According to research done by reverse mortgage consultants, a reverse mortgage will make sense for those who:
•Do not plan on moving.
•Are able to afford the price of maintaining a house.
•Wish to have access to the equity in the house to have funds available for a rainy day or supplement their income.
Some even utilize reverse mortgages to remove their existing mortgage, as well as improve their month-to-month flow of cash.
The bank will make payments to a borrower all throughout their lifetime based upon a percentage of accumulated equity in the home. The loan balance doesn’t need to be paid back until a borrower dies, sells their home, or moves out permanently.
Basics of reverse mortgages
•A bank will make a payment to a borrower based upon a percentage of accumulated equity in the home.
•As a borrower dies, sells their home, or moves out permanently.
•Elderly individuals age 62 and up who own houses outright or have minor mortgages.
•The funds may be used for any reason. Typically, retirees use the money to supplement income, pay for any health care costs, pay the debt off or finance home improvement projects.
How much will you receive?
Many factors determine the quantity of money you’re qualified to obtain with a reverse mortgage, according to the NRMLA, or National Reverse Mortgage Lenders Association.
Factors influencing the amount of the loan
•Age (or age of the younger spouse in the instance of couples).
•Home’s value.
•Rate of interest.
•Lesser of appraised value or home equity conversion mortgages FHA mortgage limitation of $625,500.
In order to be qualified for a reverse mortgage, you must either own the house outright or possess a low mortgage balance which may be paid off during the closing with the reverse loan proceeds. Also, you have to use your house as your main residence.
Usually, the more valuable the house and the older you are, the more funds you’re able to receive.
There aren’t any limits on how the funds from the reverse mortgage loan have to be used.
The payment collection method depends on the kind of mortgage. Retirees who have an adjustable rate mortgage may collect payments on the reverse mortgage a line of credit, fixed monthly payment, lump sum or a combination. Fixed rate mortgage holders get a lump sum.
