Individuals age 62 and over are able to tap into their property’s equity with a reverse mortgage. There’s a lengthy list of benefits that these HECM reverse mortgage home loans are able to offer, most of which are worth your consideration.
One main benefit of reverse mortgages is that they aren’t based upon one’s credit score and income. Bankrate explains that those loans are solely based on homeownership and accrued, existing equity within the property. In short, if you owned the property and paid the balance down as you meet the eligible age of 62, you can generally be approved.
A number of payouts methods. There are many ways to get paid out the sum upon a reverse mortgage, according to the Consumer Financial Protection Bureau. They include:
• The line of credit you’re able to draw on, which may increase over a period of time.
• Month-to-month tenure choice, which gives you a month-to-month payment.
• A month-to-month term, which gives fixed month-to-month payments over a set time.
• Lump-sum, the fixed-rate option which pays you the whole proceeds at one time.
According to the FHA, What may be federally insured? Reverse mortgages only are available via the FHA through an HECM, or home equity conversion mortgage.
Tax-free funds. It’s possible to borrow the money from the reverse mortgage without paying any income tax, according to the IRS. It’s because those funds are thought to be a loan, and not income, and therefore, aren’t taxable.
No pay back required. According to the Consumer Financial Protection Bureau, you don’t need to repay reverse mortgages unless you move from or sell the house. If the house remains your main residence, no payments will need to be made to your spouse, and you have passed.
Homeownership is still retained. Retain the home’s title using a reverse mortgage. However, a lender places a lien on the title within the quantity of the monies borrowed. Therefore, if you do wind up selling the home or moving, the lien has to be satisfied prior to all remaining monies being paid out.
To learn more on HECM reverse mortgage, contact Longbridge Financial.