BD Nationwide will help you locate mortgage bankers offering reverse home mortgage loans for senior citizens over 62 years old seeking income monthly. Reverse mortgage loans can be an excellent opportunity for Senior homeowners when used in the right situation. Reverse mortgages do not have credit score or income prerequisites, offering seniors an accessible means to secure necessary funds should they face challenges during this stage of life.
What Is a Reverse Mortgage?
A reverse mortgage (RM) is quite literally a regular mortgage in reverse. With a regular mortgage, you typically make a down payment then make regular monthly payments on your house. Your equity increases as your debt decreases. A reverse mortgage gives the “borrower” a check each month for loss of equity in the home or gives it:
Reverse Your Home Equity and Get a Pay-Check?
- As a Home loan that offers a single lump sum of cash at closing;
- As “home equity credit lines” account that lets the borrower decide when and how much of the available equity is borrowed
- As a combination of these payment methods.
How Does a Reverse Mortgage Work?
A reverse mortgage is a home loan designed for homeowners aged 62 and older, enabling them to borrow against a portion of their home’s equity. In contrast to a conventional mortgage where the homeowner repays the lender, a reverse mortgage involves the lender making regular payments to the homeowner, hence its name.
Risks of Reverse Mortgages
The reverse mortgage program carries substantial risks, and if utilized inappropriately, a reverse mortgage may result in the risk of losing your home to foreclosure or leaving your heirs with minimal inheritance. Additionally, they entail fees and might influence your eligibility for other sources of retirement income and benefits.
A significant risk emerges from the consumer’s capacity to access substantial home equity through sizable lump sum payments. The availability of such significant amounts may lead some consumers to acquire products that may not be suitable for their needs. Another risk is the neglect of responsibilities such as taxes, insurance, and home maintenance.
Whether the repayment plan is a fixed-rate or adjustable-rate fully indexed (principal and interest) repayment plan or a deferred interest loan (negative amortization loan) with flexible repayment options, you must repay a traditional mortgage. Loosing equity in your home through a reverse mortgage requires no repayment until the last surviving borrower dies, sells the home, or permanently moves out of the home. So, you don’t need a minimum amount of income to qualify for a reverse mortgage. You could have no income and still be able to get a reverse mortgage.
Consider a Home Equity Conversion Mortgage (HECM)
The only eligibility requirements for most reverse mortgages are that you must own your home and be 62 years of age or older. Reverse mortgage loan advances are not taxable, and generally do not affect Social Security or Medicare benefits. This is why lenders are targeting senior citizens when advertising reverse mortgages.
There is even a federally-insured reverse mortgage called the Home Equity Conversion Mortgage, also know as a HECM loan. It is insured by the Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD). Qualification is a little stricter. According to the HUD website (www.hud.gov), FHA requires that you:
- You must be 62 years of age or older;
- You need to own the home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan;
- You are required to live in the home.
- You can contact the Housing Counseling Clearinghouse on 1-800-569-4287 for the name and telephone number of a HUD-approved counseling agency and a list of FHA approved lenders within your area.
HUD also indicates that you are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan.
Can a Reverse Mortgage Affect Your Social Security Income?
Given that numerous retirees depend on Social Security benefits as a vital income source, there may be concerns about whether reverse mortgage payments could compromise these funds. Fortunately, it’s important to note that the funds from the reverse mortgage program do not influence Social Security benefits.
– Article written by Maria Ny for BD Nationwide