Curious about what a reverse mortgage is all about?
Well you are in the right place! Let’s explore all the things you need to know about a reverse mortgage. We get down to the nitty gritty on eligibility, conditions, lending amounts, and more!
There are two types of Home Equity Conversion Mortgage (HECM) loans. It is important to select the one that best meets your needs.
HECM REFINANCE LOAN: The HECM Refinance allows you to obtain cash out of the equity of your home.
HECM PURCHASE LOAN: The HECM Purchase loan enables borrowers to use the equity from the sale of a previous residence to buy their next primary home in one transaction with one initial investment (down payment) and without monthly mortgage payments.
Either HECM refinance or purchase loans can have fixed or adjustable rates. A fix rate gives you peace of mind as the rate stays the same throughout the duration of the loan. However, it limits the amount of cash you can get as well as any future advances. An adjustable rate allows future advances in the form of a line of credit, fixed monthly distributions, or tenure payments (cash for the rest of your life).
Paying property tax and insurance every month can potentially become a burden to an fixed-income retiree. Life Expectancy Set-Aside (LESA) allows borrowers to set aside an amount of money upfront from their reverse mortgage proceeds for tax and insurance on their home through the life of their reverse mortgage loan. This option can mitigate the risk of default giving you peace of mind.
Loan repayment is not due as long as you meet the loan obligations such as living in the home as your primary residence, continue to pay required property taxes and insurance, and maintain the home according to FHA requirements.
You or your heirs will not be required to pay more than the value of your home at the time the loan is repaid; even if your loan balance exceeds the value of your home, provided you or your heirs decide to sell the home. Best of all, any remaining equity goes to you or your heirs once the loan is repaid.
If you are interested in specific details on your unique scenario please contact us and we can give you all the detailed information you will need.