What Is A Reverse Mortgage

• A reverse mortgage is a type of loan that allows homeowners who are 62 years of age or older to convert a portion of the equity in their homes into cash. This loan is called a reverse mortgage because the traditional mortgage process is reversed. Instead of the homeowner making monthly payments to the lender, the lender makes payments to the homeowner.

How Much Money Can I Get Doing A Reverse Mortgage?

• The amount of money that a homeowner can receive from a reverse mortgage is based on several factors, including the age of the homeowner, the value of the home, and the current interest rates. The older the homeowner, the more money they can potentially receive from a reverse mortgage. This is because the lender will be taking on more risk by lending to an older homeowner.

How Do I Know If I Am Eligible For A Reverse Mortgage?

• To be eligible for a reverse mortgage, the homeowner must own their home outright or have a low mortgage balance that can be paid off with the proceeds from the reverse mortgage. The home must also be the homeowner’s primary residence.

What Types Of Reverse Mortgages Are There?

• There are several different types of reverse mortgages, including the federally-insured Home Equity Conversion Mortgage (HECM) and the proprietary reverse mortgage. The HECM is insured by the Federal Housing Administration (FHA) and is the most common type of reverse mortgage. The proprietary reverse mortgage is a private loan and is not insured by the FHA.

Main Benefits Of A Reverse Mortgage

• One of the main benefits of a reverse mortgage is that the homeowner does not have to make monthly payments to the lender. Instead, the lender makes payments to the homeowner. The homeowner can choose to receive these payments in several different ways, including as a lump sum, as a monthly payment, or as a line of credit.
• Another benefit of a reverse mortgage is that the loan does not have to be repaid until the homeowner sells the home, dies, or moves out of the home permanently. This means that the homeowner can continue to live in their home and receive loan proceeds without worrying about making monthly loan payments.

What if I change my mind and no longer want the loan after I go to closing? How do I do this?

• By law, you have three calendar days to change your mind and cancel the loan. This is called a three day right of rescission. The process of canceling the loan should be explained at loan closing. Be sure to ask the lender for instructions on this process. Mortgage lenders differ in the process of canceling a loan. You should ask for the names of the appropriate people, phone numbers, fax numbers, addresses, or written instructions on whatever process the company has in place. In most cases, the right of rescission will not be applicable to HECM for purchase transactions.

Important Things To Know

• However, it is important to note that a reverse mortgage is a loan, and like any loan, it must be repaid. If the homeowner sells the home, the loan must be repaid from the proceeds of the sale. If the homeowner dies or moves out of the home permanently, the loan must be repaid from the homeowner’s estate or other assets.

To learn more about reverse mortgages call (800) 254-3150 Aceland today and ask to speak with one of our knowledgeable mortgage professionals.  We look forward to serving you!

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