The preceding “Terms to Know” articles have laid a firm foundation for your understanding the reverse mortgage world lingo, but this final installment of this series will go over a number of terms commonly used to describe the process.
Origination refers to the entire process of preparing the documents and setting up the mortgage. It will include an Appraisal. The Appraisal is the estimate of a house’s market value, or how much it would sell for if put on the market. The terms Appreciation and Depreciation mean what they sound like, that is, the increase or decrease of the value of a home at the time an assessment is done.
Condemnation is unlikely to come into your inquiry around a reverse mortgage for your home, however it is often in the appraisal field of terms. Condemnation is either the government taking private property for public use implying right of the eminent domain or it is a court action saying a property is unfit for use.
The Home Value Limit denotes the largest value in the reverse mortgage program of the home that can be used to decide what the loan advances to the borrower could be. A TALC rate means Total Annual Loan Cost. It is an annual percentage cost of a reverse mortgage. Unlike the Annual Percentage Rate (APR), which takes into account only the finance charges, the TALC rate considers all costs.
If all goes well, the Origination goes into the Closing. The Closing is a meeting to seal the deal. All the documents are signed and the mortgage begins at this moment. Even though the mortgage begins upon signing there is a Right of Rescission to protect the borrower. It gives them the right to cancel the home loan so long as it is within three business days of the closing.
Servicing happens after the closing. It is the administration of everything about the loan and includes the keeping of loan records and the sending of statements.
Reverse mortgages are available to seniors 62 and over, including married couples. The funds can be accessed in a variety of ways including monthly installments, a line of credit, a lump sum, and to purchase a home. Homeowners with a reverse mortgage will be able to stay in the home as long as they desire and the will NEVER have a loan payment until the last borrower permanently leaves the residence.
Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington. Contact Janis and learn if reverse mortgage is right for you.