Reverse Mortgage

Reverse Mortgage

There are no income or credit requirements, and the loan has no monthly payment. Instead, the lender pays the homeowner, and the reverse mortgage balance rises as a result, accruing interest and fees. Lenders get repaid when the owner either moves or dies, and the home is sold. Reverse mortgages also come with hefty fees, which can run as high as 5% of your home’s value by some estimates. The FHA charges everyone who gets one a mortgage insurance premium fee of either 0.01% or 2% up front, as well as ongoing annual fees. The HECM Saver loan, created in October 2010, has lower fees, but typically higher interest rates and more restrictions on borrowing. Single purpose loans are the cheapest, but you can only use them for only one purpose, that can be either home repair or for paying off property taxes. If you seek low-cost mortgages that you can use for different purposes, HECMs are some of the least expensive ones you can find. Reverse mortgages are a lot like wine: the older, you are the better. The older you are, the more money you can get. Seniors must be at least 62 years old and must own their home. Eligible homes in this case include single detached homes as well as HUD-approved condominiums and dwellings. Trailer homes do not qualify.

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