Reverse Mortgage: Take Advantage of Your Home Equity
Over your lifetime, you acquire wealth in many ways. For many senior citizens today, a great deal of their wealth is invested in home equity. Paying off a mortgage is an amazing accomplishment, but it can tie up a substantial amount of wealth in the value of property, which is not easily accessible. Reverse mortgage is a government-created program that was designed to allow senior citizens to access the equity they have built in their homes, while continuing to live in their homes, mortgage-free. At first glance, reverse mortgage sounds like a wonderful option for seniors, and for many, it is. At Boise River Lending, we work carefully with our senior clients considering reverse mortgage to make sure they understand the benefits and stipulations of this type of loan. If you live in Boise, Meridian, Twin Falls, or surrounding Treasure Valley or Magic Valley, contact us today to learn more.
Reverse Mortgage Basics
While a traditional mortgage is a home loan in which you make monthly payments on a loan in exchange for equity (ownership) of your home, a reverse mortgage does “the reverse.” Homeowners who have full equity (paid off) their homes can exchange their equity for a loan. We can offer reverse mortgage loan payouts in a few ways: as a lump sum, in regular payments, as a line of credit, or as a combination of these.
In addition to the loan you receive with your reverse mortgage, you are also able to continue to live in your existing home for the rest of your life or until you terminate the loan contract. You will no longer have to pay monthly mortgage payments and cannot be kicked out of your home unless you violate the terms of your reverse mortgage or choose to pay off the remainder of your loan.
Once you die, your loved ones and heirs will not be held liable for any remaining amount due on your reverse mortgage. They can choose to keep ownership of your home in exchange for paying off the remainder of your loan or they can choose to relinquish the home, which will be sold to pay off the loan. Even if the sale price of your home is less than what is still owed on the loan, the contract is considered complete.
Reverse Mortgage Types
There are two types of reverse mortgage: an HECM and a proprietary reverse mortgage. HECM (home equity conversion mortgage) is a privately funded loan that is insured through the U.S. Department of Housing and Urban Development. Because of this, HECMs are subject to more regulation than a proprietary reverse mortgage. Proprietary reverse mortgage is not insured through the federal government and are usually only required when a reverse mortgage loan amount exceeds the amount insurable through the federal government.
Reverse Mortgage Qualification Requirements
To qualify for a reverse mortgage or HECM, you must:
- Be 62 years or older. If you have a spouse, both of you must be at least 62 years old.
- Have no outstanding federal debt.
- Continue to live in your reverse mortgaged home as your primary residence.
- Can continue to pay for additional homeowner’s expenses such as insurance, property taxes, and other living expenses.
- Complete an educational session with a federally approved, third-party counselor who will ensure you are entering the reverse mortgage contract fully informed and consenting.
Explore Your Reverse Mortgage Options
It is never too late to use the wealth you have acquired how you want to use it. If you would benefit from a line of credit or payout in exchange for your home equity, a reverse mortgage is worth consideration. Contact Boise River Lending to learn more today if you live in Boise, Meridian, Twin Falls, or surrounding Treasure Valley or Magic Valley.