Reverse mortgages are a great solution that many buyers in our market might not consider, simply because they don’t understand it. To better illustrate what reverse mortgages are and how they can be useful to certain buyers in our market, I recently asked Fernande Bencze of the Attorney Action Club to share her thoughts. You can check out our full conversation in the video above.
Essentially, a reverse mortgage is a loan that allows homebuyers aged 62 and up to purchase a property and, instead of making monthly payments, receive payments from the lender.
Though the loan balance can be paid off at any time, a reverse mortgage loan only comes due when a homeowner permanently leaves a residence or passes away. This makes it a good option for buyers with equity to spare.
There are actually two types of reverse mortgages available in our market. First, there’s the Home Equity Conversion Mortgage (or HECM), which are insured by the Federal Housing Association.
There is also the High-Value (or Jumbo) Home Equity Conversion Mortgage. These loans are designed for properties valued at or above $800,000.
The way you leverage these loans can also be highly flexible depending on your goals. Many buyers may choose, for example, to decide to set aside some of their equity to apply toward their retirement, rather than using 100% of it toward their next loan. Reverse mortgages offer the benefit of allowing you to live in a home without a monthly mortgage payment, while simultaneously boosting your retirement nest egg.
The most important thing to remember when seeking this, or any other, home loan is to partner with a real estate professional who can help you develop a plan that suits your specific circumstances.
If you have any other questions or would like more information, feel free to give me or my team a call or send us an email. We look forward to hearing from you soon.