If you don’t have a regular source of income after retirement, you will most likely find yourself struggling with your finances. If you own a house, a reverse mortgage is one great option that can help you deal with your financial problems.
What Is A Reverse Mortgage?
A reverse mortgage is a type of home loan that allows homeowners 62 years old and older to withdraw some of their home equity and have it converted into cash. There’s no need to pay taxes on the amount you get and you don’t have to make monthly payments.
How To Use Reverse Mortgage?
The proceeds you get from your reverse mortgage can be used any way you want. You can use it to help your kids with their college expenses, renovate your home, cover your living expenses, or for debt consolidation.
Pros and Cons of Reverse Mortgage
Just like all the other types of loan, reverse mortgages have advantages and disadvantages. The advantages include not having to repay the loan, providing you with some financial wiggle room, and your eligible surviving spouse could remain in your house.
The disadvantages include reducing the equity in your home, losing your home if you don’t pay the property taxes, having to cover fees that cost thousands of dollars.
How Does Reverse Mortgages Work?
The process involved in reverse mortgages Myrtle Beach is the exact opposite of a traditional home loan. The latter requires you to pay the lender every month but with a reverse mortgage, the lender will pay you instead. You still need to pay homeowners insurance, property taxes, as well as other related costs if you don’t want to risk foreclosure. The total amount that you get in a reverse mortgage loan will be based on a sliding scale of a full life expectancy. You will pull out more home equity if you are older.
There are two kinds of reverse mortgages and these are the adjustable rate and the fixed rate, which are both insured by the Federal Housing Administration.
A fixed rate consists of a one time payment while adjustable rates offer five different payment plans. These are tenure, term, line of credit, modified tenure, and modified term.
Am I Eligible?
In order to apply for a reverse mortgage loan, you need to meet the follow requirements set by the FHA.
You should be at least 62 years old. You and your eligible spouse must live in the house as your primary home and you should not have any delinquent federal debts. You should also own the house or already have a significant amount of equity in the home.
You have to attend a mandatory counselling session with an HECM or Home equity conversion mortgages counselor that’s approved by the Department of Housing and Urban Development. Your house must meet all the FHA property standards as well as the flood requirements. You must continue paying all of the property taxes, homeowners insurance, as well as the other maintenance fees provided that you continue to live in the house and use it as your primary residence.
Call Reverse Mortgage Specialist if you need more information about this kind of loan.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577