Getting a Reverse Mortgage? Here’s the Process in MI

It wasn’t very long ago when reverse mortgages brandished a reputation as being a high cost, high risk solution of last resort for retirees in Michigan need of income. Today, with revamped rules that lower both their cost and their risk, reverse mortgages have found legitimacy as a viable planning tool. While they are still can be a more expensive form of equity financing, they offer retirees more options with greater flexibility than other loan products. If you’re one of the thousands of people looking into a reverse mortgage, here is what you need to know about getting one.

Want to learn more? Click here to get free information about a reverse mortgage!

Know What Type You Need

There are three types of reverse mortgages from which to choose:

  1. The most popular is an HECM (Home Equity Conversion Mortgage), which is insured by the Federal Housing Administration (FHA). There are non-HECM reverse mortgages available, but they don’t have the same consumer protections as HECMs. The lending limit for federally insured HECMs is $625,000.
  2. If you’re home is worth more than $625,000, you would need to apply for a proprietary reverse mortgage, also called a jumbo reverse mortgage.
  3. The third type is a single-purpose reverse mortgage which is available through certain local government and nonprofit organizations to assist older homeowners in covering the costs of repairs or to pay property taxes.

Know How to Qualify for a HECM in MI

To qualify for a federally insured HECM, you have to meet certain FHA requirements, including:

  • You are at least 62 years old
  • You live in the home as your primary residence. If you are married, your spouse must also live in the home whether or not she is named on the loan.
  • You are not behind on any federal debts
  • You own your home outright or have a significant amount of equity in it
  • Your home meets FHA property standards and flood requirements
  • You attend a required HECM counseling session

Know Your Payment Options in Michigan

With an HECM, you have several options for how to receive your payment. This far into the process, you should know the purpose for getting a reverse mortgage – supplementing your income, buying another home, home improvements, etc. – so you should know which payment option would serve you best. Generally, there are three options available to you: Monthly payments, which can be set for as long as you live in your house or for a fixed period of time; a one-time lump sum; or a line of credit. With a line of credit, the lender approves a maximum credit limit from which you can draw funds as you need them. Unlike the other options, you can pay back a line of credit to replenish your limit.

The Reverse Mortgage Financial Assessment

Once you submit a HECM application, the lender will complete a financial assessment. The primary reason for the assessment is to ensure you have the ability to pay your property taxes and homeowners insurance on time. Failure to make these payments is cited as the number one reason why reverse mortgage borrowers have lost their homes to foreclosure. The lender will set aside a portion of your loan proceeds to cover these obligations on an ongoing basis.

Waiting to Close

As with any type of mortgage, the time it takes to close on them varies from lender to lender, but most will come in around 30 days. The holdup in most cases is the appraisal which can be slowed by a high demand for appraisers in your area.

Getting the right reverse mortgage for your needs takes a little time, so you don’t want to hurry the process. Do your due diligence. If you have any questions or concerns along the way contact a HUD-approved counselor for guidance.

Top Michigan Reverse Mortgage Companies

You want a HECM lender that you can rely on. Though these are not recommendations, we’ve compiled a list of the largest lenders in the state. Prior to 2012, this was mostly large banks that you’ve probably heard of, like Wells Fargo. Since 2012, the list is dominated by more specialized mortgage bankers who typically focus on the HECM product exclusively.

All Time

Lender Loans Total Principal Limit
FINANCIAL FREEDOM SENIOR FUNDING CORP 2855 282494561
WELLS FARGO 2715 386838513
ONE REVERSE MORTGAGE LLC 1302 198994440
FIRST FINANCIAL MORTGAGE CORP 1249 194780325
SENIORS EQUITY INCOME INC 1023 120140006
AMERICAN ADVISORS GROUP 916 145424500
UNITY MORTGAGE CORP 704 57894892
COLONIAL MORTGAGE CORP 677 89157105
SUCCESS MORTGAGE PARTNERS INC 611 109000280
WORLD ALLIANCE FINANCIAL CORP. 579 78235612
CENTURION MORTGAGE CORPORATION 535 71784476
PARK PLACE MORTGAGE CORP 377 37926513
BEST MORTGAGE SERVICES LLC 345 32603544
SECURITY MORTGAGE CORPORATION 329 59781017
FIRST ALLIANCE MORTGAGE CO 314 35660260
REMINGTON MORTGAGE INC 303 26261500
VAN DYK MORTGAGE CORPORATION 298 40740292
U.S. FINANCIAL MORTGAGE CORPORATION 281 26153800
METLIFE BANK NATIONAL ASSOCIATION 274 46550510
FINANCE OF AMERICA REVERSE LLC 268 36543357

Since 2012

Lender Loans Total Principal Limit
AMERICAN ADVISORS GROUP 912 144977000
ONE REVERSE MORTGAGE LLC 812 130616340
SUCCESS MORTGAGE PARTNERS INC 211 42673000
LIBERTY HOME EQUITY SOLUTIONS INC 185 28287000
PROFICIO MORTGAGE VENTURES LLC 133 22421138
SECURITY MORTGAGE CORPORATION 97 18739659
REVERSE MORTGAGE SOLUTIONS INC 85 12976378
FINANCE OF AMERICA REVERSE LLC 81 14430907
LIVE WELL FINANCIAL INC 68 13009800
ROSS MORTGAGE CORPORATION 63 10396500

Want to learn more? Click here to get free information about a reverse mortgage!

Interest Rates

Based on monthly data from HUD, we’ve calculated the average interest rates for each month:

Date Fixed Rate Adjustable Rate
2016-01-01 4.78% 3.54%
2016-02-01 5.04% 3.70%
2016-03-01 5.06% 3.81%
2016-04-01 5.06% 3.92%
2016-05-01 5.02% 4.05%
2016-06-01 5.06% 4.12%
2016-07-01 5.04% 4.21%
2016-08-01 5.06% 4.14%
2016-09-01 5.05% 4.37%
2016-10-01 5.02% 4.58%
2016-11-01 5.06% 4.66%
2016-12-01 5.06% 4.71%
2017-01-01 5.06% 4.80%
2017-02-01 4.96% 4.75%
2017-03-01 4.92% 4.59%
2017-04-01 5.05% 4.52%
2017-05-01 5.05% 4.44%
2017-06-01 5.04% 4.35%
2017-07-01 5.05% 4.40%
2017-08-01 5.06% 4.48%

Leading Cities in MI by HECM Loans Originated

As you might expect, Detroit leads other cities in Michigan by a large margin with over 5000 reverse mortgages originated since the program began in the 1980s.

Rank City Zip Total
1 DETROIT 48235 5127
2 FLINT 48507 498
3 GRAND RAPIDS 49506 340
4 LIVONIA 48154 275
5 WARREN 48093 271
6 SOUTHFIELD 48075 246
7 LANSING 48910 236
8 KALAMAZOO 49006 236
9 SAGINAW 48602 232
10 MUSKEGON 49442 217
11 JACKSON 49202 201
12 INKSTER 48141 197
13 WESTLAND 48185 197
14 TRAVERSE CITY 49684 193
15 BATTLE CREEK 49017 186
16 ROYAL OAK 48073 174
17 ANN ARBOR 48105 174
18 TAYLOR 48180 172
19 STERLING HEIGHTS 48314 158
20 WATERFORD 48327 144
21 WEST BLOOMFIELD 48322 135
22 CLINTON TOWNSHIP 48036 133
23 TROY 48098 131
24 OAK PARK 48237 130
25 DEARBORN HEIGHTS 48127 127
26 DEARBORN 48124 124
27 YPSILANTI 48198 124
28 REDFORD 48239 121
29 ROSEVILLE 48066 114
30 FARMINGTON HILLS 48336 110

Housing Counselors

BRIDGING COMMUNITIES, INC.
6900 MCGRAW STREET, DETROIT MI 48210
(313) 361-6377
BridgingCommunities.org

CENTER FOR FINANCIAL HEALTH
600 W MAPLE ST, LANSING MI 48906-5093
(517) 708-2550
http://www.centerforfinancialhealth.org

GREENPATH FINANCIAL WELLNESS
2055 SPRING ARBOR RD, JACKSON MI 49203-2705
(888) 860-4167
http://www.greenpath.com

GREENPATH FINANCIAL WELLNESS
44978 FORD RD SUITE C, CANTON MI 48187-5086
(888) 860-4167

GREENPATH FINANCIAL WELLNESS
27780 NOVI RD SUITE 105, NOVI MI 48377-3401
(888) 860-4167

GREENPATH FINANCIAL WELLNESS
271 WOODLAND PASS SUITE 125, EAST LANSING MI 48823-2060
(888) 860-4167

GREENPATH FINANCIAL WELLNESS
3501 LAKE EASTBROOK BLVD SE SUITE 222, GRAND RAPIDS MI 49546-5938
(888) 860-4167

GREENPATH FINANCIAL WELLNESS
131 COLUMBIA AVE E SUITE 112, BATTLE CREEK MI 49015-3788
(888) 860-4167

GREENPATH FINANCIAL WELLNESS
3210 RACQUET CLUB DR SUITE A, TRAVERSE CITY MI 49684-4704
(888) 860-4167

GREENPATH, INC.
36500 CORPORATE DRIVE, FARMINGTON HILLS MI 48331-3553
(888) 860-4167

OAKLAND COUNTY HOUSING COUNSELING
250 ELIZABETH LAKE RD STE 1900, PONTIAC MI 48341-1035
(248) 858-1189
http://www.oakgov.com/chi

Want to learn more? Click here to get free information about a reverse mortgage!