Reverse Mortgage – A
Powerful Tool During the Pandemic
A reverse mortgage helps senior homeowners age in place while supplementing their income. Unlike a traditional mortgage, a reverse mortgage doesn’t require repayment while the homeowner lives in the home but becomes due and payable when the homeowner leaves permanently or passes away.
With the coronavirus pandemic, aging in your home is a much more desirable outcome for many seniors. Living in a nursing home with high COVID rates is too risky with the high transmission rates and the isolation from family. Many seniors are turning to a reverse mortgage to help them stay in their homes.
What is a Reverse Mortgage?
A reverse mortgage draws out the equity in your home. You’ve built it up and now it’s your chance to use it while you’re alive. It accrues interest, but you don’t have to pay it – the full amount of principal and interest is due only when the homeowner no longer lives in the home.
Your home continues to appreciate even while you have a reverse mortgage. Any equity left after paying off the mortgage is yours (or your heirs) to keep when you sell the home.
It’s a common myth that the bank owns your home when you take out a reverse mortgage. This isn’t the case. You still own the home and decide if/when to sell it
How Does it Work?
The reverse mortgage process is a lot like a standard mortgage. You must apply with a lender and get approved. You can borrow up to the allowed amount based on your age, home value, amount of equity, and current interest rates.
You can receive payments as a lump sum, as a line of credit, or as regular monthly payments. You choose the structure that works best for you. For example, if you need a regular monthly income to supplement retirement, you may choose monthly payments. If the reverse mortgage is more of an ‘emergency fund’ you may choose the line of credit, drawing funds only as necessary.
You are responsible for the home’s upkeep, property taxes, and insurance to keep the reverse mortgage.
Who Qualifies?
The reverse mortgage program is for seniors, but more specifically the youngest borrower must be at least 55 years old. The older you (or the youngest borrower) are when you take out the loan, the more money you’ll get because lenders base the loan amount on your life expectancy. The older you are, the more money you’ll receive because you’re less likely to outlive the equity.
Aside from age, you must meet the following:
· Own the home without a mortgage or a very small mortgage
· You must live in the home as your primary residence
· You must speak to a lawyer to ensure you understand the reverse mortgage process and what it means for you
What Does it Cost?
Seniors don’t have to pay anything out of the pocket of the reverse mortgage. All fees are taken from the loan proceeds.
Each lender has its own fees, but in general, you’ll pay:
· 2% upfront mortgage insurance fee
· Standard loan closing costs to cover credit checks, appraisals, and title
· Monthly mortgage insurance
· Monthly service fees
The funds come off the top of the loan proceeds, so you see less cash in hand, but you don’t have to fork out the funds upfront to get the loan.
The Benefits of the
Reverse Mortgage
In addition, the reverse mortgage offers these benefits:
· You remain in your home and continue homeownership
· You don’t owe any monthly payments
· Your beneficiaries won’t owe any more than the home’s value when you pass away, even if you owe more than the home’s worth
· You have many options for loan disbursement to make the funds last as long as possible
· It’s easy to qualify as long as you meet the age requirements, have home equity, and aren’t delinquent on any federal debts
Seniors today want comfort and their family. In today’s environment, most people can’t see their families, making it harder on everyone. With the pandemic still an issue, it’s hard to feel comfortable moving into a nursing home and being cut off from outside contact.
Keisha Johnson helps individuals position themselves to take advantage of great opportunities such as homeownership as well as achieve their investment potential in the real estate market. She is a community service award winner and offers her service to the community by educating the youth about their credit and positioning themselves to take advantage of great opportunities in the future.
With over 10 years of experience, she has extensive knowledge that she shares with her clients during the home purchase process. Whether they are first-time homebuyers looking to take equity out of their home, or they're ready to purchase an investment property, Keisha educates her clients so they feel empowered with information during the home purchase journey
I have also been featured in Authority Magazine, I Love Mortgage Brokering Podcast, Thrive Global as well as Bitbean online Magazine.
You can easily see my real-time availability and schedule time with me at https://calendly.com/rtsmortgagefinancial
Keisha Johnson
Mortgage Broker Lic #M09001578
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