Everything You Need To Know About A Reverse Mortgage
When you buy a house, it accumulates equity depending on its location and the market factors. Usually, you will only gain access to this equity when you sell your property. A reverse mortgage is a facility from your lender that allows you to turn that equity into cash while you still live on the property.
If you have any pending loan from the mortgage, you can offset it against the total amount received. This way, you will be loan-free, but you will still have other obligations as per the Federal Housing Administration (FHA).
Reverse Mortgage Eligibility
You will need to be 62 years or older to qualify for a reverse mortgage. You will also need to show satisfactorily that you can meet the monthly expenses for property taxes and insurance. You must own the property as your primary residence and have a plan to keep living in it. Seeing as any pending balance will be offset against the income from the reversal, your pending balance should be relatively small.
The amount you will get from a reversed mortgage will depend on a few factors. It will be determined by the age of the youngest borrower living in the house at the time of the loan, or the age of an existing non-borrowing spouse. Another determinant will be the lesser amount of the home’s appraisal compared to a limit set by FHA. The last determining factor will be the current interest rates.
How To Receive The Payments
You can choose a number of options that the lender will use to distribute the payments. First, you can opt to get a lump sum after offsetting any pending mortgage payments. Other methods include:
You can choose to receive a fixed amount of money for a specified period.
Open a line of credit.
Receive equal payments on a per month basis for as long as one of the borrowers lives in the property.
Combine a line of credit with a fixed monthly payment.