Why Should I Get a Reverse Mortgage?
The simple facts about reverse mortgages.
Having a clear plan is the start of a promising retirement. At Finance of America Mortgage, we're here to help you chart a path to your retirement dreams. One way to finance these aspirations is to tap into your home equity through tools designed specifically for retirees--reverse mortgages.
So what is a reverse mortgage?
A reverse mortgage is a loan for borrowers 62 and over that converts your home equity into cash. The unique benefit is that you don't need to pay it back month after month. Interest and fees are added to the loan balance over time; you just continue to pay property taxes, insurance, and uphold the terms of the loan.
What is the difference between a reverse and a traditional mortgage?
Both are mortgages on a property that belongs to you. Instead of paying into your home every month with a traditional mortgage, you can pull money out with a reverse mortgage and repay the loan when you leave the home. These funds can come as a lump sum, installments, line of credit, or in a combination of these options. While the loan balance acccrues interest over time, you are not required to make monthly mortgage payments on the loan as long as you live in the home.*
What are several types of reverse mortgages. What's the difference?
FAM offers two types of reverse mortgages; a traditional Home Equity Conversion Mortgage (HECM) and a suite of HomeSafe reverse mortgage tools.
A HECM is insured by the Federal Housing Administration (FHA) and will base the maximum loan amount on a maximum home value of $765,600.
HomeSafe reverse mortgages offer a variety of options, from standard to jumbo loans of up to $3 million with comparable protections to the HECM.
|*The borrower must meet all of the loan obligations, including living in the properyt as the principal residence and paying property charges including property taxes, fees, hazard insurance. The borrower must maintain the home. If the borrower does not meet these loan obligations, the loan will need to be repaid.|
Who is using a reverse mortgage and why?
The face of retirement has changed. People are living longer, more active lives, and they want more options in retirement. Whether it's starting a new business, paying down debt or medical bills, taking that dream vacation, giving back, purchasing a new home, or just having extra income available for living expenses. Millions of homeowners have leveraged the equity in their homes to work on their retirement goals.
How do I decide if a reverse mortgage is right for me?
The best thing to do is to lay out the numbers and evaluate your priorities. As a licensed reverse mortgage specialist, I can walk you through a quote specific to your situation so you can decide if a reverse will get you where you want to go.
Traditional mortgages have costs attached. What about reverse mortgages?
Like a trational mortgage, there are costs associated with a reverse mortgage. Most of those upfront fees can be rolled into your loan, minimizing your out-of-pocket costs.
Along with interest, you may have an origination fee, mortgage insurance premium, property appraisal, typical third party fees, and a modest charge for independent counseling.
How am I protected with a reverse mortgage?
How is a reverse loan repaid?
The loan is repaid when the borrower or qualified non-borrowing spouse no longer lives in the home. Often, the estate will sell the home to pay the loan, but heirs also have the option to pay off the loan by other means and keep the property.*
To see how much equity you may be able to access, go to my mortgage calculator . You can also use the calculator to determine how much down payment and closing costs you will need to purchase a home with a reverse mortgage.