Comparing Senior Funding Options
-Reverse Mortgage
Reverse Mortgage defined by the U.S. Department of Housing and Urban Development (HUD):
Definition - Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to borrow against the equity in their homes. Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit.
Benefits -
- Homeowners whose circumstances change can restructure their payment options.
- A HUD reverse mortgage does not require repayment as long as the borrower lives in the home.
- Flexible options on how to receive proceeds: line of credit, lump sum, or fixed monthly payments.
- Money raised is tax free and there are no restrictions on how money can be used.
Drawbacks -
- A reverse mortgage must be paid back-- plus interest and fees (origination fee, appraisal and inspection fees, title policy, mortgage insurance and other normal closing costs)-- if the borrower no longer occupies the property as a principal residence or if the home is sold or refinanced by the heirs.
- The Federal Housing Administration, which is part of HUD, collects an insurance premium (2% on average) from all borrowers as part of the financing agreement.
- The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed.
- The amount that may be borrowed is capped by the maximum FHA loan limit for each city and county varying from $172,632 in rural areas to $362,790 in many major metropolitan areas.
Contact us today for a
free, no-obligation consultation.
Call 1-888-670-7773 to learn more.