A reverse mortgage is a means of tapping the equity in your home to live rent free until you die or the property is sold. There is also a new twist with reverse mortgages that now allows them to be used for the purchase of a home.
Why Are People More Open To Reverse Mortgages Today?
With stricter lending requirements, the current reverse mortgage is actually a lifeline in today’s economy for anyone 62 years of age or older. The bad press and former predatory nature of reverse mortgages has been significantly improved. Reverse mortgages now available to senior citizens have been updated, revised and are much more advantageous to the borrower. They are FHA insured and backed, involving more government oversight and requirements that potential borrowers be educated in the costs, advantages and disadvantages associated with these loans.
What Is A Reverse Mortgage?
This type of mortgage is called a HECM which stands for home equity conversion mortgage. Based on a complex formula having to do with the person’s age, the amount owed on the home, and the appraised value of the property, and after any existing loans, taxes, etc. are paid off, the homeowner can receive a good portion of their equity to use as they see fit.
What Are The Advantages Of Reverse Mortgages?
With this loan there are literally no income or credit requirements. Being at least 62 years of age is the only absolute requirement. The older the borrower and the more equity they have in the home, the better the interest rate and the more money they can obtain. The proceeds can be distributed in a lump sum, monthly payments, an equity draw down, or a combination of these methods. An HECM, is one of the best mortgage products for seniors out there today.
Related posts: