Loan Products
Do you want extra money to retire comfortably, update your home, travel, buy a new car, pay medical bills or prescription drug costs, and more? You may use funds you receive through a reverse mortgage for practically any legitimate purpose.
Reverse mortgages are unique in the sense is that they give you the ability to convert the equity you’ve built in your house into usable funds. A Home Equity Conversion Mortgage (HECM) is the only kind of reverse mortgage insured by the Federal Housing Administration (FHA). Since HECMs are government-regulated, they come with unique requirements.
You may qualify for a HECM if:
With enough equity in your home you can potentially live in your home for the rest of your life and retain ownership, with no monthly mortgage payments. You will still be responsible for paying taxes, insurance, any applicable homeowners association fees, and maintaining the home according to HUD guidelines. If you have an outstanding mortgage on your home, you will need to use funds from the reverse mortgage to pay the old loan off completely.
The maximum amount you may borrow depends on multiple factors such as:
HECM requirements may restrict how much money you receive in the first 12 months from the loan’s closing. Setting aside funds from the money you receive to pay for insurance and taxes might also be a requirement.
A mortgage will become due and payable when the borrower passes, the property is no longer the borrower’s principal residence, the borrower does not occupy the property for
12 consecutive months for health reasons, or the borrower violates the mortgage covenants.
When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid. All proceeds beyond the amount owed belong to your spouse or estate. This means any remaining equity can be transferred to heirs. No debt is passed along to the estate or heirs.
The estate or the borrower’s heirs may choose to repay the amount owed toward the reverse mortgage and keep ownership of the home. Since reverse mortgages are “non-recourse” in nature, if the home is sold to repay the loan, you or your heirs will never have to repay more than the property’s value or the loan amount, whichever is lesser.
Considering homeownership but not sure where to begin?
The Meadowbrook Financial Mortgage Bankers Corp. guide
to home buying will make the process easy all in one packet.
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