It’s that time of year when financial stress can creep up on you. According to the National Retail Federation, consumers plan to spend an average of $1,007 for items such as decorations, candy, and gifts this holiday season.1 This expense, added to that of travel and having company, can weigh heavily on your mind and possibly put you in a financial bind. If you’re feeling concerned about your overall cash flow, a reverse mortgage loan may help relieve some of your financial stress as you plan for 2019.
How can you get cash with a reverse mortgage?
A reverse mortgage is exclusively for senior homeowners 62 or older. One of the unique benefits of a reverse mortgage is that it does not require monthly mortgage payments or need to be repaid as long as you meet the loan obligations.2 This means that you may be able to access a portion of your home equity, turn it into cash, and not have to make monthly mortgage payments like you would with a traditional cash-out-refinance or Home Equity Line of Credit (HELOC).
Reverse mortgages don’t have credit score requirements like cash-out refinance loans and HELOCs do. Borrowers undergo a financial assessment during the qualification process, but your credit score will not automatically qualify or disqualify you from being able to get a reverse mortgage. If you have difficulties managing your financial obligations, your reverse mortgage borrower may want your loan to include a life expectancy set aside (LESA). A LESA helps protect the borrower from foreclosure by setting aside a sum of the loan proceeds to cover property related charges such as taxes and home insurance. The way the available loan proceeds are disbursed to you is flexible.3 For example, a fixed rate reverse mortgage allows you to receive your loan proceeds in as a lump sum.4
How can a reverse mortgage help you?
You can use your reverse mortgage proceeds however you like. The lump sum payment option is often used for:
How much cash can you receive?
The amount of money you will be eligible to receive depends on:
You can read more about how these factors affect your eligibility here.
If you are feeling strapped for cash as the holidays approach, a reverse mortgage may be a solution. If are at least 62 years old and own your home, call 1 (800) 976-6211 to speak with a licensed advisor or fill out the calculator above to see an estimate of how much you may be able to receive.
1 National Retail Federation. Holiday and Seasonal Trends. Winter Holidays https://nrf.com/insights/holiday-and-seasonal-trends/winter-holidays
2 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
3 The funds available to the borrower may be restricted for the first 12 months after loan closing, due to HECM reverse mortgage requirements. In addition, the borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.
4 This disbursement option is only available for a fixed rate loan.
5A spouse must meet the following requirements to be considered eligible: 1) Be the spouse of the reverse mortgage borrower at the time of loan closing and remain the spouse of the borrower for the duration of the borrower’s lifetime. 2) Be properly disclosed to the lender at origination and specifically named as a Non-Borrowing Spouse in the loan documents. 3) Occupy, and continue to occupy, the property securing the reverse mortgage as the principal residence.
6 Your current mortgage(s) and any other existing liens against the property must be paid off with the reverse mortgage proceeds.