Reverse mortgages have had its ups and downs since they were introduced during the Reagan administration. It is a financial tool that lets older people to tap the equity of their home and age in place. This type of loan can help free up cash when seniors are in retirement, and in some instances, get rid of monthly mortgage payment.
Who Can Get A Reverse Mortgage Loan?
Reverse mortgage loans are made for older people who would like to tap into the equity of their homes so they could boost their monthly cash flow without having to worry about monthly payments. If you plan to take out a reverse mortgage, you need to be at least 62 years old. Potential borrowers should undergo a home counseling session to make sure that they understand what they are getting themselves into.
This type of loan is only for primary residences. If you are planning to take out this loan against your vacation home or investment property, then you may not qualify at all. You have to live in the house for more than six months.
You also need to know that you can’t borrow over 80% of the value of your home, as much as the FHA maximum of $726,525 for 2019. But the older the borrower is, the higher the loan he or she can get. Generally speaking, the percent you may qualify to borrow is your age minus 12.
There are certain obligations you need to follow through as well. These include paying homeowner’s insurance, property taxes, home maintenance, and mortgage insurance premium. Your lender will also check whether you have enough disposable income to fulfil these obligations. In certain instances, lenders may require that the equity from the loan be set aside to cover the ongoing expenses.
Who Should Consider A Reverse Mortgage?
In case you are planning to remain in your home for a very long time throughout your retirement days and you don’t wish to pass down your home to your kids, then you are a good candidate for a reverse mortgage loan. In case you would like to preserve other investments or assets in retirement, you can get more funds through the reverse mortgage.
The best candidate for a reverse mortgage loan is a person who has accumulated diversified and substantial retirement savings.
Who Should Avoid A Reverse Mortgage?
Borrowers who don’t have enough equity in their homes, a reverse mortgage Myrtle Beach isn’t a good idea. In case you don’t have a good understanding of how this type of loan works, then you should avoid it. Also, if you plan to leave your property to your children after your death or if you plan to move out of the house eventually, then this type of loan is not for you. It’s because the reverse mortgage balance has to be paid off, which can only be done by selling the house.
Call Reverse Mortgage Specialist if you are looking for more information about reverse mortgage.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577