A reverse mortgage is a form of property mortgage that is available to senior homeowners aged 62 years old or older and have a significant amount of equity in their real estate assets. This means that they will be able to turn a portion of the equity in their house into cash without the need to sell their property or incur additional monthly expenses. An advantage of reverse mortgages over forward mortgages is that they do not need the borrower to make any additional loan payments to the lender. As such, when the borrower passes, moves away for good, or sells the house, the entire loan amount becomes due for payment and must be paid off.
BENEFITS OF REVERSE MORTGAGE:
- SECURED RETIREMENT – A reverse mortgage lets you convert an otherwise unproductive asset into cash, which you can use to pay for retirement needs or invest in other assets. Reverse mortgages are an excellent option for retirees who don’t have a lot of funds, savings, or investments but who have a lot of equity in their houses and can use that to their advantage.
- RETAIN OWNERSHIP OF YOUR PROPERTY – As long as you abide by the terms of your loan and pay your tax liabilities and homeowner’s insurance, you will continue to be the legal owner of your property. Rather than choosing to sell your property in order to liquidate your asset, you can choose to keep the house and still receive cash from its equity. This eliminates the need to be concerned about downsizing or being priced out of your community if you are forced to relocate.
- NO MONTHLY MORTGAGE OBLIGATIONS – A reverse mortgage does not require that your house be completely paid off in order to be obtained. When you sell your property, relocate to a different principal residence, or when the final borrower vacates the premises, the loan is repaid. However, loan borrowers are still legally responsible for settling property taxes, homeowners’ insurance, and other costs associated with keeping their homes in good condition.
HOW TO QUALIFY FOR A REVERSE MORTGAGE:
- The borrower should be a homeowner aged 62 or older.
- You must either be the owner of the property entirely or have paid off a significant portion of the mortgage.
- The property must be your primary residence, and you must not be in default on any federal debts at the time of application.
- You will be subjected to a credit check as well as other qualifying requirements before being accepted.
- You must stay on top of your property taxes, insurance, or any association dues and fees.
Finding Your Lender
If you are going to take advantage of your home equity and are considering a reverse mortgage as a possible option, we strongly advise you to consult with a professional realtor who can make thorough assessments and provide insights into the benefits and drawbacks of such a mortgage option. Please do not hesitate to contact us if you would like more information on different forms of property loans that may be available to you.
Advantages of Reverse Mortgage Loans
- Ideal for retirees planning to finance their home
- Quickly liquidate the equity you have on your property to cash
- Provides ample options for your heirs
- You’re protected if your loan balance exceeds the value of your home