Are you 62 years old and own your own home, then you will be happy to know that you qualify for Plantation reverse mortgage. With a reverse mortgage, you are able to access your home’s equity without moving or even selling your property.
Before you sign up for a Plantation reverse mortgage, we recommend that you understand how it works. This is due to the fact that certain reverse mortgages have a downside.
This article will help you understand the basics of a Plantation reverse mortgage and whether it is the right option for you.
According to the rules, you are not required to pay back the reverse mortgage as long as you live in the home. However, you will be required to keep up with other housing payments such as your homeowner’s insurance, property taxes, association and repairs.
When the reverse mortgage borrower dies, their heirs can:
- Pay off the debt
- Allow the house to settle the debt
In the event that the homeowner moves their primary residence, they will be expected to pay back the mortgage rate. This is usually achieved by selling the home.
According to the lender, you will have changed your permanent residence if:
- Live away from the property for at least 6 months for reasons not related to your health
- Lived away for at least 12 consecutive months for medical reasons
Different Types of Reverse Mortgages
There are different types of reverse mortgages, these include:
- Home Equity Conversion Mortgages
- Proprietary Reverse Mortgages
- HECM for purchase
- Single Purpose Reverse Mortgages
Home Equity Conversion Mortgages
This is the most common type of reverse mortgage. Some of the features that are a part of the HECM include:
- Limits on certain fees
- Federal backing
- When you receive the money you can spend it however you want
HECM loans are insured by the government through FHA. In the event that the amount of money you owe exceeds the value of your home, the FHA will take up most if not all of the loss. In order to cover this type of loss, the borrower is expected to pay the mortgage insurance premiums. The premiums sometimes are factored into the loan amount.
HECMs have restrictions on borrowing and eligibility. The FHA can only back a certain maximum amount even if the property value is higher than the set limit. Therefore the lender can not lend the borrower money that exceeds the value set by HECMs.
Before you apply for an HECM, you are required to meet with an HUD approved counselor and have the following items verified:
- Monthly living expenses
- Timely payment of real estate taxes
- Insurance premiums
The HUD approved counselor reviews the borrowers situation and determines if the reverse mortgage is their best option.
Proprietary Reverse Mortgages
Proprietary reverse mortgages are similar to HECMs however, they are not backed by a government guarantee. This type of reverse mortgage has fewer restrictions and the lender is at liberty to loosen some of the eligibility requirements such as not requiring a financial review with an HUD counselor, however the borrower might be charged higher fees with a proprietary reverse mortgage.
Because this type of reverse mortgage is not standardized, it can be hard to compare. Unlike with other types of reverse mortgages, proprietary reverse mortgage programs only disburse money as a lump-sum. Read more about this by clicking here.
HECM for Purchase
An HECM for purchase can be used to buy the borrower a new home as their primary residence. With this type of mortgage, the borrower makes a down payment and then finances the balance of the purchase with the reverse mortgage instead of using a first-lien mortgage or paying cash.
The new home to be purchased has to be their primary residence and cannot be an investment property or their vacation home.
This strategy allows you to complete everything in a single transaction and what’s more you will not have to be concerned about making monthly mortgages for your new Plantation home.
Many seniors take advantage of this reverse mortgage to move closer to family members or to downsize.
Single Purpose Reverse Mortgages
This type of reverse mortgage allows the lender to dictate to the borrower how proceeds from the reverse mortgage should be used. For instance, a single purpose reverse mortgage can only be used to get home repairs done or to pay off property taxes.
This type of reverse mortgage is usually the least expensive when compared to other types of reverse mortgages. Unfortunately, there are not many of them available.
Single purpose reverse mortgages are usually offered by State and local governments as well as non-profits. They are typically targeted towards low and moderate income borrowers who may not be eligible for other types of reverse mortgages.
If you would like to know more about Plantation Reverse Mortgages, do not hesitate to get in touch with Nationwide Home Loans.