A senior reverse mortgage is a special type of loan where a homeowner borrows money from a lender using a mortgage-equity as security. This amount could be as a line of credit/ regular-income stream, a lump-sum or combination of all/any of these options. The interest of the loan is calculated and charged like the other loans. However, you need not repay the loans while living in your home. This means the interest accumulates with time and is added to the loan balance. Not everybody can qualify for a senior reverse mortgage. Some of the qualifications include a minimum age limit of 62 years. You should also own a home and have equity to pay off the outstanding balance if any. Credit standards and minimal income should be met, and your home should also be occupied as a principal residence.
The amount you are eligible to borrow depends upon a set of factors. These include the current age as the time of closing, the number of liens, the house worth, and the interest rates. Other factors include the mandatory obligations, the payoff of the existing mortgage and the payment options.
The Reverse Mortgage Process
Once you have qualified for the reverse mortgage, you can then proceed to paperwork and get your cash ready to fund your dreams. Meeting with a professional and qualified reverse mortgage agent is quite important. Here, you learn all about the specific numbers, you receive an analysis of your particular situation and even get to estimate what you can qualify and what you can’t. Counselling is a vital step towards getting a reverse mortgage. This should be obtained from a third-party HUD-licensed counseling agent.
Once you have all the information, you can easily complete the application process with or without the help a trusted reverse mortgage loan officer. You should then have a complete copy of all documents required. Here, you need your copy and that of a trusted adviser or family members.
What to do with Reverse Mortgage Funds
After completing paperwork and handing it out to the relevant authorities, you are then looking forward to how you can utilize the cash. Most homeowners will put the amount for use during their retirement years. Here are some of the practical uses and proper utilization of the senior reverse mortgage.
This could be the best time to consider remodeling your home into that dream house. With kids and grandchildren out of the nest, you can remodel any part of your home to fit the changing personal needs.
Some seniors may use this reverse mortgage to ensure their heirs and family members have something left to pay their bills. Others will also decide to use the reverse mortgage for quality time with family and friends instead of waiting for the family/heir to inherit the equity.
Paying off bills
One can use this amount to pay off bills or debts. You can also clear the mortgage on your home or pay off the remaining credit card debt.
Seniors can also use the reverse mortgage to ensure they get quality life in their retirement period. Here they can get that dream car for personal/family use or go for a retirement vacation.