Homeowners 62 and older can use a reverse mortgage to access their home equity without having to sell their home or make monthly payments. A lender advances you money against your home equity in the form of a flat sum, monthly payments, or a line of credit.
Your debt grows, your home equity declines, and interest and fees accumulate during the loan duration.
In contrast to a traditional (or forward) mortgage, the loan is not due until you sell the home, move out, fall behind on property taxes, or die. If your spouse dies while carrying a best mortgage companies to work for in california, your next steps will be determined by whether you are a co-borrower on the loan or an eligible or ineligible non-borrowing spouse.
KEY LESSONS
A reverse mortgage is for homeowners aged 62 and up who want to access the equity in their home without selling it or paying monthly payments.
When you sell your home, move out, fall behind on property taxes, or die, the loan and interest become due.
Non-borrowing spouses who are eligible can continue to live in the home after the borrower dies, but they will not get any additional loan proceeds.
Anyone who qualifies can be a co-borrower on a reverse mortgage, including your spouse, partner, or roommate.
If a reverse mortgage holder dies, the next stages are determined by whether the surviving spouse is a co-borrower or an eligible or ineligible non-borrowing spouse.
How Your Age Influences Your Reverse Mortgage
First, some background information about reverse mortgages. To qualify for a HECM, you must be at least 62 years old. (some proprietary reverse mortgage lenders accept borrowers as young as 55).
However, the amount you can receive out of a reverse mortgage is influenced by your age, as well as the age of your spouse or co-borrowers on the loan. Because the loan balance grows over time, the longer a borrower or non-borrowing spouse remains in the property, the more likely the loan balance will exceed the home's worth. And, because you can never owe more than the home's value, the FHA wants to avoid that circumstance.
Loans with older borrowers, more-valued properties, and cheaper interest rates generally have greater principle limits, and vice versa. The maximum principle amount is determined by the age of the youngest borrower or eligible non-borrowing spouse.
If Your Partner or Spouse Is a Co-Borrower
After a borrower dies, any co-borrower on the loan continues to receive reverse mortgage advantages, including loan payouts. Furthermore, co-borrowers can stay in the home for as long as they choose as long as they meet their ongoing loan requirements.
To take advantage of these protections, a spouse or partner who meets the borrowing requirements should be identified as co-borrowers on a reverse mortgage.
You must keep up with your ongoing property costs, such as property taxes, homeowners insurance, flood insurance premiums, homeowners association (HOA) fees, and other special assessments, under the conditions of your reverse mortgage loan.
However, depending on whether they are an eligible or ineligible non-borrowing spouse and when the loan started, a surviving spouse may be entitled to remain in the property without settling the debt.
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