A reverse mortgage loan (also called a Home Equity Conversion Mortgage – HECM) is a FHA insured loan designed to allow seniors to draw upon the equity in their homes. Seniors can select to receive the loan proceeds either by a lump sum payment, by monthly installments, as a line of credit or as a combination of all of these. If you choose the line of credit option, you are not required to draw money off of the line of credit until you want to. The reason this type of loan is called a “reverse mortgage loan” is because the loan proceeds can be paid to the home owner and since the borrower is not required to make payments, the balance may grow as interest accrues.
Eventually the outstanding balance of the loan is repaid with interest, however the loan generally does not become due until the borrower passes away, sells the home, no longer maintains the home as the primary residence or fails to pay property taxes, fails to pay homeowners insurance or otherwise fails to comply with the loan terms.
The remaining equity in the home is still the home owner’s and or their heirs, so like a traditional mortgage, the bank is only entitled to the amount that is owed and the remaining equity would still go to the heirs. Likewise, if the senior decides to sell the home and move, the senior is still able to take the net proceeds of the sale (the equity).
Getting a reverse mortgage loan is a big step and needs to be carefully evaluated. Many people have found that by taking a reverse mortgage loan they avail themselves of the equity they have built in their home. Having the ability to pay off an existing mortgage, other debts and the ability to have additional cash flow can create a much more enjoyable lifestyle for seniors—especially since the reverse mortgage does not require monthly payments.
Typically those who benefit most from a reverse mortgage loan are those who plan to stay in their homes over an extended period and have built a decent amount of equity in their homes.
Contact one of our professionals today to find out if you have enough home equity to make a reverse mortgage loan a good decision for you. If you have a good amount of equity in your home and you plan on staying there for an extended period of time then a reverse mortgage loan might be right for you.
If you own your home and are 62 years of age or older you might be eligible to apply for a reverse mortgage loan. The home you are thinking of taking the reverse mortgage loan out on must be your primary residence. The home should at least have a large portion of equity in it (around half); the older you are, the less equity is required to be available. Credit is a factor, but not like a traditional mortgage, so please call us even if you think your credit is not good. Income is a factor as well, because you still have to afford to pay your other debts as well as your taxes and insurance; you also should afford to take care of the home. Having a conversation with a reverse mortgage expert at Your Better Loan LLC is a great way to determine what a HECM can look like for you. Making an informed decision is key.
We can help you figure out if you’re eligible for a reverse mortgage loan. Call us today! If you're ready to get started on a reverse mortgage loan apply now!
These materials are not from HUD or FHA and were not approved by HUD or a government agency.