When it comes to mortgages, you can go forward and backwards. That sounds confusing, right? Not so when it comes to reverse mortgages. What is a reverse mortgage and can it work for you?
Reverse Mortgage History
There used to be a lot of lenders offering this type of loan product, but they’re not so many as before. The government had to get involved as there were lots of reverse mortgage scams out there. It’s very important to get a reputable lender when applying for a reverse mortgage. If you’re helping your parents make sure they know what they’re getting into before signing.
A fantastic choice is an FHA reverse mortgage. Verifying the strength and reputation of a lender is easy with these types of loans. You can also apply for a non-FHA reverse mortgage (and may get a better deal), but check into the pros and cons for both types of reverse mortgage loans.
Are reverse mortgages a good deal?
People aged 62 or older who have sufficient equity in their home or have paid for their home in full are good candidates. There are some upfront fees that need to be paid as well as a required HUD-approved counseling class to complete. Completing this process will give you the facts that’ll help you decide if a reverse mortgage fits your budget and lifestyle.
If approved, mortgage payments stop. The homeowner may even be able to get monthly payments to help them with living expenses. If you plan on staying in your house this may work for you.
If you happen to die while you still own the house, your heirs have the option to buy the house, paying off the borrowed amount in full to the lender. The loan is now moving in forward motion. If the family members choose not to buy the house then the bank will sell the house.
Reverse mortgage options
One of the best things about a reverse mortgage is you’re getting some of that hard-earned equity. There are also options for how you can receive some of that money. You can get the money in a lump sum, receive monthly payments, or having it as a line of credit. You may want to use a combination of these options, depending on what you’d like to do. Using part of it as a line of credit and using part of it for an important may be just the right thing for your situation. Of course, you’ll ask about what options are available when you speak to the lender.
Seniors face many challenges, one of them being having a reduced income. Maintaining the home as well as paying taxes and insurance can be a challenge for them. Having a reverse mortgage gives them a plan so they are able to make their money last longer and keep their home.
To Sum Things Up….
Considering a reverse mortgage for you or a family member? Having a lender on your side who will treat you or your parents respectfully and look out for their best interests is essential. Contact me, and I’ll introduce you to the top lenders in Virginia Beach and areas of Hampton Roads.
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I hope that you enjoyed this What is a Reverse Mortgage post!