Yes! Reverse mortgage loans specifically cater to senior citizens aged 62 and above. It’s the ideal loan to help retirees with a fixed income meet their financial needs. Your age, the house value, and the loan’s interest rate defines how much you can borrow
What are reverse mortgages?
It’s a loan that converts a portion of your home equity into tax-free cash without monthly mortgage payments. The money can be used for practically anything like supplementing social security benefits or for paying for long term care payment.
You however have to prove that you have sufficient residual income to pay for the loan’s interest and your property tax. You will also first have to undergo third-party counseling to qualify for the loan.
It’s because, according to the Federal Housing Administration, you must be thorough with the loan terms before applying. The loan will be signed and processed once its requirements are met.
If you wonder why there are no monthly mortgage payments, well, there are three reasons. The loan is repaid when you pass away, sell the house, or permanently leave it.
Advantages of Reverse Mortgage Solutions:
- No harrowing monthly mortgage payments
- No pre-pay penalties
- The funds can be used as you wish, without any restrictions
- Being a non-recourse loan; you never owe the lender more than your home’s value
- You can live in your home as your primary residence
- An excellent means of cash liquidity in retirement
However, you have to make sure you pay all taxes and insurance on time. You should also keep the property maintained or end up with loan default.
- The reverse mortgage age is 62 years or older
- The house should be your principal residence
- You should own the property or have considerable equity in it
- You should not have any federal debt
- You have to participate in one of HUD’s consumer information session
What is a non-recourse loan?
The reverse mortgage loan is a non-recourse loan, which means that you and your heirs won’t have to repay more than the house’s value. They don’t have to pay more even if the debt amount grows greater than the house value.
And in case your heirs opt to keep the house, they will have to pay off the loan. It amounts to 95% of the home’s fair market value, which a third-party appraiser determines.
A Reverse Mortgage doesn’t Involve Selling your Home
Many think that a reverse mortgage is similar to selling your home to the bank. However, it’s not true because you don’t relinquish your title or ownership rights at all.
Should I get a reverse mortgage loan?
It’s a good idea if you need money because you can’t afford specific desires or needs. It lets you do what you want in your retired life and still live in the home you love.
But it’s not advised if you can’t afford its additional charges like appraisal and origination charges, will be moving soon, or require an inpatient facility care.
So it’s left to you to think carefully and decide.