How can an FHA Reverse Mortgage Loan help you right now in these times of crisis? Read on for more.
With an uncertain economy and a tumultuous stock market thanks to the effects of COVID-19, many senior citizens are looking for new sources of steady income that they can rely upon during their retirement years. Did you know if you’re 62 or older and a homeowner, you can use the equity in your house as an income stream? Called a reverse mortgage, this type of loan works by you being paid back all the money and acquired equity you have in your home, either in a lump sum payment or in monthly payments.
What is a Reverse Mortgage?
A reverse mortgage is a loan on your home that pays you, rather than you paying the bank. The mortgage is calculated by:
- Having your home’s current value professionally appraised.
- Deducting from the appraised value any amount of money you still owe on the original home mortgage.
- Determining what percentage of the remaining value of the home you want to borrow.
In order to qualify for a reverse mortgage, you must be at least 62 years old and live in the home you are mortgaging. After the mortgage is in place, you’ll be able to stay in the home for the rest of your life.
(READ: How Does a Reverse Mortgage Loan Work?)
Choosing an FHA Reverse Mortgage
An FHA reverse mortgage is an option you have when securing this type of loan. To qualify for an FHA reverse mortgage, you must meet all the requirements of a reverse mortgage, plus:
- Own a single-family home or a multi-family home with no more than 4 units (one of which you live in).
- Be current on any federal debt payments.
- Attend an information session coordinated by a HUD-approved Home Equity Conversion Mortgage (HECM) counselor.
With this type of loan, you can borrow up to $625,000 (the actual amount you’ll be able to borrow will be capped by your home’s appraised value).
What Do Seniors Do With Reverse Mortgage Funds?
Once your loan documents are complete and your funds have been disbursed, the sky’s the limit on how you will use the loan proceeds. Many senior citizens use the money they receive from this type of loan to:
- Supplement their income during their retirement, whether that be social security only or social security and a pension.
- Make home improvements.
- Travel to their so-called “bucket list” destinations.
Learn More About Your Financing Options
Determining your financing options for a reverse mortgage may seem overwhelming. We’re here to help. To inquire about the process and be matched with a lender who can offer you the best rate possible, fill out our online form to get a free quote today.
