Reverse Mortgage Solutions for Seniors

Reverse Mortgage Solutions for Seniors

If you are a senior, or know one, who wants or needs to access to funds in retirement, you might think that getting a part-time job is your only option. It isn’t. If you have equity in a property, then consider reverse mortgage solutions to get a cash flow for when you want it most.

A reverse mortgage is a unique type of mortgage that lets you access the equity that you have paid into your home and turn it into cash. Senior citizens can use this extra income to supplement their Social Security payments, pay for unexpected medical expenses, renovate their home to make it more senior-friendly, and more.reverse-mortgage-resized

You may think about getting a home equity line of credit or a second mortgage instead. However, with these options, you will need to make regular monthly payments with interest. The beauty of reverse mortgage solutions is that you do not need to make those monthly payments. Just keep paying your property taxes, insurance, and utilities just as you would normally do with a conventional mortgage.

The Federal Housing Administration offers the Home Equity Conversion Mortgage (HECM), which is their reverse mortgage program. You can access the equity in your home as long as you are using the home as your primary residence or no longer meet the requirements of reverse mortgage solutions. These requirements include:

  • The homeowner must be at least 62 years old.
  • You either must own your home outright, or else have a mortgage balance that is low enough that you can pay it off at closing with the cash from your reverse loan.
  • You have access to enough funds to be able to pay the costs associated with the home, such as property tax and insurance.
  • You must live in the home as your primary residence.
  • You must receive consumer information from a HECM counselor before you can get the reverse mortgage.
  • The home or condominium must be either a single family property or a two-to-four unit home where the owner lives in at least one of those units.

You can apply for an HECM even if you did not purchase your home with a mortgage insured by the FHA. Contact our Certified Reverse Mortgage Professional to explore your options.

The amount of cash you or the senior in question can receive depends on a number of factors, including:

  • The age of the younger borrower or eligible spouse who is not borrowing.
  • The current mortgage rate.
  • Lesser of the appraised value of the home, the HECM mortgage limit of $625,500, or the sales price of the home.

If you have a fixed rate mortgage, you will receive a single lump sum at closing. For those with adjustable rate mortgages, you can select from a number of disbursement options. Ask your mortgage lender for details about each of the available options to choose the one that is best for you.

If, at some point before closing, you decide that you no longer want a reverse mortgage, you do have recourse. Specifically, by law, known as the three-day right of rescission, you have three calendar days to cancel your mortgage. Again, make sure you get the details of this process at the beginning of your reverse mortgage application so that you know the steps to take if you do, in fact, want to cancel your reverse mortgage.

Like all mortgages, you or the home owner will need to repay the mortgage. This happens when the home is no longer being used as the borrower’s primary residence or when the property is sold. At that time, you or the senior will need to repay the cash that was accessed, plus interest, and any other HECM charges. You get to keep any other proceeds beyond those charges.

Accessing equity in your golden years can be the right decision for the right person. If you or a loved needs funds, consider reverse mortgage solutions as a means of reducing financial stress and enjoying life.

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