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
Reverse mortgages have benefited many homeowners. However, there are several things you should be aware of. Fees and closing charges related with reverse mortgages tend to be higher than those associated with regular loans. Lenders often demand greater interest rates on reverse mortgages than on other types of loans. Your home, like other property, is used as collateral against the loan, which carries its own risks. Borrowers could possibly deplete a significant portion of their home’s equity. This may leave them with less inheritance to pass down to their heirs.
In case of two co-borrowers, the surviving co-borrower can remain in the home and receive reverse mortgage payments until they also pass away or move out.
However, depending on the terms and conditions of the reverse mortgage, the surviving spouse of the only borrower may be required to repay the loan shortly after the borrower’s death.
If both borrowers die, their heirs will receive notice that the loan is due. They can sell the house to cover the remaining sum on the reverse mortgage. They can even obtain a new mortgage if they opt to keep the house.
You’ve worked hard to pay the mortgage on your home. With a reverse mortgage loan you can receive a portion of the equity that you earned. A federally insured HECM reverse mortgage loan can help you unlock that equity by increasing your monthly cash flow. Rest easy knowing you’re protected because with a reverse mortgage loan you can:
- Access the equity in your home and stay in your home as long as you want. However, if you move, pass away or fail to pay property taxes or home owners insurance or otherwise fail to comply with the loan terms then you could be forced to sell your home or repay the loan.
- Receive an annuity-like stream of cash flow for as long as you, the borrower(s) remain in the home, maintain the home, continue to stay current with property tax and homeowner’s insurance payments and otherwise comply with the loan terms. Some borrowers elect to receive a lump-sum payment rather than the monthly payments.
Speak with one of our professionals today and learn how you can make the most of a reverse mortgage loan.
Getting a reverse mortgage loan is a big step and needs to be carefully evaluated. Many people have found that by taking a reverse mortgage loan they avail themselves of the equity they have built in their home.
Typically those who benefit most from a reverse mortgage loan are those who plan to stay in their homes over an extended period and have built a decent amount of equity in their homes.
Contact one of our professionals today to find out if you have enough home equity to make a reverse mortgage loan a good decision for you. If you have a good amount of equity in your home and you plan on staying there for an extended period of time then a reverse mortgage loan might be right for you.
