Reverse Mortgages Basics
Reverse mortgages permits homeowners who are 62 years or older to use the equity in their homes to cash out and supplement their income. The cash out refinance through a reverse mortgage is given to the homeowner and they can use it for whatever purpose they want. They can save it in their bank accounts for added security, use to pay off debts, do remodeling or construction, use it for a vacation, purchase a mobile home, an recreational vehicle, new car, buy a second home, gifting it to their children, or they can use it for anything they like. To qualify for a reverse mortgage, homeowners need to have equity in their homes. Homeowners with high loan to value or underwater mortgages will not qualify. The older the reverse mortgage loan borrower is the more cash out the mortgage loan borrower can take out. The maximum loan to value on a reverse mortgage is determined by the age of the reverse mortgage loan borrower.
What Are Reverse Mortgages?
Homeowners who are 62 years old or older who have equity in their homes can qualify for reverse mortgages. Reverse mortgages enable elderly homeonwers who have equity in their homes to convert their equity into cash via a reverse mortgage cash-out refinance without having to worry about making a monthly housing payment for the rest of their lives. Once the reverse mortgage loan borrower passes, the home is transferred to the reverse mortgage loan borrower’s heirs and they have the option to either pay off the reverse mortgage and keep the home or surrender the home to the reverse mortgage lender.
How Much Can I Take Out On Reverse Mortgages?
The amount you can cash out on a reverse mortgage refinance depends on the your age. The older you are, the more you can take out. All reverse mortgages need to be on a first lien position. If you have a current first mortgage, then the first mortgage will need to be paid off with the proceeds of the reverse mortgage.
Types Of Reverse Mortgages
You can take out a one time lump sum from a cash out reverse mortgage, a monthly payment plan, line of credit, or a combination of the above options.
Qualification Requirements For Reverse Mortgages
As mentioned above, you need to be at least 62 years old to qualify for a reverse mortgage. No income is required and income is not verified. Credit and credit scores are not a factor. You need to live in the home the reverse mortgage is taken out. Second homes and/or investment homes do not qualify for reverse mortgages. Homes need to be residential homes that is 1 to 4 units, warrantble condominium units, town homes, and possibly manufactured homes. Mobile homes and timeshares do not qualify.
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