A Reverse Mortgage may be right for you if you are looking for money to finance a home remodel, pay for health expenses or supplement your retirement and are 62 or older.
A Reverse Mortage can be beneficial but it is very important to understand all the rules and fees involved. In a Reverse Mortgage the lender makes payments to you instead of you making your monthly mortgage payment. You generally do not have to pay it back unless you sell your home, your home is no longer your primary residence or if you pass away.
The least expensive option is the Single-Purpose Reverse Mortgage.They can only be used for specific things such as home repairs, improvements or property taxes. Moderate / Low income homeowners can usually qualify for this option. The more costly options are Federal Insured and Proprietary Reverse Mortgages. Home Equity Conversion Mortgages (HECMs) are backed by the U. S. Department of Housing and Urban Development (HUD) and they are more expensive and have costly up front fees. HECM loans can be used for anything and have no income or medical requirements. If you are interested in this type of loan you will have to schedule an appointment with a counselor. The government wants to make sure you know everything there is to know about the program you are interested in and all the rules and fees. Most counseling agencies charge hefty fees for their services. However, if you can not afford to pay this out of pocket, you will not be turned down. As far as how much you can borrown depends on your age, the type of Reverse Mortgage you are interested in, the appraised home value and current interest rates. Obviously, the older you are the more likely you are to have built up a lot of equity in your home. This means more money you can get.