While 2020 continues to be an unforgettable year for many, one positive takeaway is that senior homeowners have seen an increase in their collective home equity. According to a recent report, seniors added $134 billion to their already impressive housing wealth which is now at $7.70 trillion.1
As the COVID-19 pandemic continues to impact the financial well-being of American seniors many homeowners are looking to tap into their home equity.1 If you are looking into a reverse mortgage, the following questions might help you decide if it may be a good fit.
Did you know that a reverse mortgage allows qualified homeowners, who are 62 or older to access a portion of their home equity as cash which can be used to supplement their retirement income, pay for home renovations, medical expenses, and daily living expenses?
Did you know that the amount of funds that can be received from a Home Equity Conversion Mortgage (HECM) is determined by the age of the youngest borrower (or non-borrowing spouse)2, the lesser of the appraised value of your home, sale price, or the FHA national lending limit of $765,600, current interest rates and the remaining balance of your existing mortgage (if applicable) and any other mandatory obligations?3
Did you know that there are proprietary reverse mortgages available that may allow you to receive funds up to $4,000,000 (depending on the lender)?
Did you know that reverse mortgage borrowers do not have to repay the loan as long as they live in the home as their primary residence, pay property taxes and insurance, and maintain the property?4
Did you know that borrowers can receive the available equity from their reverse mortgage as a lump sum5, monthly installments, or a line of credit?6
Did you know that you can call (800) 976-6211 and speak with a licensed loan advisor to see if a reverse mortgage can benefit you?
2A 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.
3 Mandatory obligations are those fees and charges, as defined by HUD, incurred with the origination of the HECM loan that are paid at closing or during the first 12-month disbursement period. This includes but is not limited to: the loan origination fee; counseling fee; up-front MIP; third-party closing costs; customary fees and charges for warranties, inspections, surveys, engineer certifications; repair set-asides; set-aside for property taxes and insurance; and delinquent federal debt.
4 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.
5 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.
6 The reverse mortgage loan balance grows at the same rate as the available line of credit. Line of credit growth occurs and is only a benefit when a portion of the line of credit is not used. The unused line of credit grows over time and more funds become available during the life of the loan.