If you happen to be close to retirement and are looking at options that will be more financially beneficial for you, here are the details for a reverse mortgage and how this product can work for you.
Reverse Mortgage details
In short, a reverse mortgage is a type of home loan secured by a primary residence, where repayment is deferred to a later date – generally when the home sells. This loan allows you to convert some of the equity in your home without having to sell your home. This type of mortgage is only available to homeowners who are 62 or older and they are not required to make monthly mortgage payments. (although making payments can be an option)
What are the minimum requirements for application?
It is very important that you receive education on what this loan is and is not! Aside from education from a certified reverse mortgage professional (CRMP) it is necessary that you receive housing counseling known as HUD counseling. This session is required prior to signing a loan application which in the state of California is 7 days after the counseling date. The file must be documented with income, credit, and an extensive list of other important items. These documents are not unlike traditional loan requirements.
How You Can Use It
If you have a traditional mortgage the reverse mortgage will pay off the traditional loan. It is a refinance, and the reverse goes into the first position. If your total loan amount provides additional funds, you may use those funds any way you wish. You might want a monthly payment from the available proceeds or choose to leave those funds in a line of credit for future use. How else you use available funds is entirely up to you.
To learn more about reverse mortgages, contact your local certified Reverse Mortgage Professional (CRMP) for guidance and expertise.