While you determine that a reverse mortgage is the best thing for your needs, you need to consider what reverse mortgage type is going to meet the needs you have. Here’s a look at three types of reverse mortgages:
Single-Purpose Reverse Mortgages – These are the cheapest option, generally offered by non-profit organizations, and some local and state government agencies. However, they can’t be found everywhere. This type of loan is used for only the reason the lender lays out. For instance, a lender may specify the loan be used to make repairs to the home, to pay taxes or whatever. A majority of homeowners that have low-to-moderate income levels can attain this loan type.
Proprietary Reverse Mortgages – These are private loans that companies that develop them back. If your home is appraised high in value, you may attain a larger loan advance with this loan type. If your mortgage is small but the appraised value is high, you could qualify for additional funds.
HECM (or Home Equity Conversion Mortgages) – HECMs are reverse mortgages that are federally-insured by the U.S. Department of Housing and Urban Development, with the money being used for whatever reason.
There are five key things that will affect how much money you’ll qualify for in a reverse mortgage:
· Your age
· Choice of reverse mortgage
· Home’s appraised value
· Present interest rate
· Financial assessment of your ability and willingness to pay homeowner’s insurance and property taxes
More money is often offered to you if you’re older, have a lot of equity in the home and you don’t owe a lot on it. Before you apply for an HECM, you will need to talk to an independent government-approved housing counseling agency counselor. Some lenders that offer the proprietary reverse mortgages will demand you undergo counseling. The counselor will explain what the loan’s financial implications are as well as its costs.
Counseling agencies will typically charge a fee of $125 or more for their services. The fee is often payable from the loan proceeds, and if you’re unable to pay the fee, they still cannot turn you away. If you qualify for the HECM, there is no specific income requirement. First though, the lender will do a financial assessment to determine if you qualify and write the loan up.
There are several payment options you can pick from:
· Single Disbursement Option – This kind of loan is only available with fixed rate loans and gives less money than the other available HECM options.
· Term Option – This loan type provides fixed monthly cash advances for a certain period of time.
· Tenure Option – This loan type provides fixed monthly cash so long as you live in the home.
· Increasing Credit Line – This loan type lets you draw down on loan proceeds whenever you want, in your chosen amount until the line of credit is used. The option restricts the interest amount executed on the loan because you owe interest on the credit being used.
You can qualify for both a line of credit and monthly payment.
For additional information about reverse mortgages or to get answers to your questions, and to attain the free Information Guide, be sure to visit www.SolanoMortgage.Info.
