Reverse Mortgage Loans For Seniors
Reverse Mortgage Loans Explained
Retired homeowners who have little or no income who have equity in their homes and who need to do a cash out refinance are not able to do so. All mortgage loans these days are based on documented income and credit and there are caps on debt to income ratios. Many homeowners who have retired only make a fraction of what they used to make and rely on social security income, retirement income, and the money they have saved up over the years.
After the economic meltdown of 2008, many Americans, especially senior, have lost a large portion of their investments, whether it was their retirement accounts, securities accounts, or savings. Many homeowners have lost a large portion of their hard earned equity they have built up on their homes and a large percentage of homeowners have mortgage loan balances that are higher than the value of their homes. Many folks who have retired went back to the workforce with making a fraction of what they used to make to make ends meet. If retired homeowners with equity wanted to refinance their current home via a cash out refinance, they could not qualify because their retirement income was just a fraction of what they were making prior to retirement. Now retired homeowners who have equity in their homes can do a cash out refinance mortgage without income verification nor credit score requirements.
Basics On Reverse Mortgage Loans
If you are a homeowner who is at least 62 years old and have equity in your home, you can qualify for FHA reverse mortgage loans. Reverse Mortgage Loans are when a mortgage lender will advance you a lump sum of money at once or give you a line of credit based on the equity of your home. To qualify for reverse mortgage loans, the homeowner needs equity in their home. Reverse Mortgage Loans need to be in first position so if the homeowner has a current first lien on their property, the first lien needs to be paid off first and the balance will go to the reverse mortgage borrower in the form of one lump sum of cash or a line of credit.
Borrowers of Reverse Mortgage Loans do not have to worry about ever making a mortgage loan payment again. However, reverse mortgage loans borrowers are responsible to still pay property taxes and homeowners insurance payments as long as they have a balance on their reverse mortgage. Reverse mortgage loans are for primary owner occupant property owners only and not for second homeowners or investment homeowners.
More On Reverse Mortgage Loans
With Reverse Mortgages, the older the homeowners age is, the higher loan to value cash out refinance they will qualify for. For example, a 62 year old homeowner may only be able to cash out refinance on 50% loan to value whereas a 72 year homeowner may be able to cash out refinance 70% loan to value ( These figures are for illustration purposes and are not actual loan to value requirements with age factor ). The reverse mortgage loan borrower needs to occupy the property and is responsible for their own property taxes and insurance. The homeowner can sell their property at anytime and the reverse mortgage can be paid off without a pre-payment penalty.
Gustan Cho NMLS 873293
Gustan Cho Associates
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