Many homeowners have found that a reverse mortgage is a great way for them to take advantage of the equity they have built up in their homes, but there are some important things to know because a reverse mortgage is different than a traditional mortgage. Take a look!
- You must be aged 62 or older and own your home to be considered for a reverse mortgage.
- The home must be your primary residence.
- How much you can borrow depends on several factors including: Your age (the older you are, the more you can borrow), the reverse mortgage interest rate at the time you get your loan, and the value of your home.
- As long as you pay your taxes, insurance, and comply with the loan terms, you cannot lose your home under normal circumstances.
- If you die, then your heirs would inherit your home and just like any other type of mortgage that would be on your home, your heirs can pay off the reverse mortgage in many ways, including selling the home (and keeping the equity).
- There is no pre-payment penalty of any kind so you (or your heirs) can sell your home without penalty.
- You can use a reverse mortgage to purchase a home!
- You can take a fixed rate loan or an adjustable rate loan.
- You can withdraw funds tax free from a reverse mortgage loan (consult your CPA).
- You must continue to pay your property taxes, HOA dues, homeowner’s insurance and maintain your home.
- You can makes payments on your loan if you wish to keep interest from accruing.
Home Equity Conversion Mortgages (HECM)
Some reverse mortgages provide a line of credit that can grow over time and they have a mortgage insurance premium to pay.
Each borrower is required to complete an independent counseling session before they can even apply for a reverse mortgage!
For more information on when a reverse mortgage comes due click here.
If you’re aged 62 or older and own your home you might be eligible for a reverse mortgage. Contact us to find out more about reverse mortgages and ways to make it work for you.
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