Learn About Reverse Mortgages
Reverse Mortgage Loan Information
A reverse mortgage is a special type of home loan that enables homeowners to convert a portion of their equity into cash. The equity built up over years of home mortgage payments and appreciation can be paid to you. Unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence.
The U.S. Department of Housing and Urban Development (HUD) reverse mortgage provides these benefits, and it is federally-insured as well. There are also Fannie Mae (Homekeeper) conventional reverse mortgages and Lemans Brothers Bank offers Cash Account Reverse Mortgage through Financial Freedom Senior Funding Corp.
Using a Reverse Mortgage
The funds from a reverse mortgage can be used for a variety of proposes. The best news is that you are not restricted in how to use the funds.
Examples of Loan uses include:
- Investments
- Vacations
- Supplemental retirement income
- Home repairs and improvements
- Long-term care insurance
- Cover medical expenses and prescription drugs
- Pay property taxes.
Qualifying for a Reverse Mortgage Loan
The eligibility requirements are quite simple to obtain a Reverse Mortgage. There are no income, employment or credit qualifying restrictions.
The basics for Reverse Mortgage Loan Qualification:
- All homeowners must be age 62 or older and occupy the property as their principal residence.
- The home must be owned free and clear or having a remaining mortgage balance which can be paid off by a reverse mortgage.
- The property must be a single-family home or two to four unit dwelling.
- Town-homes, detached homes, condominium unit, planned unit developments (PUDs) and some manufactured homes are eligible.
- The home must meet HUD minimum property standards and, in some cases, necessary home repairs can be made after the closing of a reverse mortgage
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Loan Amounts
Loan amounts vary and are based on several factors. Please review the following factors and if you have any questions, please don’t hesitate to contact one of our Loan Professionals toll-free at 877-407-1041.
The maximum amount that can be borrowed is based on the following factors:
- The age of the youngest homeowner.
- The appraised value of the home.
- The current interest rate.
- The county in which the property is located.
In general, the more your home is worth, the older you are, and the lower the interest rate, the more you’ll be able to borrow
Costs can be Included in Your Loan
All of the normal loan costs can be included in your loan balance. Just like a standard mortgage loan, reverse mortgage costs include appraisal, credit report, title insurance, legal fees, loan origination, and recording fees.
Interest Charges
The interest rate on a reverse mortgage adjusts and is tied to readily available market indexes plus a margin. Just like a home equity line, you are not charged interest on money that has not been withdrawn.
Accessing Funds
You have unique needs and you may prefer to get the entire amount upfront, while others would prefer a steady monthly payment. Regardless of your needs, you can get your money however you wish and change the loan distribution as often as you wish to accommodate changing needs.
Reverse Mortgage Distribution Options:
- Lump Sum – Cash is immediately available
- Term – Equal monthly payments for a fixed period of months selected.
- Tenure – Equal monthly payments as long as at least one homeowner lives and continues to occupy the property as a principal residence.
- Line of Credit – A credit line which the customer can draw upon as he or she wishes.
- Combination – Any combination of the above plans.
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