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1.
What is a reverse mortgage?
A reverse mortgage allows homeowners age 62 and over to
convert part of the equity in their home into cash without having to
sell the home, give up title to it, or make monthly payments. The loan
only needs to be repaid after the last borrower permanently leaves the
home.
2.
What’s the difference
between a reverse mortgage and a home equity loan?
With a traditional home equity loan you must have
sufficient income to qualify for the loan and you are required to make
monthly payments. The reverse mortgage is different in that it pays you
and there are no income requirements since payment is only due when you
permanently leave the home.
3.
Can the lender take my
home away if I outlive the loan?
No! You do not need to repay the loan as long as any
borrower continues to live in the house and keeps taxes and insurance
current. Even if you receive more than the home is worth, you can never
owe more than the value of your home.
4.
How much money can I get?
The amount you can receive depends on several factors,
including your age, the value of the home, any applicable loan limits,
type of program selected, and current interest rate. In general, the
older you are, the more valuable your home is, and the less you owe on
it, the more you will be able to receive. Please see the
reverse mortgage calculator on our website to help you
estimate available funds for your situation.
5.
How do I receive my
money?
You have several options:
-
Equal monthly
payments as long as at least one borrower lives in the home as a
primary residence
-
Equal monthly
payments for a fixed period of months selected.
-
Line of credit,
available for use whenever you choose
-
A combination of
line of credit and monthly payments so long as at least one borrower
lives in the home
-
A combination of
line of credit and monthly payments for a fixed period of months.
-
Lump sum cash
payment.
6.
What are the requirements
or restrictions for a reverse mortgage?
·
Both
borrowers must be age 62 or older.
·
No
income, credit or health qualifications
·
Any
existing mortgages must be paid off at closing. This frees up additional
cash since you will no longer have a mortgage payment.
·
Reverse
mortgages must be secured by a primary residence, meaning you must
reside there at least 183 days of each year.
·
The
residence must be either a single family dwelling, or borrower must
reside in one unit of a 2-4 family dwelling. Some manufactured homes and
condominiums may qualify.
7.
Will I still have an
estate to leave to my heirs?
When you sell your home or no longer use it as your primary
residence, you or your estate will repay the cash you received from the
reverse mortgage along with interest and any other fees to the lender.
Any remaining equity in the home belongs to you or your estate.
Remember that you can never owe more than the home is worth,
so no debt will be passed on to your heirs. If your heirs prefer to keep
the home, they can pay off the reverse mortgage by obtaining a standard
forward mortgage on the property or by using other assets.
8.
What are the costs and
fees?
Most reverse mortgages have an application fee, origination
fee, closing costs, insurance, and a monthly servicing fee. These fees
may normally be paid by the reverse mortgage so that you need not pay
for them from your current cash on hand.
Please contact your local lender at Bloomfield State Bank for additional
information. Click here for
local branch information, or on “contact
us” to have a nearby lender contact you.
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