What Is A Reverse Mortgage?
Advantages of a Reverse Mortgage
- A reverse mortgage allows people 62 years or older to use accumulated home equity and remain in their home. Remember, you can’t use your equity until it is available as cash. You can’t take your doorknob to the store to buy a loaf of bread.
- A reverse mortgage can be set up as a monthly payment, line of credit, lump sum payment—or a combination of these. You’re in control.
- You can use a reverse mortgage (HECM for Purchase) to buy a house;
- No matter how the reverse mortgage is set up, no monthly payment is due from the home owner unless he or she dies, moves, or sells the home.
- The homeowner can receive a guaranteed source of home equity proceeds from a reverse mortgage as long as he or she lives in the home as a primary residence. A home owner potentially could continue to receive monthly payments even after the loan balance is higher than the value of the home.
- Neither the homeowner nor his or her heirs will ever owe more than the home is worth, no matter how long the borrower lives in the house.
- You cannot owe more than the value of your home at the time of repayment, regardless of your balance.
- If the reverse mortgage balance is less than the value of your home at the point of repayment, your heirs get to keep the difference.
- The loan can be repaid without selling your home.
- Qualifying for this loan is fairly easy since credit scores, employment, and income are not part of the qualification process.
- Reverse mortgage proceeds will generally not impact your Medicare or Social Security eligibility. (please consult with a professional regarding this matter)
- Ownership and title of the home remain in your name.
- You are required to speak with a reverse mortgage counselor before obtaining the loan.
- You can cancel the loan for any reason (right of rescission) during the three day period after your reverse mortgage closes.
- Limited income and fixed income is a common impetus behind reverse mortgage inquiries. By eliminating the mortgage payment, the newly liberated cash can provide a financial cushion to the homeowner, making resources available for long-term healthcare insurance, medical expenses, home repair, debt reduction and recreational activities.
- Your credit score has no bearing on your eligibility for a reverse home equity loan nor does it affect the calculation of your loan value. Your home value is based on your age, current interest rates, and property value.
- The HECM is FHA insured and, therefore, the borrower is guaranteed to always have the funds available to him/her, and if the lender does not pay funds to the homeowner in a timely manner, the lender owes the homeowner a late charge!
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