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Reverse Mortgages: What They Are and How to Get One



 If you have significant home equity but little retirement income, a reverse mortgage may be beneficial. Homeowners 62 years or older can borrow against the equity in their home and receive funds from a lender through a reverse mortgage. This money can be utilized for living expenditures and home upgrades without requiring you to relocate or make monthly loan payments. 

 When you obtain a reverse mortgage, you retain ownership of your home and use the proceeds to pay off any remaining mortgage balance. A reverse mortgage is a term that refers to a loan that is reversed. Reverse mortgages are loans that give you access to your equity at home in the form of one-time payments, credit lines, or a series of monthly payments. Unlike traditional mortgages (also known as  forward mortgages) and second mortgages, reverse mortgages do not require you to pay as long as  the home is your primary residence. However, you must repay your existing mortgage when you close or before you close your reverse mortgage. 

 If you die or move permanently, you will need to repay the loan. This is often achieved by selling a home. Alternatively, you or your heirs can return the loan or pay the lender 95% of the appraised value of the home and retain the home. If the value of your home grows throughout the term of your reverse mortgage, any excess value will be distributed to you or your estate. This also occurs if you die, sell, or move before fully utilizing the equity in your loan.  If the value of your home drops during the term of your reverse mortgage, neither you nor your estate will be required to make up the difference. This benefit is made possible by the reverse mortgage insurance premiums you will pay.  How to Equalize a  Reverse Mortgage To qualify for a reverse mortgage, you must meet the following criteria: at least 62 years old 

 Own one of the following eligible property types: single-family homes, 2-4 units of homes (if 1 unit is occupied),  HUD or FHA certified condos, or FHA certified mobile homes. Please keep your accommodation as your primary residence. Has homeowners insurance, property taxes, maintenance, and financial means to maintain  flood insurance and membership fees of the Homeowners Association as needed. Fully own your home  or have at least 50% capital Participate in a HUD-approved reverse mortgage counseling session. reverse mortgages that do not delinquent federal obligations (taxes, student loans, etc.) 

 There are three types of reverse mortgages that you can consider depending on your situation. 

 Home Secured Mortgage (HECM): The most common type of reverse mortgage, HECM, is insured by the Federal Housing Authority and is only available  through FHA licensed reverse mortgage lenders. These credits can be used for any purpose.  Proprietary Reverse Mortgage: A less common type of reverse mortgage for homeowners worth more than the FHA limit of $ 765,600 in 2020. Sometimes called a jumbo reverse mortgage. Single-purpose reverse mortgages: A less common type of reverse mortgage for low- and middle-income seniors who need  home refurbishment, home refurbishment, or property tax funding. Unlike HECMs, these loans can only be used for purposes specified by the lender.  How reverse mortgages work Reverse mortgages give you access to some of the housing mortgages called  initial capital limits. This limit depends on four factors: 

 Your Age: The lender considers the age of the latest borrower or eligible non-borrowing spouse. Young borrowers receive less money because they have a longer life expectancy. Current interest rates: Higher interest rates reduce creditworthiness. The value of your home: The amount you can borrow is partially based on the lesser of your home`s appraised value, the FHA limit, or the sales price. In 2020, the FHA limit is $765,600, and the sales price is only factored in if you`re using a HECM for purchase.  How much you owe on your current mortgage (if applicable): If you don`t own your home outright or have at least 50% equity in your home, you won`t be able to receive a reverse mortgage.  When a reverse mortgage might be for you 

 You want to age in place and your home can accommodate it.  Your home needs accessibility improvements for aging in place.  You don't mind leaving your home to your heirs.  You need or need cash and are unable to qualify for a mortgage refinancing, mortgage loan, or mortgage loan facility, probably due to poor credit.  You can afford to catch up  with homeowner insurance, taxes, and maintenance indefinitely. If the reverse mortgage is not appropriate 

 They rely on  government interests based on specific needs, such as: B. Medicaid or Supplemental Security Income (SSI). It may be interrupted if you use a reverse mortgage.  You want someone to inherit your home for free and without debt when you die.  You think you may want to move. (If you're moving and still want to be a homeowner, a HECM for sale may be an option.) For your health, you may need to move to a  living support facility or long-term care facility for at least 12 months.  Your spouse will not be a co-borrower. Non-borrowing spouses do not receive any further reverse mortgage income after the death of the borrowed spouse, and in certain circumstances they may no longer be able to live in their homes. (Qualifications will be decided at the time of application.)

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