Reverse Mortgage Loans
What are Reverse Mortgage Loans?
A reverse mortgage lets homeowners tap into their home equity. Unlike traditional mortgages, you get paid by the lender. Payment options include monthly installments, lump sum, or a line of credit. The amount depends on factors like your age and home value. The best part? You don’t repay until you leave the home or breach loan terms. If you’re 62 or older and own your home, you might qualify. Reach out to us for details or apply now to start unlocking your home’s equity. For more info on reverse mortgages, explore our website.
Reverse Mortgage Loan Benefits
- No credit score qualification: Reverse mortgages don't require a minimum credit score.
- No debt-to-income ratio: There's no set limit on your DTI for reverse mortgages. But you must show you can handle basic home expenses.
- Freedom in retirement: Use the money from a reverse mortgage for medical bills, investments, or extra retirement income.
- Non-recourse loan: If you can't pay back the loan, the lender can only take the agreed collateral, nothing more.
- Financial benefits: Keep your savings, improve cash flow, or buy something with a reverse mortgage.
- Relocation: Move to a new city or closer to family with a reverse mortgage.
- Change living situation: Downsize to a cheaper home or one that's easier to maintain with a reverse mortgage.
- Age in place: Stay in your home as you get older with a reverse mortgage.
- Tax-free money: The money you get isn't taxed, so you can use it for anything, like investing or home repairs.
What are the Reverse Mortgage Loan Requirements?
Qualifications for Reverse Mortgage:
- Age Requirement: Borrowers must be 62 years old or older.
- Joint Borrowers: Loan amount based on the youngest applicant's age for married couples.
- Financial Capability: Must be able to afford taxes, insurance, and HOA fees.
- Property Ownership: Property must be the primary residence, owned outright or with substantial equity.
- Property Maintenance: Ability to maintain the property and cover associated fees.
- HUD Counseling: Mandatory counseling to understand the implications and details of reverse mortgage, costs around $125 for a 90-minute session.
Costs of Reverse Mortgage:
- Origination Fee: Limited by FHA, maximum of $2,500 for homes valued at $125,000 or more. Homes worth more than this are capped at 2% of the value of the first $200,000 and 1% on the value over $200,000 for a maximum of $6,000.
- Interest: Typically adjustable except for lump sum option, which has a fixed rate.
- 3rd Party Closing Costs: Vary by lender and include appraisal fees and credit checks for both borrowers. .
- Service Fee: Sometimes applicable for loan servicing.
- Mortgage Insurance: Premiums at closing and monthly, typically 1.25% of the loan balance..
- Government Regulation: Lenders' charges regulated, advisable to compare costs for the best fit.
FAQ
A reverse mortgage is a loan that allows homeowners aged 62 or older to convert part of their home equity into cash.
Homeowners must be at least 62 years old, own the home outright or have a low mortgage balance, and live in the home as their primary residence.
Reverse mortgages provide additional income during retirement. There are no monthly mortgage payments, and the loan does not need to be repaid until the homeowner sells the home or passes away.
The biggest drawback of reverse mortgages is fees and interest can add up, reducing the amount of equity left in the home, and it can affect eligibility for certain government programs.
The loan is repaid when the homeowner sells the home, moves out permanently, or passes away.
