What is a reverse mortgage?
A reverse mortgage is a type of home equity loan that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. Reverse mortgages are typically catered towards older homeowners, but they have also become a great retirement planning tool for many homeowners. This type of mortgage does not need to be repaid until the borrower passes away, sells the home, or permanently moves out. Borrower must maintain the house and pay property taxes and homeowners insurance.
Home Equity Conversion Mortgage (HECM) is a type of reverse mortgage insured by FHA.
How do reverse mortgages work?
Unlike a traditional mortgage that borrowers pay back each month, a reverse mortgage makes payments to borrowers. Borrowers can get these payments in a lump sum, as regular monthly payments, as a line of credit, or as a combination of monthly payments with a line of credit. There are several factors that determine the amount of funds you can receive from a reverse mortgage, such as your age, value of home, and interest rate.
Who would benefit from a reverse mortgage?
A reverse mortgage makes senses for individuals who:
- Are age 62 and older and who own a home or have small mortgages.
- Don’t plan to move.
- Can afford the cost of maintaining their home.
- Want to access the equity in their home to supplement their income or have money available for a rainy day.
What are the advantages of Reverse Mortgage?
- Does not require monthly payments from the borrower.
- Proceeds can be used to pay off debt or settle unexpected expenses.
- Funds can improve monthly cash flow.
However, note that Consumers with a Reverse Mortgage can lose their home if they fail to comply with the loan terms, which include, among other terms, paying property taxes, homeowners insurance and HOA dues (if applicable) in time, maintaining the property, etc.
Why should you choose Mortgage Possible?
Our team offers a 24-hour loan center for future homeowners who don’t have time to apply for a loan during regular business hours. We offer quick loan approvals and provide our clients with suitable loan options for their needs and financial situations. Our team members are well-versed in reverse mortgage / HECM rules and requirements and will ensure that you are knowledgeable about our mortgage process prior to committing to a loan.
For any questions about the Reverse Mortgage process or any of our other home loan services, give our team at Mortgage Possible a call to speak to a local team member who can answer all of your home loan questions. Contact Us Today!