A reverse mortgage is a loan available to homeowners that are 62 years or older that enables them to convert some of the equity in their home into cash. The program provides seniors a limited income from the accumulated wealth in their homes to use for necessary monthly living expenses. There are many misconceptions about reverse mortgages, and Primary Residential wants to help put you at ease and explain the truths of top reverse mortgage misconceptions.
Your estate will still inherit your home, but there will be a lien on the title in the amount of the reverse mortgage loan plus any mortgage insurance premium and accrued interest.
For example, let’s assume you had a reverse mortgage and, after six years owe $50,000 on it. When you pass away, your estate sells your house for $350,000. The lender will get $50,000, and your estate inherits the rest.
Another common misconception is that there are a lot of out-of-pocket costs associated with taking out a reverse mortgage. The truth is that generally the majority of lender closing costs and fees can be financed as part of the reverse mortgage loan.
A reverse mortgage and a home equity loan are similar in that both loans use the home’s equity as collateral. However, there are also significant differences, such as:
The HECM reverse mortgage was explicitly designed to allow seniors citizens to live in their home for the rest of their lives. The homeowner will never be evicted or foreclosed on as long as they meet the obligations of the loan. Some of the obligations might be that the borrower must use the home as their primary residence. They must also continue to pay all property taxes and homeowners insurance and maintain the home according to standards set by the Federal Housing Administration requirements.
If you are age 62 years or older and could use some money to meet basic living expenses but would like to remain in your home, a reverse mortgage may be a good option. Everyone’s situation is unique, and the best way to find out if a reverse mortgage might be right for you is to talk to your personal home loan professional. Primary residential is always happy to answer your questions and explain the process in detail. Give us a call today.
*This ad is not from HUD or FHA and was not approved by HUD or any government agency. The loan is subject to foreclosure for failure to pay taxes and insurance to maintain the property and insurance and to comply with the terms of the loan. Consumers remain responsible for property taxes, homeowner’s insurance, and home maintenance.