A reverse mortgage is a means for homeowners, that meet the age requirement, to borrow money from a lender. The borrowers and property must meet certain criteria in order to qualify.
The people applying must be on the title of the home and 62 years old or older. The mortgage is to help seniors, so this is why there are age restrictions on it. If one of the persons on a title is not 62, a loan officer may have some additional products.
A primary residence is the only real estate that qualifies for a reverse mortgage. Rental property and second homes do not qualify. A small mortgage paid off in closing with some of the proceeds from the reverse mortgage, is acceptable. There can be no other liens on the property.
The property owner must be current on taxes, insurance, and homeowner association dues, if applicable.
Many seniors use this loan to increase their monthly income. In some instances, homeowners need money for large medical expenses or other unforeseen debt. There is no restriction on what the funds can pay for.
To determine the loan amount, lenders will factor in the age of the borrowers, the value of the property, and interest rates. Usually, older borrowers get more money, and valuable homes get the most money.
Depending on immediate needs and lifestyle condition, there are several options offered.
Homeowners must go through a mandatory counseling session. These sessions are free. Independent third parties, such as the Department of Housing and Urban Development and AARP, offer them. During the session, counselors go over the pros and cons of a reverse mortgage and alternative options.
The reverse mortgage is a loan, and it comes due when the last surviving borrower either passes away or moves out of the property for 12 months. At that time, the heirs may choose to sell the home and pay off the loan or use other funds to pay back the lender and keep the real estate in the family.
For information on reverse mortgages contact Beaches Title today.