New Reverse Mortgage Financial Assessment Guidelines

Effective April 27, 2015, anyone applying for a reverse mortgage will be required to pass a 'Financial Assessment.'  The intent of these new guidelines is to ensure reverse mortgage borrowers will be able to afford to pay their property taxes and homeowners insurance along with their living expenses.  These changes are designed to protect both HUD and the homeowner.

Maintaining tax and insurance payments has been an ongoing concern of HUD. An estimated 10% of all reverse mortgage borrowers fall in arrears. This is likely attributed to 'forgetfulness' or 'oversight' as opposed to not being able to afford it. Forgetfulness and oversight in the sense that prior to the reverse mortgage, taxes and insurance are included in the mortgage payment and held in escrow, from which they are directly paid. Out-of-site, out-of-mind. Once the mortgage is paid off with a reverse mortgage, the taxes and insurance are only due semi-annually and are the responsibility of the homeowner. This tends to cause the homeowners that haven't set money aside monthly to have to come up with a larger amount of money when they may least expect it. This will be remedied in part by how the 'Life Expectancy Set-Aside' amounts are calculated. It is similar to an escrow account and allows for multiple years of insurance and taxes to be set aside.

There is an expected 10 – 20% decrease in eligibility anticipated. The good news is that the requirements will be less stringent than for a traditional 'forward' mortgage. So, if you've been considering a reverse mortgage, don't be discouraged. A simple phone call will answer your questions. The 'assessment' is not a long process, but computer generated.

In most cases, the advantages of a reverse mortgage far outweigh these new challenges. A reverse mortgage can still eliminate your monthly mortgage payment, free up cash and a allow the homeowner to remain in the safety and comfort of their family home.

For more information or for a FREE, No-Obligation Quote, contact:

Daniel Nicolosi
Hawaii Reverse Mortgage Specialist
Certified Senior Advisor
Harbor Financial Group – Your Aloha Mortgage Solution
700 Bishop Street, Suite 210
Honolulu, HI  96813

You can reach Daniel directly at (808) 799-8218 on Oahu; or Toll Free at 888-423-2468 Neighbor Islands.

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