A home loan or a mortgage is a loan that buyers get when they buy a home. Depending upon the type of loan, the price of the home, and the financial standing of the buyer, a loan allows the buyer to borrow a sum of money from a bank or a financial institution and have an adjustable or fixed interest rate and payment terms to pay back the loan. There are various kinds of home loans, but there is one type of home loan that is very different from all the others.
This is the reverse mortgage which is a type of home equity loan for older homeowners that does not require the homeowner to make monthly mortgage payments. Instead, the home’s equity is paid to the homeowner monthly. To better understand what a reverse mortgage is and how it works, let’s look at what this type of loan means and how you can apply for one.
Information About Reverse Mortgages for Consumers/Homeowners
- A Reverse mortgage does not necessarily work for everyone. It is best suited for those who are 62 years or older and do not plan to move. It also only works for those that can afford to maintain their home and pay all taxes.
- Homeowners can use a reverse mortgage to supplement their income, pay medical bills, complete home repairs, or pay off any other unexpected expenses.
- Even though the homeowners do not need to make any payments, they still need to satisfy certain requirements before they can get a reverse mortgage. These include the home being your primary residence, being current on your property taxes, federal debts, and hazard premiums, having good financial standing with the ability to pass a credit check and being able to pay the high closing costs associated with this type of loan.
- It is essential for homeowners to work with a reputable lender who will answer all their questions and work with them to find the best mortgage solution for their needs. The leading licensed mortgage lender in Florida is Nationwide Home Loans. Our team of professionals has the knowledge and experience necessary to help you achieve your goals and find the best mortgage product for you. We will talk you through each step of the reverse mortgage process so that you feel completely satisfied with our service.
Obtaining a Reverse Mortgage from a Lender
- Loan officers need some personal information from homeowners so that they can determine if the homeowners are eligible for a reverse mortgage or not. Even if a homeowner is eligible for the loan, they are not obligated to get it and have opportunities to change their mind.
- Lenders conduct financial assessments for each prospective client to ensure that they meet all the requirements as mentioned in the section above.
- Not only do lenders analyze clients’ credit history, but they also look at all income sources including pensions, IRAs, Social Security, and 401(k) plans.
- Reputable lenders, like our professionals at NHL Lending, will be transparent with you about the costs of getting a reverse mortgage which includes:
- The origination fee: This fee covers the lender’s operating expenses associated with originating the reverse mortgage.
- A mortgage insurance premium: This is a fee paid by the borrower to an agency of the federal government called the Federal Housing Administration. This premium provides protections for both the lender and the borrower in a HECM reverse mortgage.
- The appraisal fee: This can vary by region and is the fee paid to an appraiser who assigns a fair market value to your home and recommends if any repairs are needed.
- Closing costs: These include a credit report fee, document preparation fee, recording fee, flood certification fee, title insurance, pest inspection, courier fee, and escrow, settlement or closing fee.
- A servicing fee & set-aside: A monthly fee earned by the lender for administering the loan.
The application process for the loan officially begins once the client provides the lender with the loan application and the signed disclosures as well as all required information.
Even though it may seem like a daunting task, getting a reverse mortgage can be a smooth process in the hands of the right lender. As an outstanding reverse mortgage company in Fort Lauderdale, NHL Lending can provide you with the best customer service and get your loan closed easily.