Is a Reverse Mortgage Right for You or a Loved One?

Would you or a loved one benefit from a reverse mortgage? A reverse mortgage benefits anyone over the age of 62 living on a fixed income. It can help supplement social security & retirement income, meet unexpected medical expenses, make home improvements, and more!

A reverse mortgage is a special type of FHA home loan that allows a borrower to draw upon the equity they have built up in their home over the years. With a reverse mortgage no monthly payments are made to the mortgage company; instead an equity payment is made to the borrower. The loan does not need to be repaid until the borrower is no longer using the property as their primary residence.

To be eligible for a reverse mortgage a borrower must: be 62 years of age or older, own their home outright or have a low balance on their existing mortgage that can be paid off at closing and the property must be used as their primary residence. In addition it is required that the borrower receive consumer information from an approved HECM counselor prior to obtaining the loan. The home does not have to have an existing FHA loan, but the new loan will be FHA insured. 

Many types of properties qualify for a reverse mortgage including: single family residences and 1-4 unit dwellings (as long as the borrower uses one of the units as their primary residence). In addition condominiums and manufactured homes qualify as long as they meet FHA approval.

The main difference between a traditional home equity line of credit and a reverse mortgage is that is no minimum income requirement, and no monthly payment is made to the mortgage company, instead a monthly payment is made to the borrower. The amount available to a reverse mortgage borrower depends on their age, current interest rate, and the appraised value of their home or FHA’s mortgage limits for the area, whichever is less. The older the borrower, the lower the interest rate, and the more valuable the home is worth, the more they can borrow.

A reverse mortgage borrower cannot be foreclosed on for not making the mortgage payment because the reverse mortgage does not need to be repaid until the borrower no longer uses the property as their primary residence. However, as with all homeowners it is required to maintain property taxes and insurance.

In the event that the property is vacated due to sale or death, the reverse mortgage is paid off from the estate or the proceeds of the sale, and the remaining equity in the home, if any, belongs to the borrower or their heirs.

To find out more about how a reverse mortgage can benefit you or a loved one please visit www.oxfordhomeloan.com or give me a call. I would be more than happy to give any advice and answer any questions you may have.