A reverse mortgage is a non-recourse loan, which means the borrower (or the borrower's estate) of a reverse mortgage will not owe more than the future loan balance or the value of the property, whichever is less. If the borrower or representatives of his or her estate choose to sell the property to pay off the reverse mortgage loan, no assets other than the home will be used to repay the debt. If the borrower or his or her estate wishes to retain the property, the balance of the loan must be paid in full.
Let Your Home Take Care of You with a Reverse Mortgage/ Home Equity Conversion Mortgage
Reverse mortgages were created specifically for senior homeowners, allowing them to make the most of the equity they have acquired in their homes.
With a reverse mortgage, you borrow against the equity you have established in your home and do not need to repay the loan for as long as you live in the home as your primary residence, maintain your home in good condition, and pay property taxes and insurance. You can live in your home and enjoy making no monthly principal and interest mortgage payments.
Depending on your financial situation, a reverse mortgage has the potential to help you stay in your home and still meet your financial obligations.
We realize that reverse mortgages may not be right for everyone, give us a call so we can help walk you through the process and answer any questions you may have.
Reverse Mortgages vs. Traditional Mortgage or Home Equity Loans
A reverse mortgage is the opposite of a traditional mortgage. With a traditional mortgage, you borrow money and make monthly principal and interest mortgage payments. With a reverse mortgage, however, you receive loan proceeds based on the value of your home, the age of the youngest borrower, and the interest rate of your loan. You do not make monthly principal and interest mortgage payments for as long as you live in, maintain your home in good condition, and pay property taxes and insurance. The loan must be repaid when you pass away, sell your home, or no longer live in the home as your primary residence.
Home Equity Conversion Mortgage (HECM)
A Home Equity Conversion Mortgage, or HECM, is the only reverse mortgage insured by the U.S. Federal Government, and is only available through an FHA-approved lender.
If you're age 62 or older, a Home Equity Conversion Mortgage (HECM) for Purchase from Bank of England Mortgage may be a smart choice for financing a new place to call home.
Rather than having to seek conventional financing, borrowers age 62 and older can purchase a new residence while eliminating mortgage payments* through a reverse mortgage (Of course, they’ll still be responsible for paying property taxes and required homeowners’ insurance). This may help them more comfortably afford an upgrade, or spend less money out-of-pocket. Retiring Boomers are choosing to maintain a comfortable lifestyle in a home that better fits their needs. You own the home, with your name on the title and the home purchase and a reverse mortgage closing are rolled into one, making your process simpler.
How Much Can Be Borrowed?
In general, the more your home is worth, the older you are, and the lower the interest rate, the more you will be able to borrow.
The maximum amount that can be borrowed on a particular loan program is based on these factors:
- The age of the youngest borrower at the time of the loan
- The appraised value of the home
- Current interest rates
Initial Eligibility Requirements for Reverse Mortgages
The initial eligibility requirements are quite simple.
- Homeowners must be 62 years of age or older and occupy the property as their primary residence
- The property may be a Single family or a 2-4 Unit property, Townhome, or FHA-approved Condominium
- The home must meet minimum FHA property standards
- Borrower cannot be delinquent on any federal debt
- Completion of HECM counseling
All loans are subject to credit approval including credit worthiness, insurability, and ability to provide acceptable collateral. Not all loans or products are available in all states or counties. A reverse mortgage is a loan that must be repaid when the home is no longer the primary residence, is sold, or if the property taxes or insurance are not paid. This loan is not a government benefit. Borrower(s) must be 62 or older. The home must be maintained to meet FHA Standards, and you must continue to pay property taxes, insurance and property related fees or you will lose your home.