There exists a unique type of refinancing option that is available
solely for homeowners who are at least 62 years old and it is called reverse
mortgage. Are you interested in applying for this type of loan? If you are
trying to figure out if you need to move forward with this loan, you should
have the right information first. We are here to be sure that you get your
questions addressed. Listed below are 10 important things you need to know
about reverse mortgages.
Reverse Mortgage Is A Loan
Reverse mortgage is a type of loan that’s made specifically
for people who are above 62 years old who would like to access a part of their
equity. The amount of cash available to the borrower will be determined by the
value of the house, the current interest rates, as well as the age of the
youngest borrower or the non-borrowing spouse. Just like with any other kind of
loan, it must be paid back at a certain point in time. You could sell the house
or pay off the loan with a no prepayment penalty.
What Are Your Options?
In case you move out of the house or you pass away, you and
your loved ones will some options when it comes to paying the loan off.
1.
You can put it up for sale and use the proceeds
to pay off the loan balance and the remaining money will be yours to keep.
2.
Heirs could purchase the house if it is something
that they would like to reside in, keep, use, or hold as the value increases.
To buy the house, they would have to pay only the loan balance or 95% of the
home’s appraised value, whichever is less.
3.
If you or your heir don’t want to do anything
with the house, you could simply sign the deed over to the reverse mortgage
lender and just walk away from the house.
Reverse Mortgage Can Answer Immediate and Future Goals
There are some individuals who get a reverse mortgage loan
to eliminate, pay down, or consolidate their current mortgages, home equity
loans, as well as other kinds of debts. Others utilize the money they receive
to create an emergency fund, increase
their borrowing power, defer drawing on other assets.
Different Kinds of Reverse Mortgage
Single Purpose Reverse Mortgage – offered by state, local,
or non profit agencies. It must be used for purposes that are state specific.
HECM or Home equity conversion mortgage – it is issued by
the federal government and the borrower must go through a counselling session
before they can be approved. It is offered at one Reverse Mortgage.
Proprietary Reverse Mortgage – it is not insured by the
government and it is available to people who have houses with high appraisal
value.
HECMs Are Popular
The first reverse mortgage that was federally insured was
issued back in 1991. After one year, there were 157 HCEMs were made. By the end
of 2017, there were over 55,000 HCEMs created. Because the reverse mortgage has
become a federally insured loan, over 1 million HECMs have been made.
The Financial Assessment
Before you get your HECM, you have to go through a financial
assessment. This will check your income and your credit history to make sure that
you are willing and able to adhere to the financial responsibilities of the
loan. Credit score isn’t a requirement at this point. According to the result
of this assessment, some of the proceeds of the loan might be set aside to pay
off the property taxes as well as the homeowners insurance.
You Still Own Your House
If you are approved for a reverse mortgage loan, you will
not sign over your home to the lender. You will be the owner of the house and
your name will still be on the title.
Five Payout Options
Unlike other kinds of loans, reverse mortgage loans provides
different methods to get your proceeds. Based on which HECM product you go for,
there could be as much as five different payout options. You could get the
funds in one lump sum, tenure or monthly term payments, as a line of credit, or
any mix of these options.
Reverse Mortgage Proceed Values Vary
The proceed amount you will receive from your house differs
from one person to another and will be based on various factors. These factors
include the value of your home, your age, financial goals, and in case you have
an existing mortgage on the house.
You Can Use The Money As You Please
The proceeds from a reverse mortgage could be used any way
you like. You should create the best plan on how to use your reverse mortgage
by talking to a reverse mortgage specialist and taking into account your
retirement and financial goals.
Call Reverse Mortgage Specialist if you want to know more about this type of loan.
David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/
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