Good news for our senior citizens: there is a finance tool called reverse mortgage. You can get access to your mortgage equity while you are still living there.
Is the idea of dipping into your mortgage causing some trepidation? Using your equity as a source of income is not the first solution to increase revenue. Such a move will reduce your property equity for surviving heirs. Most family members would prefer you to live your golden years financially secure and on your terms. Planning your retirement is a tricky business especially when life happens, and things don’t go according to your plan.
Sometimes retirement doesn’t go as planned or unforeseen expense crops up that limits your income. A reverse mortgage is an excellent solution to provide income and eliminate your mortgage payment.
Yep, you heard that right. No, mortgage payment. Throughout the term of the reverse mortgage, you don’t make a mortgage payment, and the lender gives you installments instead.
A reverse mortgage, also known as an Equity Conversion Mortgage (HECM), is when a person 62 years or older takes out a loan based on the equity in their home. The amount of equity is determined by how much is remaining after the mortgage is paid off. Distributed in combination or separately, the amount is paid out in one of four ways: tenure, lump sum, term payments, a line of credit. A reverse mortgage is federally regulated, and the bankers have to meet government requirements.
The government also provides Reverse Mortgage Lenders with an insured guarantee by the Federal Housing Administration (FHA) for the lender. In the event that your loan balance is higher than the property value, the insurance will kick in and cover the difference.
The difference is where the magic happens. The lender will finance the market value of your home and then pay off the remainder of your mortgage. The leftover amount, or “difference,” is what they distribute to you. It is quite a brilliant way to get cash back in your hands. If you do have a mortgage, you are required to use the funds to pay off the mortgage. Sounds too good to be true, right? It is normal to have more questions at this point, especially as you hear more.
That is why reverse mortgage counseling is required to receive the loan. With a counselor, you get to go over eligibility requirements, repayment of the loan, and financial alternatives and implications. They will also go over the timeline, covering when the mortgage is due and when the credit needs to be payable. The counseling will ensure you are confident and knowledgeable about your decision.
How much money can you get? It depends on your age and value of your home. Twin City Lending has reverse mortgage advisors to answer your question. Reach out to us. We are happy to respond to all of your questions.
What are some of the reasons people reverse mortgage their homes? Some of the most common conditions: medical and daily living expenses and home renovations. Plus, parents don’t want to be a burden to their children while they are living.
What kind of homes are eligible? Most single-family homes, townhouses, approved condominiums, and manufactured homes qualify.
A reverse mortgage can help when you:
After receiving a reverse mortgage, you:
This is a general overview of a reverse mortgage. There are a lot more options and details we would like to discuss with you.
Twin City Lending knows the pros and cons as a reverse mortgage lender. We can help you figure out if a reverse mortgage is the best solution for your situation. Seniors, we care that you are comfortable and we have an array of finance options to meet your needs. A reverse mortgage is just one of the tools in our bag to keep you in the lifestyle to which you are accustomed. You have invested in others for all your lives, so it is time others give back to you. Twin Cities Lending is delighted to help you, and we look forward to hearing from you soon.