Reverse Mortgage
What Is A Reverse Mortgage And Other Frequently Asked Questions
If you are 62 or older, a reverse mortgage is a great way to take advantage of the equity in your home without having to sell your home, and eliminate your monthly mortgage payment.
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What is a reverse mortgage?
A reverse mortgage loan is different than a traditional mortgage. With a traditional mortgage loan you make monthly mortgage payments, but with a reverse mortgage loan the lender pays you money through monthly installments, a one-time lump sum payment, a line of credit or a combination of a line of credit and monthly installments. The money that you receive is dependent on your age, the value of your home and the current interest rate.
You keep the title to your home. Your home is part of your estate. You are simply using the reverse mortgage to pull equity from your home.
What is the advantage of a reverse mortgage?
The biggest advantage of a reverse mortgage are the payments to you! You can receive a lump sum, monthly installments, a line of credit, or a combination of payment types.
Another advantage of a reverse mortgage loan is that you are not required to pay the loan back until the home is no longer your primary residence or you fail to maintain the home, or fail to pay property taxes and/or homeowner's insurance or do not otherwise comply with the terms of the loan.
If you’re aged 62 or older and own your home you might be eligible for a reverse mortgage loan. Contact us to find out more about reverse mortgage loans and ways to make it work for you.
Why would I avoid a reverse mortgage?
You would rather leave the equity for your heirs
Reverse mortgages allow you to pull equity from a home. Once that equity is converted to cash, it is no longer there for your heirs. When they sell they home or if they decide to keep the home, they must repay the balance of the equity owed on the home.
You live with someone who is under 62
If a borrower dies, sells their home, or moves out, the loan immediately becomes due. One solution is to list your boarders on the loan paperwork; however, no one living with you under the age of 62 may be a borrower on the reverse mortgage.
If you are planning or unexpectedly need to move
You must be healthy enough to continue dwelling within the home. If your health declines to the point where you must relocate to assisted living, the loan must be repaid in full, as the home no longer qualifies as a primary residence.
Moving into a nursing home or an assisted living facility for more than 12 consecutive months is considered a permanent move under reverse mortgage regulations. For this reason, borrowers are required to certify in writing each year that they still live in the home they're borrowing against, in order to avoid foreclosure. you’re contemplating moving for health concerns or other reasons, a reverse mortgage is probably unwise because in the short-run, steep up-front costs make such loans economically impractical.
If you would like more information about reverse loan options, contact us today! Or start your loan application.
How does a reverse mortgage work?
The FHA-insured HECM (reverse mortgage) has a formula to determine the amount you are eligible to borrow.
The amount available is dependent on several factors:
- Your age
- The value of your home
- The current interest rates and terms being offered by lenders
These factors determine your limits and the amount you can borrow. The formula represents the maximum amount FHA has determined you may borrow with a Reverse Mortgage. Note, all liens must be paid off, and any fees/costs associated with your loan must be paid off. The remaining funds can be distributed a few different ways.
- Lump Sum
- Line of Credit
- Monthly Payments
- Some combination of the three options above
The loan is due when a repayment event occurs. This may include:
- Death of the last surviving borrower on the loan
- Borrowers permanently moving out of the home
- Borrows failing to live in the home for 12 consecutive months
- Failure to pay property taxes or insurance
- Failure to maintain the property
You still have the right to sell your home at anytime. Proceeds from the sale will first payoff your current balance. The remaining funds are yours. There is no prepayment penalty.
If you would like more information about reverse mortgage loan options, contact us today! Or start your reverse mortgage application.
Excited to share a major update that will make the homebuying process more secure and less stressful. President Donald Trump recently signed the Homebuyers Privacy Protection Act of 2025 into law. This bill is a significant victory for the real estate industry, as it directly addresses the problem of unwanted calls, texts, and emails that often flood clients upon mortgage application. What's Changing? For years, many borrowers have experienced a barrage of unsolicited contact from different lenders immediately after their mortgage application. This happens because of "trigger leads"—a process where credit reporting agencies sell information to other companies once a credit inquiry is made. Effective March 5, 2026, this new law will put a stop to this practice. It will severely limit who can receive client contact information, ensuring client privacy is protected. A credit reporting agency will only be able to share trigger lead information with a third party if: • Clients explicitly consent to the solicitations. • The third party has an existing business relationship. This change means a more efficient, respectful, and responsible homebuying journey. We are committed to a seamless process and will keep you informed of any further developments as the effective date approaches. In the meantime, you can use the information below to inform clients how to proactively protect themselves from unwanted solicitations. Opting Out: • OptOutPrescreen.com: You can opt out of trigger leads through the official opt-out service, OptOutPrescreen.com. • Do Not Call Registry: You can also register your phone number with the National Do Not Call Registry to reduce unsolicited calls. • DMA.choice.org: For mail solicitations, you can register with DMA.choice.org to reduce promotional mail. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Good question — refinancing can be a smart move, but the timing really matters. The "right time" to refinance your mortgage depends on a mix of personal and market factors. Here are the main ones to weigh: 1. Interest Rates If current mortgage rates are at least 2% lower than your existing rate, refinancing could save you money. Example: Dropping from 7% to 6% on a $300,000 loan can save hundreds per month. 2. Loan Term Goals Switching from a 30-year to a 15-year mortgage can help you pay off your home faster (though monthly payments are higher). Extending your term may lower your monthly payment but increase total interest paid. 3. Equity in Your Home Lenders usually want you to have at least 20% equity for the best rates and to avoid private mortgage insurance (PMI). If your home’s value has increased, refinancing can help eliminate PMI. 4. Credit Score If your credit score has improved since you got your mortgage, you may now qualify for much better rates. 5. Life Situation Planning to stay in the home at least 3–5 years? That’s often how long it takes to “break even” on refinance closing costs. If you might sell sooner, refinancing may not make sense. 6. Debt or Cash Needs A cash-out refinance can help if you want to consolidate higher-interest debt, fund renovations, or free up cash — but it raises your loan balance. ✅ Rule of Thumb: Refinance if you can lower your rate, shorten your term, or eliminate PMI, and you’ll stay in the home long enough to recover the costs. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
1. Getting Leads from AI AI can help you find and qualify homeowners who may be interested in a second mortgage (home equity loan or HELOC). Common approaches: Predictive Analytics – AI models look at property values, loan-to-value (LTV), credit trends, and household income estimates to flag homeowners who may be equity-rich but cash-flow constrained. Behavioral Targeting – AI scrapes signals from online behavior (searches, social media, property sites) to identify homeowners exploring refinancing, debt consolidation, or home improvement. List Enrichment & Scoring – AI takes raw lead lists (from credit bureaus, title data, etc.) and ranks prospects by likelihood of conversion. Chatbots & Virtual Assistants – Automated lead capture on websites or ads, qualifying borrowers by asking pre-screening questions 24/7. 2. Using AI in the Mortgage Process (Second Mortgages Specifically) Once a lead is captured, AI can help streamline: Prequalification – Instantly running soft credit pulls and property value AVMs (automated valuation models). Risk Assessment – AI models assess borrower income stability, equity position, and repayment ability faster than traditional underwriting. Automated Marketing – Personalized drip campaigns (emails/texts) tailored to where the borrower is in their decision cycle. Compliance Guardrails – AI tools scan communications and ads to make sure they meet RESPA, ECOA, and fair lending rules. ✅ Important Note: Regulations are tightening around AI in lending (bias, transparency, fair lending laws). Any AI-driven lead-gen or underwriting must remain compliant with ECOA, Fair Housing Act, UDAAP, RESPA, and FCRA. Do you want me to map out an AI-driven workflow for generating and closing second mortgage leads (step by step with tools you could use), or do you want a higher-level overview of companies already doing this? You said: Customers are finding thru AI and I am getting them second mortgages thru AI ChatGPT said: Got it — you’re saying customers are finding you through AI (likely through AI-driven search, recommendations, or even chatbots), and then you’re also using AI on your end to help them get second mortgages (home equity loans or HELOCs). Here’s how that usually plays out, and how you can structure it: 🔹 How Customers Find You Through AI Search + Recommendation Engines Borrowers ask tools like ChatGPT, Google Gemini, or even lender chatbots about “best second mortgage lenders.” AI-driven SEO tools route them toward your website or ads. AI-Powered Marketing Predictive ad platforms (Google Ads, Meta, programmatic ads) use AI to match your services with homeowners who are likely equity-rich. Smart drip campaigns + automated SMS/Email nurtures keep them engaged until they’re ready to apply. Conversational AI (Front Door) Website chatbots or virtual assistants pre-qualify by asking: “What’s your home value?”, “What’s your current balance?”, “What’s your income?”. These instantly filter serious borrowers from casual shoppers. 🔹 How You Help Them Get the Loan With AI Lead Intake & Pre-Screening AI pulls in property data (AVM: Zillow/Black Knight/CoreLogic) + soft credit pulls. Instantly calculates Loan-to-Value (LTV) and debt-to-income (DTI). Automated Prequalification If borrower has enough equity + meets credit standards → AI engine generates a prequalification in minutes. AI Underwriting Support OCR (document reading AI) extracts paystubs, W2s, bank statements → fills in 1003 automatically. AI models flag potential risk (income inconsistencies, high utilization). Personalized Loan Matching AI matches the borrower to the best second mortgage product (fixed-rate 2nd lien, HELOC, blended loan). Could even run “what-if” payment scenarios instantly for the customer. Automated Compliance & Closing AI scans communications to avoid UDAAP/ECOA violations. Auto-generates disclosure packages and checks for missing signatures. 🔹 Big Picture You’re essentially creating an AI-driven pipeline: Customer → AI finds you → AI captures lead → AI helps you qualify → AI supports underwriting → You close the 2nd mortgage faster. This model is gaining traction because borrowers want instant answers, and AI cuts weeks off the traditional process. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Great question. Markets don’t usually wait until the Fed actually cuts rates to react — they move in advance, based on expectations. Here’s how it works: Forward-looking nature of markets – Bond yields, stock prices, and mortgage rates are influenced by what investors think will happen, not just what has already happened. If traders believe the Fed will cut rates in September, they start pricing that in now. Fed communication – The Fed often signals its intentions ahead of time through speeches and policy statements. If Chair Powell or other Fed officials strongly hint at a cut, the market will react immediately. Data-dependent – If new data (like inflation cooling or unemployment rising) supports the case for a cut, markets may rally or yields may drop months before the Fed makes the move. The actual cut – When September arrives, if the Fed cuts exactly as expected, the market reaction may be small (because it’s already “priced in”). But if the cut is bigger, smaller, or delayed compared to expectations, that’s when you see sharper moves. 👉 So to your point: yes, the market already reacts now to a possible September cut. By the time the Fed announces it, most of the impact could be baked in. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
yes — shopping for your homeowners' insurance annually is generally a smart move. Here’s why: 1. Rates change more than you think. Insurance companies regularly adjust premiums based on inflation, claims data, weather patterns, and even changes to your credit or risk profile. A company that was cheapest two years ago might now be in the middle of the pack. 2. Your coverage needs can shift. If you’ve renovated, added security systems, bought expensive personal items, or paid off your mortgage, you may need to adjust your coverage — and some insurers may reward those updates with lower rates. 3. Loyalty discounts can fade. While some insurers offer loyalty perks, others quietly raise rates on long-term customers (“price optimization”), counting on you not to shop around. 4. Bundling opportunities change. If you’ve switched auto or other policies, you might qualify for better bundle discounts elsewhere. Tips for shopping annually: Compare at least 3–4 quotes. Match coverage limits exactly when comparing prices — don’t just look at the premium. Check both local agents and online marketplaces. Ask about claim satisfaction and financial stability, not just price. Reassess your deductibles; a higher deductible can lower your premium. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgayge nmls#324329
Program Overview Borrower Contribution: You pay 1% of the purchase price as the down payment. Lender provides a 2% grant, bringing your total to 3% down, which is the typical minimum for conventional loans. For example, on a $250,000 home: You pay $2,500 (1%) Lender adds $5,000 (2%) You start owning 3% equity from day one Eligibility Requirements To qualify for ONE+, you must meet all of the following: Income: At or below 80% of your area's median income (AMI) National Mortgage Professional Credit Score: Minimum FICO® score of 620 Property Type: Must be a single-unit primary residence (no second homes or investments) Loan Limit: Loan amount must be $350,000 or l Total Down Payment: With their 2% grant included, your total down payment cannot exceed 5% Mortgage Insurance (PMI) Despite the grant taking you to 3% equity, the program does require mortgage insurance (PMI). National Mortgage Professional The Mortgage Report tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
A 40-year interest-only fixed for 10 years mortgage is a specialized loan product with the following structure: 🔹 Loan Term: 40 Years Total length of the mortgage is 40 years. 🔹 Interest-Only Period: First 10 Years For the first 10 years, the borrower only pays interest on the loan. No principal is paid down during this time (unless the borrower chooses to). Monthly payments are lower because they do not include principal repayment. 🔹 Fixed Interest Rate: First 10 Years The interest rate is fixed during the 10-year interest-only period. This provides payment stability during that time. 🔹 After 10 Years: Principal + Interest After the initial 10 years: The borrower starts making fully amortizing payments (principal + interest). These payments are higher, because: The principal is repaid over the remaining 30 years, not 40. And the interest rate may adjust, depending on loan terms (some convert to an adjustable rate, others stay fixed). ✅ Pros Lower payments early on—can help with cash flow. May be useful if the borrower plans to sell or refinance within 10 years. Good for investors or short-term homeownership plans. ⚠️ Cons No equity is built unless home appreciates or borrower pays extra. Big payment increase after 10 years. Can be risky if income doesn't rise, or if home value declines. 🧠 Example Let’s say: Loan amount: $300,000 Interest rate: 6% fixed for 10 years First 10 years: Only pay interest = $1,500/month After 10 years: Principal + interest on remaining $300,000 over 30 years = ~$1,798/month (assuming same rate) tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
When the 10-year Treasury yield goes down, it generally signals lower interest rates and increased demand for safe-haven assets like U.S. government bonds. Here’s what typically happens across different areas of the economy and markets: 🔻 Why the 10-Year Treasury Yield Drops Increased demand for bonds: Investors buy Treasuries during uncertain times (e.g., recession fears, geopolitical risk), which drives prices up and yields down. Expectations of lower inflation or interest rates: If the Federal Reserve is expected to cut rates or inflation is cooling, yields tend to fall. Weak economic outlook: Slowing growth or a poor jobs report can trigger a yield decline. 📉 Impacts of a Lower 10-Year Treasury Yield 🏦 1. Mortgage Rates and Loans Mortgage rates (especially 30-year fixed) tend to follow the 10-year Treasury. As yields fall, mortgage rates usually decline, making home loans cheaper. This can stimulate the housing market and refinancing activity. 📈 2. Stock Market Lower yields often boost stock prices, especially growth stocks (like tech), because: Borrowing costs are lower. Future earnings are worth more when discounted at a lower rate. Defensive and interest-sensitive sectors (like utilities and real estate) also benefit. 💰 3. Consumer and Business Borrowing Lower Treasury yields can lead to lower interest rates across the board, including for: Auto loans Credit cards Business loans This can boost consumer spending and business investment. 💵 4. U.S. Dollar Falling yields can make U.S. assets less attractive to foreign investors. This can weaken the dollar, which may help U.S. exporters by making goods cheaper abroad. 🪙 5. Inflation Expectations If the yield is falling due to low inflation expectations, it may indicate deflationary pressure. However, if it's just due to safe-haven buying, it might not reflect inflation at all. ⚠️ Potential Risks A sharp drop in the 10-year yield can signal a recession or loss of confidence in the economy. A flattening or inverted yield curve (when short-term rates are higher than long-term) can be a recession warning. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Resi/commercial Typical 2-3 units over a 1-unit ground-floor commercial space LTV’s up to 75% A mixed-use property is a type of real estate development that combines two or more different uses within a single building or development. The most common combination is residential and commercial — for example, apartments or condos above ground-floor retail or office space. 🔑 Key Characteristics of a Mixed-Use Property: Feature Description Use Types Typically includes residential, commercial, retail, office, and sometimes hospitality or industrial components. Zoning Must be zoned for mixed-use by the local municipality. Layout Different uses are separated vertically (e.g., retail on the bottom, housing on top) or horizontally (different sections of the development). Ownership Can be owned by an individual, company, REIT, or government entity; may be leased or sold as separate units. Financing Considered commercial real estate; underwriting depends on the income mix and proportions of use types. 🏢 Common Mixed-Use Examples: Urban Buildings: Apartments above restaurants or retail stores (like Starbucks or a dry cleaner). Suburban Developments: Townhome communities built around a retail plaza or office park. Live/Work Units: Ground-floor office or retail space with a residence above, often used by entrepreneurs. Transit-Oriented Developments: Mixed-use buildings near train stations or bus hubs. 📊 Benefits of Mixed-Use Properties: Diversified Income Streams (residential + commercial) Increased Foot Traffic for businesses Live-Work-Play Environment appeals to urban dwellers Higher Land Use Efficiency and potentially better returns Encouraged by city planning to reduce sprawl and support sustainability A mixed-use property is a type of real estate development that combines two or more different uses within a single building or development. The most common combination is residential and commercial — for example, apartments or condos above ground-floor retail or office space. 🔑 Key Characteristics of a Mixed-Use Property: Feature Description Use Types Typically includes residential, commercial, retail, office, and sometimes hospitality or industrial components. Zoning Must be zoned for mixed-use by the local municipality. Layout Different uses are separated vertically (e.g., retail on bottom, housing on top) or horizontally (different sections of the development). Ownership Can be owned by an individual, company, REIT, or government entity; may be leased or sold as separate units. Financing Considered commercial real estate; underwriting depends on the income mix and proportions of use types. 🏢 Common Mixed-Use Examples: Urban Buildings: Apartments above restaurants or retail stores (like Starbucks or a dry cleaner). Suburban Developments: Townhome communities built around a retail plaza or office park. Live/Work Units: Ground-floor office or retail space with a residence above, often used by entrepreneurs. Transit-Oriented Developments: Mixed-use buildings near train stations or bus hubs. 📊 Benefits of Mixed-Use Properties: Diversified Income Streams (residential + commercial) Increased Foot Traffic for businesses Live-Work-Play Environment appeals to urban dwellers Higher Land Use Efficiency and potentially better returns Encouraged by city planning to reduce sprawl and support sustainability and 🔑 Key Characteristics of 5–10 Unit Multifamily Properties: Feature Description Number of Units 5 to 10 self-contained rental units, each with a kitchen and bathroom. Zoning Generally zoned as multifamily residential or mixed-use, depending on the area. Financing Category Considered commercial real estate by most lenders (5+ units triggers commercial underwriting). Ownership Typically owned by small investors, partnerships, or LLCs. Management Can be owner-managed or managed by a third-party property manager. 4. Private or Bridge Loans Short-term, higher interest Used for rehabs, quick purchases, or properties that don’t qualify for traditional financing 📊 Why Investors Like 5–10 Unit Multifamily: Easier to manage than large apartment complexes More scalable than single-family rentals Still eligible for economies of scale (one roof, one lawn, multiple rents) Can often house hack (live in one unit, rent the others) Tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
