Is a Reverse Mortgage Right for You?
Retirement is the ultimate goal for many people as they consider their futures. What many people don't consider is how they'll continue to afford the cost of living once they retire. While you may have a retirement plan in place, it may not be enough to supplement your current income for an extended period. Thankfully, if you own a home, you may have a built in safety net. If you’re 62 or older – and want money to pay off your mortgage, supplement your income, or pay for healthcare expenses – you may consider a reverse mortgage. Here are a few things you need to know about reverse mortgages and your options.
What is a Reverse Mortgage?
When you have a regular mortgage, you pay the lender every month to buy your home over time. In a reverse mortgage, you get a loan in which the lender pays you. Reverse mortgages allow you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. A reverse mortgage is a financial option available for homeowners 62 or older who have accumulated home equity and want to use this to supplement retirement income. Unlike a conventional forward mortgage, there are no monthly mortgage payments to make. Borrowers are still responsible for paying taxes and insurance on the property and must continue to use the property as a primary residence for the life of the loan.
There are 3 Types of Reverse Mortgages
Single-purpose reverse mortgages are generally offered to lower-income homeowners by non-profit organizations and local government agencies. They allow a homeowner to use the proceeds for one single purpose as the name suggests, usually to payoff property taxes or for home improvements. They have low associated fees, but are limited in their offerings. If you’re an older homeowner who needs help paying for property taxes or necessary home repairs, a single-purpose reverse mortgage may be a good option.
Federally-Insured Reverse Mortgages
A federally-insured reverse mortgage, otherwise known as a Home Equity Conversion Mortgage (HECM loan) is less restrictive than a single-purpose reverse mortgage, though it has higher associated costs. These are by far the most popular reverse mortgages out there. Homeowners can use this type of reverse mortgage for any purpose, or multiple purposes, and can select how they want to receive the money. HECMs will carry the same interest rates regardless of lender, but the closing costs and servicing fees can vary, so make sure you shop around. The HECM FHA mortgage limit is $679,650 and the HECM origination fee is capped at $6,000.
Proprietary Reverse Mortgages
A proprietary reverse mortgage is similar to a Home Equity Conversion Mortgage, though they are privately-backed loans and usually the most expensive. Unlike a single-purpose reverse mortgage, the proceeds of a proprietary reverse mortgage can be used for anything, including paying off the homeowner’s existing mortgage to free up monthly cash flow. And unlike HECMs, proprietary reverse mortgages do not restrict the amount of proceeds borrowers can receive in the first year of the reverse mortgage term. Instead, borrowers can usually obtain all the loan proceeds up front, though a line of credit is another possibility.
Trust MHQ Mortgage Headquarters for Your Mortgage Loan Needs!
We understand that as a retiree, you may at times need access to funds for a number of different reasons. We also understand that getting those funds isn't always easy in your particular position. When deciding what type of mortgage product is right for you, rely on the expertise of Mortgage Headquarters of Missouri to help you decide. In today’s competitive market, there are many options available. MHQ Mortgage Headquarters will help you find the right mortgage product for your retirement lifestyle and financial needs.
Mortgage Headquarters of Missouri, Inc
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
Website - www.MHQMortgage.com
What is a Reverse Mortgage?
When you have a regular mortgage, you pay the lender every month to buy your home over time. In a reverse mortgage, you get a loan in which the lender pays you. Reverse mortgages allow you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. A reverse mortgage is a financial option available for homeowners 62 or older who have accumulated home equity and want to use this to supplement retirement income. Unlike a conventional forward mortgage, there are no monthly mortgage payments to make. Borrowers are still responsible for paying taxes and insurance on the property and must continue to use the property as a primary residence for the life of the loan.
There are 3 Types of Reverse Mortgages
- Single-purpose reverse mortgages
- Federally-insured reverse mortgages (HECM loans)
- Proprietary reverse mortgages
Single-purpose reverse mortgages are generally offered to lower-income homeowners by non-profit organizations and local government agencies. They allow a homeowner to use the proceeds for one single purpose as the name suggests, usually to payoff property taxes or for home improvements. They have low associated fees, but are limited in their offerings. If you’re an older homeowner who needs help paying for property taxes or necessary home repairs, a single-purpose reverse mortgage may be a good option.
Federally-Insured Reverse Mortgages
A federally-insured reverse mortgage, otherwise known as a Home Equity Conversion Mortgage (HECM loan) is less restrictive than a single-purpose reverse mortgage, though it has higher associated costs. These are by far the most popular reverse mortgages out there. Homeowners can use this type of reverse mortgage for any purpose, or multiple purposes, and can select how they want to receive the money. HECMs will carry the same interest rates regardless of lender, but the closing costs and servicing fees can vary, so make sure you shop around. The HECM FHA mortgage limit is $679,650 and the HECM origination fee is capped at $6,000.
Proprietary Reverse Mortgages
A proprietary reverse mortgage is similar to a Home Equity Conversion Mortgage, though they are privately-backed loans and usually the most expensive. Unlike a single-purpose reverse mortgage, the proceeds of a proprietary reverse mortgage can be used for anything, including paying off the homeowner’s existing mortgage to free up monthly cash flow. And unlike HECMs, proprietary reverse mortgages do not restrict the amount of proceeds borrowers can receive in the first year of the reverse mortgage term. Instead, borrowers can usually obtain all the loan proceeds up front, though a line of credit is another possibility.Trust MHQ Mortgage Headquarters for Your Mortgage Loan Needs!
We understand that as a retiree, you may at times need access to funds for a number of different reasons. We also understand that getting those funds isn't always easy in your particular position. When deciding what type of mortgage product is right for you, rely on the expertise of Mortgage Headquarters of Missouri to help you decide. In today’s competitive market, there are many options available. MHQ Mortgage Headquarters will help you find the right mortgage product for your retirement lifestyle and financial needs.
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
Website - www.MHQMortgage.com
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