Are you 62 years old and own your home? If so, then you may qualify for a reverse mortgage that allows you to turn your home equity into money. What’s a reverse mortgage? Simply put: it a loan you take out against your home’s equity, and it never needs to be repaid so long as you live in the home and it’s not been sold.
If you would like to put more money into your retirement account, and despise the idea of making loan payments, you may want to consider a reverse mortgage.
Reverse Mortgage: How Does It Work?
When a person qualifies for a reverse mortgage, the lender makes payments to them based on a percentage of the home’s value. When the home is no longer occupied by the homeowner, the lender will sell it to get the money it lent out back. Now, there are a number of reverse mortgages out there, including reverse mortgages private lenders offer, but they all share similar characteristics:
· Older homeowners qualify for larger loan amounts than homeowners who are younger.
· Larger loans are given to people who own more expensive homes.
· Reverse mortgages must be the home’s primary debt, meaning other lenders have to agree to rank their loans lower than the main mortgage holder.
· Financing fees are often included in the loan cost.
· Lender can ask for repayment in several instances: failure to upkeep the property, failure to maintain insurance on property, failure to pay taxes, abandon property, file for bankruptcy or commit fraud.
· Lender can request payment in more cases: the home has been condemned, when a new owner is added to property title, part or all property is sublet, the property’s zoning classification has changed or more loans are taken out against the home.
What Are HECM Loans?
Millions of people have been eligible for reverse mortgages since their appearance in the 1960s. However, the most common kind is the federally-insured home equity conversion mortgage (or HECM, for short).
This mortgage type, which is provided by the U.S. Department of Housing and Urban Development, was made available in the late 1980s (1989). This kind of reverse mortgage is the only one the federal government issues, reducing the costs to borrowers and promising lenders will meet their responsibilities. A negative point behind them is the limited maximum loan amount.
What Are The Income Options With The HECM?
Reverse mortgages offer an array of income-producing options such as:
· Credit line
· Lump-sum payments
· Monthly cash advances
· Combination of the above three
The most interesting one of the HECM loan is the credit line, as the money that’s available to the lender will increase over time by the interest amount. There are less income options available on non-HECM loans.
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.
