Reverse mortgage, also known as Home Equity Conversion Mortgage (HECM) are special loans specifically made for older homeowners. A reverse mortgage allows borrower to convert a portion of the equity on your home now into cash.
Over the years there is equity that is built up on your home from making mortgage payments. This loans converts that equity and can be paid to you. However, these loans do not require monthly mortgage payments. Instead the interest is added to the loan balance each month. You only have to pay the loan until the borrower is no longer using the home as their principal residence or they fail to meet the obligations of the mortgage. These loans can also be used to purchase a primary residence
What are the qualifications?
To qualify for a reverse mortgage you must be a homeowner of 62 years or older. You must own your home outright, or have a low mortgage balance that can be paid off at closing with the savings from the revers loan. You must have a financial resource to pay ongoing property charges like taxes and insurance. You must live in the home as your primary residence and you must work with a reverse mortgage counselor prior to obtaining the loan.
Is my home eligible?
All homes that are single family homes or a 2-4 unit home with at least one unit occupied by the borrow your are eligible. There is a list of HUD- approved condos that meet the FHA requirements that are also eligible for a reverse loan.
For this program there are a number of ways you can receive the payments:
- Tenure – these are equal monthly payments as long as at least one borrower lives in the property as a primary residence.
- Term- monthly payments for a fixed period of time.
- Line of credit- Unscheduled payments at the time of the borrower’s choosing until the credit line is exhausted.
These loans are commonly used for home renovations, medical expenses, and daily expenses. The reverse mortgage can be used to pay off existing mortgages, and alleviate of some finical stress. If you or a family member might qualify for a Revers mortgage check out your options and start getting rid of your mortgage today.