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The following information is provided by the National Reverse Mortgage Lenders Association (NRMLA), an unbiased source for information about Reverse Mortgages and how they work.
We encourage you to visit our blog https://cliffjohnsen.wordpress.com or the (NRMLA) website for a comprehensive explanation of the Reverse Mortgage process.
What is a Reverse Mortgage?
A reverse mortgage is a type of loan available to homeowners, 62 years or older, that allows them to convert part of the equity in their home into cash. There are NO monthly interest payments due!!
The product was conceived as a means to help retirees use the accumulated wealth in their homes to cover living expenses . However, there is no restriction on how reverse mortgage proceeds are used.
Reverse Mortgage Defined
The loan is called a reverse mortgage because instead of making monthly payments to a lender, as with a traditional mortgage, the lender makes payments to the borrower. The interest payments are added to the loan balance each month. There are many options including taking a lump sum of money right in the beginning.
The borrower is not required to pay back the loan until the home is sold or otherwise vacated. As long as the borrower lives in the home he or she is not required to make any monthly payments towards the loan balance. The borrower must remain current on property taxes, homeowners insurance, and condominium fees (if applicable).
With a Reverse Mortgage, does the borrower still own their home?
With a reverse mortgage, the borrower always retains title or ownership of the home. The lender never, at any point, owns the home, even after the last surviving spouse permanently vacates the property and remains current. Upon the owners vacating the property, the Reverse Mortgage is treated like any other loan upon sale. Pay the balance, and the remainder of the equity goes to the owners or heirs.
How much money can a borrower get with a Reverse Mortgage?
The amount of funds that a borrower is eligible for depends on his or her age (or, in the case of couples, the age of the younger spouse), the value of the home and interest rates. The older the borrower, the more proceeds he or she may receive. A ball park figure is about 50%. More with increasing age of the borrower. ie if your house is worth $600k you will have about $300k to start.
Please note that this does not constitute a full explanation of your Reverse Mortgage options. For more specific details, contact NORTH POINT FINANCIAL TODAY!
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North Point Financial is a Real Estate Broker – Broker license numbers: NMLS (985055 and 974889), Cal BRE (0662853) Cal Contractor- General, Electrical and Plumbing #381401 These materials are not from HUD or FHA and were not approved by HUD or a government agency. Copyright © 2017 North Point Financial. All rights reserved.