Retirement Funding Solutions
It’s no secret that most Americans don’t save enough to fully cover retirement expenses, but many of us have equity in our homes. For seniors who own their homes outright or have paid off most of their mortgage, a home equity conversion mortgage (HECM) or “reverse mortgage,” can free up equity to pay for post-retirement expenses, including using the proceeds to purchase a downsized home or to buy into a retirement community.
Retirement Funding Solutions (www.rfslends.com) is a San Diego-based lender currently licensed to offer reverse mortgage loans in 39 states. The company launched its HECM offerings in early 2015 as a division of mortgage-lender Synergy One.
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Retirement Funding Solutions offers several calculators on its web site to help prospective borrowers figure out how much money they might receive from a reverse-mortgage loan, how such a loan can affect the borrower’s long-term financial outlook, and how much money they might receive through an HECM for Purchase loan to buy a smaller house.
Because RFS is a division of an FHA-approved lender, the company is authorized to offer FHA Home Equity Conversion Mortgage loans; these loans require prospective borrowers to meet with a counselor to fully explain the program and its requirements.
RFS’ parent company, Synergy One Lending, has an A+ rating with the Better Business Bureau and has been BBB-accredited since March 2015.
RFS services are not yet available in all states. You can check the company’s licensing map here for the latest updates on states RFS serves and those were the company is not yet licensed.
Regardless of lender, the money received from a reverse mortgage may affect the homeowner’s eligibility for income-based programs such as Medicaid; review your state’s policies and your personal situation carefully before making a borrowing decision. Reverse mortgage income doesn’t usually affect Social Security benefits or Medicare coverage, but it’s a good idea to verify that before taking out a loan.
HECM rules dictate that the homeowner/borrower must stay current on property taxes, insurance, and home maintenance in order to stay in the home after the loan is made.
There are several fees that will vary based on the loan amount and type. For reference, the government’s outline of HECM costs includes upfront and yearly mortgage insurance premiums, an origination fee up to $6,000 paid to the lender, a monthly servicing fee of up to $35 paid to the lender, and 3rd-party costs related to loan approval such as title searches, taxes, appraisal costs, and property inspections. Borrowers may be able to roll some of these costs into the loan.
Homeowners age 62 and older who want to access the equity they’ve built in their homes to pay for senior care or other post-retirement expenses; reverse-mortgage seekers who want to work with a VA- and FHA-approved lender; homeowners who thoroughly understand the details and responsibilities of a reverse mortgage.