Deciding on a financial plan for retirement takes time. One viable option is to take out a reverse mortgage on your home, but you may have some questions before organizing this type of agreement.
A reverse mortgage is the same as a Home Equity Conversion Mortgage (HECM), and the Federal Housing Administration (FHA) will insure a HECM.
The details below further describe who owns the property in a reverse mortgage and what you can do to ensure you are borrowing money in a way that makes sense for you.
Reverse mortgages enable homeowners to convert their property’s equity into a lump sum or monthly payouts. You can use this money for various purposes, such as paying credit card debt and making home improvements.
Only individuals 62 or older can qualify for reverse mortgages (HECMs) but can access proprietary reverse mortgages earlier at 55.
Yes, you do! Under a reverse mortgage plan, the title to your home belongs to you. Similar to a traditional home mortgage agreement, reverse mortgages allow you to borrow money and place your home as security for the loan, just like a traditional home loan.
You must continue to follow through with certain responsibilities after organizing a reverse mortgage. This includes keeping up with your property taxes, paying for homeowner’s insurance and maintaining the property with necessary repairs, just like with a traditional mortgage.
Your heirs will own the house after death. If the beneficiary is a co-borrower spouse, they can continue living in the house and collecting the loan payments as long as they observe the reverse mortgage requirements.
Heirs who aren’t co-borrowers will own the house and have up to 12 months to payoff the loan balance. Their options include:
Beneficiaries have the right to exercise either one of these options. They’ll then have an extra six months to pay off the loan or 12 months to sell the property. The loan provider may extend the durations to help beneficiaries finalize the transaction.
A reverse mortgage is a non-recourse loan. Put simply, if a borrower or heir cannot pay back the reverse mortgage loan because the value of the property is less than the balance of the reverse mortgage owed, a financial institution does not have the right to ask for other assets to make up the difference, the excess owed is no longer due.
Under reverse mortgages and traditional home mortgages, a property will serve as collateral when a borrower violates their end of the loan agreement. Only in this situation can a reverse mortgage company or bank take your home.
A reverse mortgage agreement does not require a homeowner to give up the title to borrow money. If you currently own your home and set up a reverse mortgage, you or an heir will only give up ownership of the property if the terms of the agreement are breached.
The financial institution in which you took out a reverse mortgage will explain the legal terms of your agreement and what you can do to ensure payments come in on time.
Yes! You can sell a house with a reverse mortgage because you hold the title. In the case of HECM loans, the private loan provider or government has no say in your decision to sell.
Once you sell the property, the sale proceeds will cover the loan balance, and you can pocket any remaining amount. If the funds fail to pay for the total outstanding amount, mortgage insurance will cover the difference. Again, the reverse mortgage is non-recourse, so you can never owe more than the current value of your home.
There could be a scenario when a homeowner decides to sell a property that they have a reverse mortgage on. Owners may choose to sell to pay back the loan balance or for relocation purposes.
Any equity remaining in the home becomes available to the borrower or their heirs once the reverse mortgage loan is paid back in full.
Yes! HECMs include Federal Housing Administration (FHA) insurance, which creates a safety net for individuals selling a home with a reverse mortgage. This insurance is in place to protect borrowers and their heirs. You and your family members will never be responsible for paying back a loan sum larger than the residential property’s appraised value.
We use our years of experience and a supportive and educative approach to streamline retirement funding. A dedicated and licensed advisor will support you from the application stage to closing by understanding your financial goals, identifying a suitable solution, explaining it exhaustively and answering your questions.
Our approach has attracted the admiration of clients who say they’ll recommend us. They commend our advisors’ efficiency, professionalism, friendliness, helpfulness, knowledge, patience and responsiveness.
Senior Lending Corporation is based out of Tampa, Florida and is licensed in several states. We help individuals over 62 set up reverse mortgages to plan for retirement.
We’re Florida’s number one reverse mortgage company because we have a strong willingness to help and educate our clients. Our mission is to match you to the program that makes sense for your financial goals.
We cherish your trust, so we’ll treat you like family from the moment you reach out to us.
Call us today at 800-822-1190 or reach out to us online for details about how a reverse mortgage could be the right move for your financial future.
