What is a Reverse Second?
It is a Reverse Mortgage loan Like the Home Equity Conversion Mortgage (HECM), it is a non-recourse loan, meaning neither the borrowers nor their heirs shall have personal liability. Only available through one of our partners as it is a proprietary product. The Reverse Second allows borrowers to keep a forward first lien in place while accessing the remaining equity available for additional funds. It is a great tool in those cases where the First loan is at a very favorable rate and the borrower wants to preserve it. Great for high value homes where there is a large equity available.
It is a Line of Credit and as such, it has a variable rate. There is no upfront or monthly Mortgage Insurance Premium.
Like the normal Reverse, you are allowed to choose your payments or not make any payments at all. A real great way to manage the budget. Unlike the HECM product, the Reverse Second borrowers can use loan proceeds to pay off debt at closing to income qualify. This loan requires a Financial Assessment with a passing grade.
The maximum loan amount is capped by the limits set on other loans (based on age, rate and value). The first lien may remain in place, but the sum total of the First and The Reverse Second can’t exceed the limits. The Reverse Second is available when the borrower’s first lien is a closed-ended, fixed rate, forward lien.
Ask for more details.