Reverse Mortgages
A reverse mortgage is a financial product designed for homeowners, typically seniors aged 62 or older, that allows them to convert a portion of their home equity into loan proceeds. Unlike a traditional mortgage where the borrower makes monthly payments to the lender, in a reverse mortgage, the lender makes payments to the borrower.
Key features of Reverse Mortgages:
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Home Equity Conversion: The loan allows homeowners to tap into the equity they have built up in their homes over the years. The homeowner retains ownership of the home, and the loan is repaid when the borrower sells the home, moves out of the home, or passes away.
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Payment Options: Borrowers can receive the loan proceeds in various ways, including a lump sum, fixed monthly payments, a line of credit, or a combination of these options.
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No Monthly Mortgage Payments: Unlike traditional mortgages, borrowers typically are not required to make monthly mortgage payments. However, they are still responsible for property taxes, homeowners insurance, and maintenance of the home.
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Loan Repayment: The loan becomes due when the borrower no longer occupies the home as their primary residence. At that point, the loan must be repaid, either through the sale of the home or through other means.
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Federally Insured Options: The Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage and is insured by the Federal Housing Administration (FHA). Other private reverse mortgage products may also be available.
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It's crucial for individuals considering a reverse mortgage to thoroughly understand the terms, costs, and implications of the loan. Additionally, counseling is often required before obtaining a reverse mortgage to ensure that borrowers are fully informed about the decision.
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Contact
Reverse Mortgage Planner - NMLS #2214972
512-584-9766
Brian McRae