When you become older and want peace from paying bills and paying for a mortgage, the reverse mortgage loan may be the best option for you. The reverse mortgage is available only for senior citizens now, starting at the age of 55 in most states (used to be 62). This loan help can help you have a better retirement.
A reverse mortgage loan allows you to convert part of your home equity into cash without the fear of selling off the property. In a reverse mortgage, you can use some of your home’s equity for your retirement based on the value of your home. This loan does not require any principal or interest payments. It does require you to pay your taxes, insurance and maintain your property.
How do Reverse Mortgage Loans Work?
This loan works by converting some of your home’s equity into cash. You are able to access the funds from your home’s equity through this loan in a few ways.
Types of Reverse Mortgage Loans
There are, in general, two basic types of Reverse mortgage loans. It would be best if you considered comparing the one which suits your needs and fulfill your requirements.
Proprietary Reverse Mortgage (Jumbo)
Proprietary reverse mortgages are private loans designed for borrowers with high home value. So, if you have a highly appraised home, then you can get a considerable loan through a proprietary reverse mortgage.
Home Equity Conversion Mortgage (HECM)
These are federally insured loans backed by the US department of Housing and Urban Development FHA. The HECM loans can be used for any purpose without any limitations. The appraised value is limited to FHA loan limits. There some other things that are considered:
Advantages of Reverse Mortgage Loan
The reverse mortgage loans are an ideal financial support for senior citizens. Following are the advantages it provides:
If you are looking for a reverse home mortgage, you should perform research before applying for the loan. It’s best to consider the lender that suits your needs and provides you with the best loan features.