Are you looking for financial assistance that will help you get through your retirement years? Reverse loan mortgage might be the best one for you. If you own your property, this home equity loan will allow you to get the money without having to make any monthly or regular payments. You only pay the loan when you decide to move and give up your property or when you pass away.
Here are some details that will help you decide whether this is the right loan program for you.
Reverse Mortgage Loan Details
A HECM reverse mortgage line of credit cannot be reduced by the lender and any unused portion of the line of credit will grow over time. With a reverse mortgage the amount that can be borrowed is determined by an FHA formula that considers the age of the youngest borrower, the current interest rate, and the appraised value of the home. For an HECM, the amount you can borrow will be based on the youngest borrower’s age, the loan’s interest rate and the lesser of your home’s appraised value or the FHA’s maximum claim amount.
The amount you can actually borrow is based on what’s called the initial principal limit. In January 2018, the average initial principal limit was $211,468 and the average maximum claim amount was $412,038. The average borrower’s initial principal limit is about 58% of the maximum claim amount. If a borrower is eligible for a $100,000 loan, for example, no more than $60,000, or 60 percent, can be accessed. However, there are exceptions to the 60 percent rule. The individual can withdraw a bit more if there is an existing mortgage, or other liens on the property, that must be paid off.
What You Need to Know as a Borrower
The borrower is not required to pay back the loan until the home is sold or otherwise vacated. They must remain current on property taxes, homeowners insurance and homeowners association dues if applicable. The amount of funds that a borrower is eligible for depends on the person’s age or age of the youngest spouse in the cast of couples, home value, interest rates and upfront costs. The older someone is, the more proceeds he or she may receive. With a reverse mortgage, the borrower always retains title or ownership of the home. And as long as the borrower lives in the home he or she is not required to make any monthly payments towards the loan balance.
Still have questions about Reverse Loan Mortage? Get in touch with FloridaReverse.Mortgage and we will have an expert assist you.