What You Need to Know About Reverse Mortgages
The Basics of a Reverse Mortgage
Reverse mortgage loans enable seniors to convert their home’s equity into tax-free cash, all while retaining the occupancy and ownership of their home. Unlike a traditional mortgage, there are no monthly payments to be made and repayment of the loan is deferred until the borrower is no longer living in the home. At the time the borrower is no longer occupying the property, the loan becomes due and it must be paid in full, including interest and financed closing costs. Because no monthly payments are made, the loan amount owed grows over time and the equity that remains after selling the home and paying off the loan grows smaller.
With a reverse mortgage, your loan will NEVER be more than the value of your home.
With a reverse mortgage, borrowers continue to own their homes and are required to stay current with property taxes, insurance, and needed repairs. A reverse mortgage must be the only mortgage on the property, if there is an existing mortgage, it must be paid off in full with the proceeds from the reverse mortgage. As the home appreciates and the borrower grows older the borrower may qualify for more money, and the reverse mortgage may be refinanced against the increased equity.
Reverse Mortgage Eligibility
- All borrowers must be 62 years old and occupy the property as their primary residence at least 6 months of the year
- You must own the home outright, or be able to pay the loan off in full with the proceeds of a reverse mortgage
- You are required to attend a HUD Counseling Session either face to face or by telephone
These requirements apply to all individuals on the title
Eligible properties include:
- Single family one-unit dwelling
- 2-4 unit owner occupied dwelling
- some condominiums and planned unit developments
- some manufactured homes
For more information or to get detailed answers relating directly to your situation, please contact us now.