A reverse mortgage loan helps homeowners who are at least 62 years old access the equity they have built up in their homes. While retirees benefit most from a reverse mortgage, other reverse mortgage candidates can also benefit from this type of loan. Additionally, consulting with mortgage refinance companies can provide additional insights into how a reverse mortgage might fit into your financial strategy, even if you do not need funds immediately.
If you are considering applying for a reverse mortgage loan, it’s essential to know what makes you eligible for the loan, how it works and what to look for in a reverse mortgage funding company.
Who is best suited for a reverse mortgage? Many reverse mortgage borrowers use the proceeds to pay off other debts, cover monthly expenses, or renovate their homes. Others use a reverse mortgage to protect or maintain their lifestyle in retirement. Understanding whether you qualify for this type of mortgage program is crucial, as there are three main types of candidates for which reverse mortgage loans are ideal.
The first ideal candidate for a reverse mortgage is a homeowner with several years left to pay off their mortgage yet still has sufficient equity in the home. A reverse mortgage is a beneficial option for this candidate because instead of making monthly payments to a traditional mortgage loan, they receive funds through a reverse mortgage to supplement the money they need for retirement. Here’s why this person might consider a reverse mortgage:
This second candidate is a homeowner who has substantially or completely paid off their mortgage and does not need immediate cash. The structure of a reverse mortgage works well for this person for the following reasons:
The third person who is a great candidate for a reverse mortgage is an affluent retiree. These retirees generally have $500,000 to $1.5 million worth of investable assets and have no mortgage against their homes. These retirees can benefit from a reverse mortgage for the following reasons:
If you consider yourself a candidate for a reverse mortgage loan, you need information to make the right decision. Understanding what makes you eligible for a reverse mortgage, the reverse mortgage cost, and the borrowing limit will help you determine if it’s a good option for you.
To get a reverse mortgage loan, you must meet a few requirements. The most critical conditions are your age and the amount of equity you have in your home.
The principal limit is the term that refers to the borrowing limit on a reverse mortgage. To determine this limit, mortgage companies consider your age, loan interest rate, and home value. Generally, the older you are, the higher the principal limit. To get a more precise estimate of your borrowing limit, using a mortgage calculator can be helpful. If you are married or co-borrowing with someone, the younger person’s age will determine the principal limit.
There is a limit on how much you can borrow on a reverse mortgage loan based on a percentage of the appraised value of your home. In the case of the government-insured Home Equity Conversion Mortage (HECM), the limit is $1,089,300, regardless of whether your home is valued higher than this amount.
You have three options to receive the funds you borrow:
If you are an ideal candidate for a reverse mortgage loan, this option can help you take better control over your mortgage loan and enjoy your retirement.As Florida’s # 1 reverse mortgage company, we are here to serve your financial needs. You can count on us to work with honesty and integrity throughout the process from beginning to closing.
Our licensed advisors are here to find the best program for you. To enjoy a stress-free retirement, get in touch with a specialist today! You can call and get your Free reverse mortgage analysis by calling 800-822-1190.