right choice for you? In this comprehensive guide, we’ll walk through all the key details about Quicken Loans reverse mortgages so you can make an informed decision
What is a Reverse Mortgage from Quicken Loans?
A reverse mortgage allows senior homeowners to tap into some of the equity they’ve built up in their home over the years. With a regular mortgage, you make monthly payments to the lender. A reverse mortgage works in reverse – the lender makes payments to you.
Specifically, a reverse mortgage from Quicken Loans provides seniors with a lump sum, monthly payments, or a line of credit using their home equity as collateral. You don’t have to repay the loan as long as you continue living in the home When the home is sold or you move out, the loan must be repaid
Quicken Loans, one of the largest mortgage lenders in America, offers reverse mortgages through its affiliate One Reverse Mortgage. These loans are regulated by the U.S. Department of Housing and Urban Development (HUD).
##Reverse Mortgage Eligibility Requirements
To qualify for a reverse mortgage from Quicken Loans, you must:
- Be at least 62 years old
- Own your home outright or have a low mortgage balance
- Live in the home as your primary residence
- Not be delinquent on any federal debt
- Undergo financial assessment and counseling
The home itself must also meet certain criteria in terms of condition, value, and loan limits. Investment properties do not qualify for reverse mortgages.
How Does a Quicken Loans Reverse Mortgage Work?
With a reverse mortgage from Quicken Loans, you convert a portion of your home’s equity into cash while retaining ownership of the home. Here’s a closer look at how these loans work:
- You receive funds as a lump sum, monthly payments, or a line of credit
- Interest accrues on the loan and is added to the balance
- You continue paying property taxes, insurance, and maintenance costs
- No repayment is due until you move, sell the home, or pass away
- Upon repayment, remaining equity goes to you or your heirs
Importantly, Quicken Loans reverse mortgages are non-recourse loans, meaning the amount owed will never exceed the value of the home even if the loan balance grows larger than the home’s value.
What Types of Reverse Mortgages Does Quicken Loans Offer?
Quicken Loans offers a few different types of reverse mortgage products:
Home Equity Conversion Mortgage (HECM) – The most common type of reverse mortgage, insured by HUD. Allows you to borrow up to 65% of your home’s appraised value.
Jumbo Reverse Mortgage – For luxury homes worth over $970,800, with customized loan terms and no HUD insurance.
Single-Purpose Reverse Mortgage – Used for a specific purpose like home repairs. Offered by nonprofits and state/local agencies.
Proprietary Reverse Mortgage – Private loan not insured by HUD, with higher lending limits than HECM loans.
The experts at Quicken Loans can help you determine which loan best suits your financial needs and retirement goals.
What Are the Costs of a Quicken Loans Reverse Mortgage?
Like any mortgage, you’ll pay certain fees and closing costs to obtain a reverse mortgage from Quicken Loans:
- Origination fee – Up to $6,000
- Mortgage insurance premium – 2% of the loan amount
- Closing costs – Appraisal, inspections, etc.
- Servicing fees – Charged annually for account administration
- Interest – Accrues on loan balance each month
Closing costs for a reverse mortgage are typically higher than a traditional mortgage. However, these can often be financed into the loan amount.
Pros and Cons of Reverse Mortgages from Quicken Loans
Reverse mortgages offer several benefits but also come with some drawbacks to consider:
Pros
- Generate cash from home equity without monthly repayments
- Continue living in your home for life
- Receive tenure or term monthly payments if you wish
- Use funds to pay off existing mortgage debt
- Non-recourse loan protects you if home value declines
Cons
- Upfront costs and fees can be high
- Interest accumulation reduces equity in your home
- Loan limits may fall short of your financial needs
- Prepayment penalties may apply if you pay off early
- Heirs may inherit less or have to sell home to pay off loan
As you can see, reverse mortgages involve a tradeoff between generating cash from your home equity today versus preserving equity for the future. Consider your goals and discuss the pros and cons with family members before deciding.
How Can You Use Reverse Mortgage Funds from Quicken Loans?
A big advantage of reverse mortgages from Quicken Loans is flexibility. You can use the funds however you wish, including:
- Paying off your existing forward mortgage
- Covering healthcare/in-home care costs
- Funding home improvements
- Paying property taxes and insurance
- Building financial safety net
- Supplementing retirement income
- Taking dream vacations
- Helping grandkids with college costs
With the lump sum or line of credit options, you have total control over how you allocate the funds within your budget.
What Happens When a Quicken Loans Reverse Mortgage Comes Due?
You do not need to repay your reverse mortgage from Quicken Loans as long as you continue living in the home as your primary residence. The loan only comes due if:
- You sell the home or move out permanently
- The last remaining borrower passes away
- You default on property taxes, insurance, or maintenance
At that point, you or your heirs can either:
- Repay the loan in full + accrued interest
- Sell the home and use proceeds to repay the loan
- Sign over title to the lender in lieu of repayment
With a HECM reverse mortgage, you will never owe more than the appraised value of the home, even if the loan balance exceeds this amount.
Alternatives to a Reverse Mortgage from Quicken Loans
While reverse mortgages provide a way to generate cash from your home equity, there are a few alternatives to consider as well:
- Home equity loan – Repaid in installments so your heirs inherit the home
- Home equity line of credit (HELOC) – Access funds as needed rather than upfront
- Downsize – Sell your current home and buy a cheaper property
- Take in renters – Generate income from extra bedrooms
- Cash-out refinance – Tap equity while keeping forward mortgage
Discuss these options with financial and legal advisors to see if they may better fit your needs.
The Bottom Line on Reverse Mortgages from Quicken Loans
At the end of the day, reverse mortgages can be useful financial tools for some retirees but aren’t right for everyone. By providing tax-free cash from your home equity, they offer retirement security and flexibility. However, it comes at the cost of reduced equity and inheritance.
Weight the pros and cons carefully based on your financial situation. Consult with loved ones who may be impacted. And compare reverse mortgages from Quicken Loans to alternative options before deciding. With proper planning and realistic expectations, a reverse mortgage could help you enjoy your retirement years to the fullest.
How does a reverse mortgage work?
You can apply for a reverse mortgage based on your home equity if you are at least 62 years old. If you receive the loan, the financial institution will provide funds in exchange for your agreement to pay back any money you borrow in a lump sum.
Most reverse mortgages are known as Home Equity Conversion Mortgages (HECM) and can pay out funds in any one of the following ways:
- a lump sum, giving you all the cash at once
- an ongoing annuity, giving you monthly payments
- term payments, giving you regular payments for a limited time
- a line of credit you can borrow from, up to a certain limit
- monthly payments plus a line of credit
- term payments plus a line of credit
You can keep living in your home, and you can use the cash however you like. Many retirees use a reverse mortgage to supplement their retirement income, for example, or to help pay for unexpected medical expenses.
Plus, because it’s a loan, the cash is not considered income by the Internal Revenue Service, so you won’t have to pay taxes on the funds you receive.
Although you don’t have to make payments, interest will still accrue over the life of the loan, meaning that you will owe more on the loan over time. In other words, you’ll eventually have to pay back more cash than you received.
There are federal regulations in place to make sure that your estate won’t end up owing more money than the value of the home, protecting your heirs in case the housing market drops, but beware of reverse mortgage scams that are not insured by the Federal Housing Authority.
Like any other home loan, a reverse mortgage will require you to keep paying your property taxes, maintain a home insurance policy, and keep up with maintenance on your home to protect its value.
How to use a reverse mortgage calculator
A reverse mortgage calculator is a tool to help you estimate the size of the loan for which you could potentially qualify.
Before starting, you’ll need the following information:
- the age of the youngest borrower
- the home’s value
- the home’s location
- your mortgage balance
A reverse mortgage calculator can give you an idea of how much you could potentially borrow and at what interest rate. However, remember that a calculator will only give you a vague estimate, at best, and that it will not include closing costs.
A reverse mortgage calculator also is not a guarantee that your application will be accepted, and it won’t lay out the terms of any reverse mortgage you might apply for.
You’ll need to talk with a reputable reverse mortgage lender to explore the variety of payment structures available and which plan best fits your needs.
Keep in mind that you can only take out a reverse mortgage on your primary residence. If you don’t qualify for a reverse mortgage, don’t like the terms of a reverse mortgage, or want to take advantage of your equity in a second home or investment property, there are other alternatives to explore.
For example, home equity loans and home equity lines of credit (HELOC) also use your home equity to secure a loan.
A home equity loan lets you borrow cash and repay it with fixed monthly payments while a HELOC lets you draw a line of credit over a set period before you’re required to pay. Both options carry the risk of foreclosure if you miss payments, but there is no age limit.
Cash-out refinancing lets you take out a new mortgage on a property for more than you currently owe. This will probably either extend or raise your current monthly payments (or both), but that also depends on the structure of the two mortgages. If your original mortgage has a high interest rate, a cash-out refinance could be an advantageous choice.
Finally, remember that selling your home is another alternative. If you’re approaching retirement and plan on moving to a continuing care retirement community (CCRC), selling your home lets you keep all your equity, which can help pay any lump-sum entrance fee to your new community.
Should We Use A Reverse Mortgage To Enjoy Retirement?
FAQ
What is the negative side of a reverse mortgage?
Does Rocket offer a reverse mortgage?
What is the monthly payment on a reverse mortgage?
What is the current reverse mortgage interest rate?
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Fixed Rate
|
Adjustable Rate
|
Lending Limit
|
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8.990% (9.075% APR)
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11.825% (6.625 Margin)
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$4,000,000
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9.690% (9.775% APR)
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11.950% (6.750 Margin)
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$4,000,000
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9.990% (10.546% APR)
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12.075% (6.875 Margin)
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$4,000,000
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What is a reverse mortgage?
A reverse mortgage is a loan that allows homeowners who are 62 or older to borrow against a portion of the equity in their home. A reverse mortgage works differently than a traditional mortgage loan, though. Instead of making payments to your lender, your lender will make a payment to you.
Does Quicken offer a reverse mortgage?
Quicken’s One Reverse Mortgage company continues to be prominent in the reverse mortgage space. Recently, the company announced the launch of a proprietary reverse mortgage, which it offers in addition to the Home Equity Conversion Mortgage product insured by the Federal Housing Administration.
Is quicken a broker or a lender?
Quicken is a registered service mark of Rocket Mortgage, LLC, used under license by LMB OpCo QuickenCompare, a LMB Mortgage Services, Inc. company, is not acting as a lender or broker. The information provided by you to QuickenCompare is not an application for a mortgage loan, nor is it used to pre-qualify you with any lender.
Who is the best reverse mortgage lender?
One Reverse Mortgage, operated by national lender Quicken Loans, holds a steady place among the top reverse mortgage lenders by volume. Quicken entered the reverse mortgage market when it purchased One Reverse Mortgage in 2008 for an undisclosed sum.