Reverse Mortgage Benefits And Requirements For Homeowners
This Article Is About Reverse Mortgage Benefits And Requirements For Homeowners
The housing market is booming. Never in history has home prices appreciated so much in such a short period of time. Many homeowners have seen their home values escalate 20 to 40 percent in the past few years. Homeowners who are at least 62 years old who are struggling to make their monthly mortgage payments may qualify for a reverse mortgage. One of the major requirements in qualifying for a reverse mortgage is the homeowners need equity in their homes. With the booming housing market, many homeowners have seen their home values skyrocket. With today’s historic low mortgage rates and high home prices, eligible homeowners may qualify for a reverse mortgage.
Homeowners With Equity In Their Homes May Qualify For A Reverse Mortgage
Homeowners who have at least 62 years old and have equity in their homes can qualify for Reverse Mortgages. Reverse Mortgage Benefits include not requiring to make a principal and interest payment on their home loans. There is no catch. Reverse Mortgage Benefits allow for homeowners not to make a principal and interest payment as long as they live in their home. The reverse mortgage loan balance needs to be satisfied when the homeowner sells their home or they pass.
If the homeowner dies, the home will be passed on to the heirs of the homeowner. The lender will give the heirs to either sell the home or pay off the reverse mortgage. In this blog, we will discuss Reverse Mortgage Benefits for homeowners with equity in their homes plus its benefits.
Types Of Borrowers Who Benefits From Reverse Mortgages
The housing market is booming with no signs of any correction. Many homeowners often do not realize how much their homes are worth. In the past several years, home prices have increased double digits in many parts of the country. Many senior homeowners are sitting in homes with a lot of equity. There is no reason for them to struggle to make their monthly principal and interest payments. They can realize reverse mortgage benefits by refinancing their current home loan with an FHA Reverse Mortgage.
A reverse mortgage is also referred to as a Home Equity Conversion Mortgage (HECM). HECM is offered by lenders. FHA insures HECM’s to lenders in the event the lender takes a loss due to foreclosure. To qualify, homeowners need to be at least 62 years old and have equity in their homes.
How Do Reverse Mortgages Work
Here are how the Reverse Mortgage Process Works:
- Reverse mortgages are for both purchase and refinance loans
- We will mainly cover refinancing on this blog
- No month principal and interest payments
- If the home is free and clear of any mortgage, the homeowners will get cash and do not have to make any monthly payments
- If the home has an existing mortgage, the lender will pay the outstanding mortgage balance
- When the homeowner dies, the equity in the home goes to paying off the balance and/or heirs after paying the HECM
- Loan proceeds from the cash-out refinance is tax-free
- No income is required on a reverse mortgage
- Borrowers need to prove that they can afford to pay property taxes and homeowners insurance
- Borrowers need to be at least 62 years old
- The older the borrower is, the higher the loan to value cap is
Borrowers need to complete HUD Approved Home Certification by HUD Approved counseling agencies.
Reverse Mortgage Eligibility Requirements
Only owner-occupant primary residences with substantial equity qualify for reverse mortgages. Principal and interest payments do not have to be paid for the life of the loan. However, borrowers are required to pay property taxes and homeowners insurance. Single-family homes, townhomes, FHA Approved Condos, and Manufactured Homes qualify for reverse mortgages.
How Much Cash-Out Refinance Funds Can I Get On Reverse Mortgages
The amount homeowners can get on a cash-out reverse mortgage depends on Factors based on:
- Age of the youngest reverse mortgage borrower
- Current first lien position and the home’s value
- HECM FHA mortgage limit in the area
Homeowners who need to qualify for reverse mortgages with a mortgage company licensed in multiple states with no lender overlays on FHA Loans, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at firstname.lastname@example.org. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
August 3, 2021 - 3 min read