A reverse mortgage allows homeowners 62 and older to access their home equity without selling the property or making monthly payments. A lender provides you with an advance on your home equity in the form of a flat sum, monthly payments, or a credit line.
During the tenure of the loan, your debt increases, your home equity decreases, and you accrue interest and fees.
In contrast to a Reverse mortgage lenders san diego, the loan is not due until you sell the residence, move out, fall behind on property taxes, or pass away. Your next steps depend on whether you are a co-borrower on the loan, an eligible or ineligible non-borrowing spouse, or a non-borrowing spouse who is not eligible.
KEY TAKEAWAYS
A reverse mortgage is for homeowners over the age of 62 who wish to access the equity in their property without selling it or making monthly payments.
When you sell the residence, move out, fall behind on property taxes, or die, the loan and interest are due.
Eligible non-borrowing spouses may continue to reside in the residence after the death of the borrower, but will not receive any additional loan proceeds.
The co-borrower on a reverse mortgage can be anyone who qualifies, including your spouse, companion, or roommate.
If a spouse with a reverse mortgage passes away, the next steps depend on whether the surviving spouse is a co-borrower, an eligible or ineligible non-borrowing spouse, or an ineligible non-borrowing spouse.
How Age Influences Reverse Mortgages
First, a brief overview of reverse mortgages. For a HECM, you must be at least 62 years old. (some proprietary reverse mortgage lenders accept borrowers as young as 55).
However, your age, as well as that of your spouse or co-borrowers, affects the amount you can receive from a reverse mortgage. Because the loan balance accrues interest over time, the longer a borrower or non-borrowing spouse resides in the home, the greater the likelihood that the loan balance will exceed the home's value. Since you can never owe more than the home is worth, this is a situation the FHA wishes to avoid.
In general, loans with older borrowers, residences with a higher market value, and lower interest rates have higher principal limits, and vice versa. The principal limit is determined by the age of the junior borrower or non-borrowing spouse who is eligible.
If Your Husband or Wife Is a Co-Borrower
After a borrower passes away, any co-borrower on the loan continues to receive reverse mortgage benefits, including loan payments. In addition, co-borrowers may remain in the residence for as long as they choose, provided they continue to meet their loan obligations.
To take advantage of these protections, a spouse or partner who fulfills the borrowing requirements should typically be listed as a co-borrower on a reverse mortgage.
Property taxes, homeowners insurance, flood insurance premiums, homeowners association (HOA) fees, and other special assessments must be maintained in accordance with the terms of your reverse mortgage loan.
However, a surviving spouse may be able to remain in the residence without settling the debt, depending on whether they are an eligible or ineligible non-borrowing spouse and the origin date of the loan.
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