Understanding reverse mortgages
There are many ways to ensure you enjoy a sufficient cash flow during your retirement. In addition to adopting smart fiscal management practices is definitely advisable, you may also be interested in learning about non-traditional lending options.
Home equity conversion mortgage (HECM) is a Federal Housing Administration (FHA) reverse mortgage program. HECM are an increasingly popular option among senior citizens 62 and above. It could be a part of your personal money management strategy. Here's some of what you need to know.
Reverse mortgage essentials
HECM reverse mortgages let homeowners exchange some of the equity they've paid into their principal residences for cash payments. For this reason, these loans are typically used as a supplemental source of retirement income. Some people also utilize reverse mortgage proceeds to supplement their purchase of new principal residences.
If you take out a HECM reverse mortgage, you're not obligated to make monthly repayments it until the borrower permanently moves out of the home, stops using the property as the principal residence, sells the home or the last surviving borrower dies. The loan also becomes due if you stop paying your property charges, such as taxes, homeowners’ insurance, or fail to maintain the property in good repair. This can impact your estate, so it's smart to plan ahead.
Who's eligible for a reverse mortgage?
HECM reverse mortgages are loans that specifically available to homeowners who certain criteria, which include but not limited to the following:
Are 62 or older,
- Own their homes in full or whose remaining mortgage balances are low enough to be paid by the proceeds from the reverse mortgage or other funds,
- Live in the home in question as their principal residence &
are financially capable of paying property upkeep costs including insurance & taxes,
- Participate in a consumer information session given by a HUD- approved HECM counselor.
How will you be paid?
HECM reverse mortgage borrowers can choose from multiple kinds of payment structure. For instance, you may elect to receive fixed monthly payments for a predetermined period or create a tenure loan that continues paying a fixed sum as long as a borrower lives in the principal residence. Some seniors choose to receive credit lines or combination of the other options. If your mortgage includes a fixed interest rate, you'll be paid one lump sum at the time of closing.
Are reverse mortgages right for you?
Reverse mortgages are just one kind of borrowing solution, and they may not be for everyone. For instance, the fees or interest rates associated with some loans may not be worth the extra cash. On the other hand, if you plan to stay in your home indefinitely—or if you're relatively healthy and well-off enough that you'll be able to pay the remaining reverse mortgage balance should/when you leave the home—you might find that the lack of monthly payments grants you a much-needed degree of fiscal freedom.
Above all, it's important to work with experienced lenders. Because reverse mortgage terms, rates and details vary, you should always seek assistance from someone who is knowledgeable. To learn more about whether you might benefit from a reverse mortgage, get in touch with a Quontic Bank today by calling at 1-800-388-7689.
Quontic Bank is a Member FDIC bank, regulated by the U.S. Office of the Comptroller of the Currency. We are authorized by the U.S. Department of Housing and Urban Development (HUD) to make Federal Housing Authority (FHA)-insured mortgage loans in all fifty states. We have an A+ rating from the Better Business Bureau and were named to the Top 200 Healthiest Banks In America in 2016, ranking No. 88 of the 6,199 federally insured banks in the U.S., according to DepositAccounts.com. We were also ranked the 12th largest reverse mortgage lender in the U.S. by "Reverse Mortgage Daily” in September 2017. Quontic Bank is a member of the National Reverse Mortgage Lenders Association (NRMLA) and holds NMLS ID 403503.