Duke Team of Remarkable Home Loans

     Reverse mortgages are a type of home loan that allows homeowners aged 62 and over to convert a portion of their home equity into cash. This can be a valuable option for seniors who need additional income in retirement or want to pay off debt without having to sell their home. They can also be used to get rid of your monthly mortgage payment. Here's what you need to know about reverse mortgages.

     1. You still own your home, just like a regular mortgage. Also, like a regular mortgage, you must continue to keep up the home, and pay your property taxes, homeowners insurance and, if applicable, HOA fees.

     2.  Reverse mortgages are non-recourse loans, which means that you, the borrower, or your heirs are not responsible for paying back more than the value of the home at the time of sale. This is an important protection, as it ensures that you can never owe more than the home is worth. Additionally, if the home is sold for more than the loan balance, you or your heirs will receive the difference.

     3.  What happens to the home when the you, the borrower, pass away? In some cases, the home will be sold to pay off the loan balance. However, if the home is worth more than the loan the difference is paid to your (the borrower's) heirs. It's important to note that if the your heirs want to keep the home, they will need to pay off the loan balance, which can typically be done with a refinance, even if they were not on title to the home.

       4. With the HECM (Home Equity Conversion Mortgage), a reverse mortgage insured by FHA, even if the loan balance is higher than the value of the home  at your passing or when you have to move out, your heirs may purchase the home for 95% of the home's value. The FHA insurance will pay the difference to the lender to make them whole.

    It is important to talk to your attorney about proper estate planning regarding your home, with either a forward (regular) or reverse mortgage, so your wishes are upheld and your heirs protected.

     While there is no specific credit score requirement for reverse mortgages, borrowers must be at least 62 years old and must own their home outright or have a significant amount of equity. The amount that can be borrowed will depend on the age of the borrower, the value of the home, and current interest rates. Borrowers can choose to receive the loan proceeds as a lump sum, monthly payments, or a line of credit.

     One potential drawback of reverse mortgages is that they can be more expensive than other types of home loans. Borrowers will typically pay higher interest rates and fees, and the interest on the loan will compound over time, which can significantly reduce the amount of equity in the home. Additionally, borrowers may be required to pay mortgage insurance premiums, which can add to the overall cost of the loan.

In summary, reverse mortgages can be a valuable option for seniors who need additional income in retirement or want to pay off debt without selling their home. However, borrowers should carefully consider the costs and benefits of this type of loan, as well as the potential impact on their heirs. If you're considering a reverse mortgage, be sure to work with a knowledgeable lender who can help you understand the eligibility requirements and the costs and benefits of this type of loan.