Reverse Mortgage Tips
Are you looking to tap into your home equity as a way to boost monthly cash flow or save for a rainy day? The new reverse mortgage can help.
Reverse mortgages have been around for decades to help retirees improve their financial situations as their incomes decline. Under the federally insured Home Equity Conversion Mortgage (HECM) program, these loans have long allowed people ages 62 and older to borrow a lump sum, open a line of credit, or receive term or tenure payments based on the amount of home equity they have built up over time.
Now, a new reverse mortgage era is here.
The Federal Housing Administration, which insures the vast majority of new reverse mortgage loans, has made some program changes in late 2013 and early 2014.
Many of the rules are still the same as they have always been: borrowers can choose from different payment types, they can opt for an adjustable rate or a fixed rate, and they’re required to attend reverse mortgage counseling before completing an application.
But there are also a few changes to note about the new, and improved, reverse mortgage.
If you’re in the market, here’s what you should know.
A reverse mortgage has more protections than ever.
Recent changes implemented by the Federal Housing Administration have made the new reverse mortgage safer than ever. Improved counseling protocols and restrictions on the upfront amount borrowers can withdraw have been put in place to protect borrowers’ home equity.
A reverse mortgage is still government-insured.
Like all HECM loans, the new reverse mortgage comes with a government guarantee that you will never have to repay more than your home is worth at the time of sale. This is known as the HECM’s “non-recourse” feature.
FHA insurance also means you can always count on receiving your loan proceeds as agreed upon at the time of sale.
A reverse mortgage can be used to buy a home.
The new reverse mortgage can help you remain in your current home, or it can help you move into an entirely new one, while eliminating your monthly mortgage payments.
A reverse mortgage is available nationwide.
Whether you live in Texas or Alabama, Hawaii or Oklahoma, all reverse mortgage types are available to you. This year, for the first time, all 50 states have approved all of the reverse mortgage types available under the HECM program.
A reverse mortgage offers many rate options.
In recent years, reverse mortgages have been offered at a fixed rate, or at a monthly adjustable rate. The new reverse mortgage also offers a rate option that adjusts on a yearly basis (up to a capped point).
The new reverse mortgage bears many similarities to its former version, but offers an even better option today for those looking to drive cash flow or simply to open a line of credit for future use.
If you’re considering tapping into your home equity through the new reverse mortgage or would like to learn how much you’re eligible to borrow, contact us today.