Credit does not matter. A reverse mortgage, available for homeowners (62+), does not show up on your credit and can turn home equity into cash$$.
Credit and a Reverse Mortgage
Credit is not a consideration in qualifying for a reverse mortgage (maximum amount of $417,000). No credit report is required, and your credit is not affected. The homeowner’s credit score, savings, or income are not even considered for loan approval. Instead, age, home value, and home equity are the key factors used.
Overview of a Reverse Mortgage
A reverse mortgage can help senior homeowners, age 62 and older, who are “house-rich but cash-poor”. They own their homes outright or have considerable equity in their homes, but they do not have the cash or liquid dollars to meet their needs or desires. In contrast to a regular mortgage, whereby payments are outgoing and paid to the lender; in a reverse mortgage, payments are incoming and paid to the homeowner.
Reverse Mortgage – Advantages
With a reverse mortgage, the homeowner has the option to receive payments monthly, a lump sum, or a line of credit. The money can be used for any purpose. The homeowner keeps title to the home and can continue to live in the home for a lifetime. No repayments are required unless the home is sold, the homeowner no longer occupies home as a primary residence, or the homeowner dies.
Reverse Mortgage – Disadvantages
A reverse mortgage can be costly. Lenders generally charge origination fees, closing costs, and other servicing fees. Loan interest is added to the principal balance monthly and can accumulate quickly. Yet, the interest is not income tax deductible; unless, the loan is paid partially or in full. Real estate taxes, homeowner’s insurance, repairs and maintenance continue to be the responsibility of the homeowner.
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