What You Need to Know About Reverse Mortgages in NC

Long considered a financing solution of last resort for retirees in need of additional capital to meet their income needs, reverse mortgages are getting a second look from financial planners as a viable planning tool. Not long ago reverse mortgages were frowned upon for their high costs and the additional risks that placed retirees in a precarious position with their homes and their financial position. Much of that has been alleviated through reforms introduced by the Federal Housing Authority (FHA), clearing the way for a fresh look at the product. While it is still considered by many to be a last-resort option, for house-rich, cash poor retirees, a reverse mortgage offers a lot of flexibility for meeting income and other planning needs.

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

How a Reverse Mortgage Works in North Carolina

As the name implies, a reverse mortgage is the opposite of a conventional mortgage in which payments are made towards a loan used to purchase a house. Instead, a reverse mortgage makes payments to the homeowner using the equity in the house. Whereas a conventional mortgage requires the homeowner to make principal and interest payments to eventually own the home. A reverse mortgage pays the homeowner a portion of the home’s equity and the interest accrues against the total equity to be repaid when the homeowners leave the home.

Qualifications

  • While there is no credit qualification, at least one of the homeowners must be 62 and they must have a certain amount of equity in the home.
  • Most lenders require at least 50% equity in the home.
  • They also must demonstrate the ability to make property tax and insurance payments.
  • The amount they can borrow is based on their ages, the interest rate and the amount equity in the home; the older the borrower, the more he can receive.

Accessing Funds

Homeowners can access their equity through monthly payments, as a lump sum, or as needed through a line of credit (LOC). They are not required to repay the loan because it is not repaid until they leave the home and the property is sold. However, an LOC can be repaid, replenishing it for future use. The other advantage of an LOC is that the credit limit actually increases each year as the home value increases.

Repaying the Loan

The major appeal of a reverse mortgage is it never has to be repaid. The loan is paid off when the last homeowner leaves, whether for another home or upon their death. Because they are nonrecourse loans, if the value of the home decreases, neither the homeowner nor the estate is responsible for any shortfall. If, after the loan is settled, there is still equity, it belongs to the homeowner.

Rates and Costs

Generally, the closing costs and interest rates on a reverse mortgage are higher than a conventional mortgage. Like conventional loans, if you want a lower interest rate, you will pay higher closing costs in the form of points. Where a typical conventional mortgage interest rate might run around 4% depending on your credit score, a reverse mortgage can run as high as 5.5 or 6%.

Best Uses of a Reverse Mortgage in NC

The funds from a reverse mortgage can be used for any purpose – renovation, to buy another home or to supplement their income. While it is still used as a last-resort source of income for some retirees, others utilize it as a flexible financial planning tool. For instance, some retirees access the funds so they can delay their Social Security benefits until age 70 when they will receive a much higher benefit. Some have used it to enable them to convert their 401(k) or IRA to a Roth IRA for more favorable tax treatment of their withdrawals. Others use the funds to offset declines in their income due to stock market declines.

Know the Risks and Think it Through

There are still risks and costs with a reverse mortgage that have to be factored into their use. If you can’t make the property tax or insurance payments, you risk foreclosure. Once you start reverse mortgage payments, the equity can’t be used for any other purpose. So, while they offer some planning flexibility, a reverse mortgage can also eliminate some flexibility. So, it is important to carefully think it through with a financial planner.

Leading Reverse Mortgage Companies in NC

All Time

Lender Loans Total Principal Limit
WELLS FARGO 3763 684493766
AMERICAN ADVISORS GROUP 1877 326817562
ONE REVERSE MORTGAGE LLC 1740 299834158
RBC CENTURA BANK 1533 175984301
SIDUS FINANCIAL LLC 952 162147501
FINANCIAL FREEDOM SENIOR FUNDING CORP 870 120185755
BANK OF AMERICA 864 175670765
HARVARD HOME MORTGAGE INC 586 98126500
LIBERTY HOME EQUITY SOLUTIONS INC 547 105901368
METLIFE BANK NATIONAL ASSOCIATION 526 113982181
TOWNEBANK 373 84190572
REVERSE MORTGAGE SOLUTIONS INC 351 67223050
GENERATION MORTGAGE COMPANY 329 68598460
WENDOVER FINANCIAL SERVICES CORP 306 25541525
YADKIN BANK 256 54481240
PROFICIO MORTGAGE VENTURES LLC 255 52656925
REVERSE MORTGAGE USA INC 232 34603180
FINANCE OF AMERICA REVERSE LLC 227 47649225
GATEWAY BANK MORTGAGE INC 213 53191913
HOMEOWNERS MORTGAGE ENTERPRISES INC 199 40562190

Since 2012

Lender Loans Total Principal Limit
AMERICAN ADVISORS GROUP 1728 301041962
ONE REVERSE MORTGAGE LLC 828 145477233
LIBERTY HOME EQUITY SOLUTIONS INC 526 100802168
REVERSE MORTGAGE SOLUTIONS INC 313 60633050
TOWNEBANK 274 63021954
YADKIN BANK 256 54481240
PROFICIO MORTGAGE VENTURES LLC 230 47036725
FINANCE OF AMERICA REVERSE LLC 200 43336725
REVERSE MORTGAGE FUNDING LLC 198 53158400
GATEWAY BANK MORTGAGE INC 191 47917213

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

North Carolina Reverse Mortgage Interest Rates

Date Fixed Rate Adjustable Rate
2016-01-01 4.90% 3.57%
2016-02-01 4.77% 3.59%
2016-03-01 4.93% 3.77%
2016-04-01 4.84% 3.95%
2016-05-01 4.95% 3.96%
2016-06-01 4.92% 4.13%
2016-07-01 4.60% 4.14%
2016-08-01 4.81% 4.16%
2016-09-01 4.92% 4.39%
2016-10-01 4.84% 4.49%
2016-11-01 4.91% 4.60%
2016-12-01 4.75% 4.64%
2017-01-01 4.93% 4.69%
2017-02-01 4.86% 4.67%
2017-03-01 5.00% 4.61%
2017-04-01 4.89% 4.52%
2017-05-01 4.87% 4.43%
2017-06-01 4.95% 4.40%
2017-07-01 5.01% 4.39%
2017-08-01 5.00% 4.45%
2017-09-01 4.94% 4.49%

Top Cities in NC by All Time HECM Loans Originated

Rank City Zip Total
1 CHARLOTTE 28212 1416
2 WILMINGTON 28403 722
3 RALEIGH 27607 673
4 GREENSBORO 27406 535
5 ASHEVILLE 28806 483
6 DURHAM 27707 437
7 WINSTON SALEM 27103 400
8 FAYETTEVILLE 28306 366
9 HENDERSONVILLE 28792 271
10 GASTONIA 28052 212
11 NEW BERN 28562 207
12 HICKORY 28601 188
13 HIGH POINT 27260 186
14 LEXINGTON 27292 183
15 ELIZABETH CITY 27909 182
16 BURLINGTON 27215 182
17 CONCORD 28025 178
18 SALISBURY 28146 168
19 ROCKY MOUNT 27801 165
20 MOORESVILLE 28115 154
21 JACKSONVILLE 28546 153
22 GOLDSBORO 27530 149
23 MONROE 28112 141
24 STATESVILLE 28677 141
25 CARY 27511 132
26 FRANKLIN 28734 132
27 SOUTHPORT 28461 127
28 WILSON 27893 123
29 SANFORD 27330 123
30 MATTHEWS 28105 121

HECM Counselors

ACTION PATHWAYS, INC
316 GREEN ST, FAYETTEVILLE NC 28301-5028
(910) 323-3192
http://www.actionpathways.ngo

ALLIANCE CREDIT COUNSELING, INC.
10720 SIKES PL SUITE 100, CHARLOTTE NC 28277-8141
(704) 943-2044
http://www.knowdebt.org

CCCS OF FORSYTH COUNTY, INC. – MAIN OFFICE
8064 NORTH POINT BOULEVARD, SUITE 204, WINSTON SALEM NC 27106-3116
(336) 896-1191
http://www.financialpaths.org

CCCS OF GREATER GREENSBORO
315 E WASHINGTON ST, GREENSBORO NC 27401-2911
(336) 373-8882
http://www.safeandhealthyfamilies.com/

CCCS, A DIVISION OF TRIANGLE FAMILY SERVICES, INC.
3937 WESTERN BLVD, RALEIGH NC 27606-1936
(919) 821-0790
http://www.tfsnc.org

CENTRE FOR HOME OWNERSHIP & ECONOMIC DEVELOPMENT CORPORATION
105 W. CORBIN STREET, SUITE 103, HILLSBOROUGH NC 27278-2192
(919) 241-4718
www.homeownershipcentre-ed.org

CONSUMER CREDIT COUNSELING SERVICE OF WNC, INC. DBA ONTRACK FINANCIAL EDUCATION & COUNSELING
50 S FRENCH BROAD AVE STE 227, ASHEVILLE NC 28801-3271
(828) 255-5166
http://www.ontrackwnc.org/

CONSUMER EDUCATION SERVICES, INC
3700 BARRETT DR, RALEIGH NC 27609-7213
(866) 635-6414
http://www.housing-counseling.org

CREDIT CARD MGMT SVCS, INC D/B/A DEBTHELPER.COM
40 WESTGATE PKWY SUITE 1, ASHEVILLE NC 28806-3867
(800) 920-2262
http://www.debthelper.com

DURHAM REGIONAL FINANCIAL CENTER DBA DURHAM REGIONAL COMMUNITY DEVELOPMENT GROUP
2634 DURHAM CHAPEL HILL BLVD STE 214, DURHAM NC 27707-2831
(919) 688-3381
http://www.drfcenter.org

FOOTHILLS CREDIT COUNSELING, INC.
709 W MAIN ST SUITE A, FOREST CITY NC 28043-2820
(828) 286-7062
http://www.fhccinc.org

JOHNSTON-LEE-HARNETT COMMUNITY ACTION, INC
1102 MASSEY ST, SMITHFIELD NC 27577-4951
(919) 934-2145
http://jlhcommunityaction.org

NAVICORE SOLUTIONS- RALEIGH, NC
4917 WATERS EDGE DR SUITE 240, RALEIGH NC 27606-5416
(919) 233-9044
http://www.navicoresolutions.org

NORTHWESTERN REGIONAL HOUSING AUTHORITY
869 HWY 105 EXT. SUITE 7, BOONE NC 28607-4958
(828) 264-6683
http://www.nwrha.com

PROSPERITY UNLIMITED, INC
1660 GARNET ST, KANNAPOLIS NC 28083-6667
(704) 933-7405
http://www.prosperitycdc.org

RESOURCES FOR SENIORS
1110 NAVAHO DR SUITE 400, RALEIGH NC 27609-7352
(971) 207-7820
www.resourcesforseniors.com

SALISBURY COMMUNITY DEVELOPMENT CORPORATION
1400 WEST BANK STREET, SALISBURY NC 28144-3912
(704) 638-5383
www.salisburycdc.org

SANDHILLS COMMUNITY ACTION PROGRAM, INC.
340 COMMERCE AVENUE, SUITE 20, SOUTHERN PINES NC 28387-7168
(910) 947-5675 ext 25
www.SandhillsCAP.org

TELAMON CORPORATION
5560 MUNFORD ROAD SUITE 109, RALEIGH NC 27612-2635
(919) 899-9911
http://www.telamon.org

WESTERN PIEDMONT COUNCIL OF GOVERNMENTS
1880 2ND AVE NW, HICKORY NC 28601-5766
(828) 322-9191
http://wpcog.org