HomeStar Financial, LLC has answers to the most common questions about Reverse Mortgages to give you “piece of mind”.
What is a Reverse Mortgage?
A reverse mortgage is a special mortgage loan for seniors. It is a safe and easy way to turn your home equity into cash. Unlike a home equity loan or mortgage loan, you do not have to make monthly mortgage payments. Instead, a reverse mortgage pays you! More importantly, you do not have to repay the loan for as long as you live in your home. It is a great way to keep your home and get money from it at the same time.
How do I qualify?
It's simple and fast! You and any co-borrower must be at least 62 years old. You must own your home either with a small mortgage balance remaining or free and clear. Best of all there are no income or credit requirements.
How much money can I borrow?
The amount you can borrow is based on a number of factors, the value of your home, the number of borrowers, and the age of the borrowers. Check the following chart to see how much you might qualify for.
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Age
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Maximum Claim Amount
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$75,000
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$100,000
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$150,000
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70
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27,095
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37,770
|
59,620
|
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80
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38,343
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52,618
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81,668
|
|
90
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50,338
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67,826
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104,613
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These figures are for a FHA Home Equity Conversion Mortgage. They approximate and assume financing closing costs and fees of $2,500 to $3,500 with an interest rate of 8%. Your amount may differ because of the interest rate and or different terms and conditions.
How can I receive my money?
You can receive your money in several ways:
- Equal monthly payments for as long as you and/or your spouse live in your home.
- Equal monthly payments for a certain period of time.
- A line of credit you can draw upon as it is needed.
When must I repay the loan?
In the event of your death, your spouse continues living in the home. Generally, you must repay the in full when the last surviving borrower dies or sells the home. Your heirs can choose to repay the loan keep the house, or sell the house, repay the loan a keep any equity that is left.
What About Interest Rates, Closing Costs and Fees?
Reverse mortgages charge interest at an adjustable rate. That means that the interest can change periodically. The terms of these changes are disclosed i front before the loan closes. The interest changes do not affect the amount of money you receive. The interest is paid at the time the loan is repaid. You also incur closing costs and fees when you obtain a reverse mortgage. These items can be included in your loan so you do not have come up with any cash. All costs and fees associated must be disclosed well before you close your mortgage loan.
Are Reverse Mortgage Loans Safe?
Reverse mortgages are very safe. FHA or Fannie Mae guarantee the payments that are made to you. They also guarantee you can stay in your home as long as you like, and you will never owe more than the house is worth.
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