The federally insured (HECM) Reverse Mortgage is a special program for borrowers 62 years or older. With a reverse mortgage, you can access the equity in your primary residence to help fund your retirement. This loan option can help pay for a continued lifestyle or a big project even when you are in your retirement.
If you are 62 or older and own property, you can borrow against your equity as tax-free income. In a regular mortgage, the homeowner would pay the lender. In a reverse mortgage, the lender pays the homeowner instead. There is no monthly payment, and you don’t have to sell your home. However, with a reverse mortgage, the amount you owe goes up over time instead of decreasing.
The most popular type of reverse mortgage is the Home Equity Conversion Mortgage (HECM), a mortgage backed by the U.S. government.
Some key benefits of a reverse mortgage over a traditional loan are:
The HECM reverse mortgage is very flexible which allows us to tailor a benefit that can specifically meet your need in retirement.
We also have access to a non-FHA proprietary jumbo reverse mortgage for non-FHA condos and jumbo loans above $850,000.
Even if you have your house paid off, you might not be able to borrow the full amount. The maximum you can borrow, the principal limit, depends on several factors such as:
Your principal limit will likely be higher the older you are, the more your property is worth, and if interest rates are low.
The payment options are as follows:
Line of Credit:
Term and Tenure Payments:
Lump-Sum:
Not just anyone qualifies for a reverse mortgage. In order to be approved, you need to meet several factors:
If you’re unsure of whether you might qualify, speak with one of our knowledgeable loan specialists.
However, if you don’t qualify, there may be other options for you. For example, if you’re a veteran or service member, you may be eligible for a VA cash-out refinance, which allows you to access the equity in your home.
With a reverse mortgage, the interest on the loan is added to the balance of the loan and paid off when the homeowner moves or sells the property, or dies. If you are away for more than 12 consecutive months, the inheritor will either have to pay the value of the loan or move out.
While you live in the residence, there are no monthly payments required. It is only after the end of the term or tenure that the heirs of the mortgage will have to decide what to do. It is considered a non-recourse loan, which means that you can never owe more than the home is worth. At the end of the mortgage, the heirs can:
If the bank ends up paying more than the home was worth over the life of the loan, that debt doesn’t transfer to the heir and instead is taken as a loss by the lender.
Feel like you’re at the point in your life where a reverse mortgage may be highly beneficial for you? At United Executives, we’re happy to discuss your options with you and answer any questions. Fill out our contact form or give us a call at (626) 967-900.
United Executives is dedicated to five-star white-glove customer service to make the mortgage process as efficient and stress-free as possible for our borrowers
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