How Reverse Mortgages Can Help You Financially
This BLOG On How Reverse Mortgages Can Help You Financially Was UPDATED And PUBLISHED On April 27th, 2020
How Reverse Mortgages Can Help You: Reverse Mortgages is a government mortgage loan program offered by the Federal Housing Administration, FHA:
- Reverse Mortgages permits homeowners who are 62 years old or older to utilize their home equity they have in their homes into cash
- Reverse Mortgages is also called Home Equity Conversion Mortgage ( HECM )
- How reverse mortgages can help you is that homeowners can take advantage of this program as part of their current retirement plan
- Besides having social security income, pension income, and retirement income from their 401k retirement plan, the homeowner can tap into their home equity for cash to use it as they see fit with no questions asked
In this article, we will discuss and cover How Reverse Mortgages Can Help You Financially.
How Reverse Mortgages Can Help You As A Retirement Tool
Homeowners with home equity in their homes can get a one lump sum cash payment, a monthly payment, or a home equity line of credit with reverse mortgages.
- The home equity line of credit option of a reverse mortgage can be used as a credit card where you can tap into it if you need cash
- A homeowner may want to do a property flip and buy a foreclosure and purchase that foreclosure from their line of credit of their reverse mortgage
- Once they purchase the foreclosure, they can tap into the reverse mortgage for the repairs needed
- Once the repairs are complete, they can sell the property and pay the reverse mortgage line of credit off with the proceeds from their sale
- You can also tap in to reverse mortgage line of credit as unexpected bills come up
If you take a one-time lump sum on a reverse mortgage, the lender will give you a one lump sum cash payment and you can do whatever you want to do with the proceeds.
- Whether it is for investments, purchase a second home, consolidate debts, buy a new auto, or help out family members, it is up to you on what you would like to use the reverse mortgage proceeds for
Reverse Mortgages Versus Home Equity Loans
Reverse Mortgages do not require borrowers to make any monthly mortgage payments, unlike home equity loans.
- With home equity loans, the borrower needs to make minimum monthly payments to their lender
- With reverse mortgages, you do not have to make any principal and interest payments on your reverse mortgage
But you are responsible to pay the property taxes and homeowners insurance as well as homeowners association fees if applicable.
Repayment Of Reverse Mortgages
As with any other loans, reverse mortgages need to get repaid to the reverse mortgage lender.
- Reverse mortgages are non-recourse mortgage loans
- This means borrowers or the heir of the borrower are not responsible for the repayment of the loan on more than what you can get from the sale of the property after the main borrower dies
- HUD, the parent of FHA, will be covering the shortage and difference when the property sells and if there are a deficit and shortage from the sales price and the loan balance
- The responsibility does not fall back on the heir’s of the property if the property sells at a lower value than the balance of the loan
If you are a homeowner with equity in your home and would like to explore reverse mortgages, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at firstname.lastname@example.org. Our team of reverse mortgage experts at Gustan Cho Associates are available 7 days a week, evenings, weekends, and holidays to take your calls and answer any questions you may have about reverse mortgages.