Home equity loans are not very common, nowadays, making it difficult for people to access the value of their home without selling it. A reverse mortgage enables homeowners to access equity in their home by using the value of their home as collateral.
What is a reverse mortgage?
A reverse mortgage was built for homeowners to liquify the equity that they have put in their home by allowing them to use the equity as collateral on another mortgage. A reverse mortgage is often paid out in routine payments, which supplements retirement income.
People can use a reverse mortgage to retire at an earlier age than they would otherwise be able to, to purchase a second home to flip or use as a rental property, or even to prevent foreclosure on their current home.
Who qualifies for a reverse mortgage?
There are several criteria that an individual must meet before they are able to qualify for a reverse mortgage. Here are some of the requirements that must be met:
The borrower must be at least 62 years of age or older.
The borrower must be a homeowner who either owns the entirety of the home, or has a low mortgage balance that will be able to be paid off entirely from the reverse mortgage.
The home that the reverse mortgage applies to must be the primary residence of the homeowner. A reverse mortgage doesn’t need to be paid back until this home is no longer the primary residence, either through selling or vacating, or if the borrower fails to pay taxes and insurance on the home.
Benefits of a reverse mortgage?
There are major benefits of a reverse mortgage that are distinct from any other type of loan. Here are some of the benefits for individuals who get a reverse mortgage:
The borrower is able to access the equity of their home without needing to sell the home.
The borrower still owns their home, but doesn’t have to make any additional monthly payments on their mortgage.
A reverse mortgage doesn’t have to be paid back until the home is sold or vacated.
Reverse mortgages are backed by the federal government, which means that a shifting housing market won’t leave a borrower with a larger bill than the value of the home when the house sells.
The borrower can choose how they receive the payments from a reverse mortgage, whether in full or in routine payments.
Call our experts today, to see if you quality for a reverse mortgage!