Qualifying for a reverse mortgage today is a different process than it was in the past.

As underwriting standards have tightened considerably in recent years, becoming eligible for a reverse mortgage now requires a more complex analysis of the loan applicant’s financial circumstances. For applicants who may have experienced financial challenges in the past, there’s no need to worry.

LESA Options

You may still have the opportunity to secure a reverse mortgage with the assistance of a “LESA” depending on your financial assessment. LESA stands for Life Expectancy Set-Aside, an acronym introduced by the Department of Housing and Urban Development in April 2015. Its implementation was aimed at enhancing the protections provided to reverse mortgage borrowers, particularly as part of the updated financial assessment underwriting requirements.

In the reverse mortgage application process, LESAs play a pivotal role. They influence not only a lender’s decision regarding the approval of an applicant but also determine the amount of loan proceeds a borrower can potentially receive.

LESAs offer a solution for borrowers who prefer their lender to handle tax and insurance payments. They can be categorized as Fully Funded or Partially Funded, depending on the borrower’s preferences and financial situation.

  • Fully Funded LESA: With this option, the lender covers all property charges using funds from the reverse mortgage loan proceeds. Borrowers don’t need to worry about making separate payments for taxes and insurance, as the lender takes care of these obligations on their behalf.
  • Partially Funded LESA: For borrowers who are capable of contributing to their property charges, a Partially Funded LESA covers a portion of these expenses. In such cases, borrowers receive periodic payments from their loan proceeds to assist with tax and insurance payments. However, borrowers remain responsible for ensuring timely payment of all property charges not covered by the LESA.

For qualifying borrowers concerned about meeting their monthly tax and insurance obligations, setting up a LESA can provide peace of mind. Even if borrowers have sufficient residual income to cover these charges themselves, a voluntary LESA allows the lender to handle these payments, offering added convenience and financial management.

If you prefer the assurance of your lender handling your monthly taxes and insurance payments, regardless of your ability to afford these expenses independently, opting for a voluntary LESA could be a suitable choice. Take a closer look at how a reverse mortgage can support your financial goals today.

Are you tired of worrying about making monthly mortgage, property tax, and insurance payments? You can eliminate these financial burdens and enjoy greater peace of mind in retirement.

Here’s how it works:

When you opt for a reverse mortgage, the lender takes over the responsibility of paying your taxes and property insurance. This means you no longer have to worry about these expenses eating into your monthly budget. The best part? These payments are not considered borrowed until the lender actually uses them to cover your tax or insurance bills. That means you won’t accrue interest on funds you haven’t borrowed yet, giving you even more financial flexibility.

By eliminating the need to pay taxes and insurance out of pocket, a reverse mortgage can free up valuable funds for you to use as you see fit. Whether you want to supplement your retirement income, cover unexpected expenses, or simply enjoy a more comfortable lifestyle, a reverse mortgage can help make it happen.