If you are one of the many Americans with equity in your home and you would like to have more money in your pocket every month and you are 62 or older , a reverse mortgage may be right for you. The reverse mortgage is a financing tool that allows a homeowner over 62 to keep his/her home and stay in it without a mortgage payment (homeowners must still pay property taxes and homeowners insurance). Some choose a reverse mortgage to pay off an existing loan and eliminate a monthly mortgage payment. Others choose the reverse mortgage to tap into their equity. In many cases, both those goals may be accomplished.
The reverse mortgage has a variety of options to tap into the equity. The homeowner may receive regular monthly payments from the lender and/or a lump sum in cash and/or simply have the ability to draw on the equity when the need arises or a combination of these options. A reverse mortgage may be used for a refinance or purchase transaction and may be customized to each borrower’s needs.
Here are the facts:
- No mortgage payment is required but the homeowner must continue to pay property taxes and insurance.
- The homeowner may refinance the reverse mortgage or sell the home at any time (The bank does not become the owner of the property) – there is no prepayment penalty.
- When the homeowner dies, the reverse mortgage must be paid off. If the property is sold, the heirs are entitled to any remaining equity.
- The home must be the homeowner’s primary residence.
- A reverse mortgage may be used for the purchase of your home and still have no mortgage payments – the homeowner must pay property taxes and homeowner’s insurance.
Santa Cruz Home Finance is not affiliated with or acting on behalf of or at the direction of FHA, VA or the Federal Government.