Maryland Real Estate

Reverse Mortgage Senior Loans

According To Wikipedia:

A reverse mortgage is a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (e.g., into aged care).

In a conventional mortgage the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases within his or her property, and typically after the end of the term (e.g., 30 years) the mortgage has been paid in full and the property is released from the lender.

In a reverse mortgage, the home owner makes no payments and all interest is added to the lien on the property. If the owner receives monthly payments, or a bulk payment of the available equity percentage for their age, then the debt on the property increases each month.

Reverse Mortgage Highlights:

• Must be at least 62 years old
• House must be primary residence
• Mortgage must be either fully paid or have a small balance
• No income or credit score requirements
• Payment can be a lump-sum, monthly cash payout, line of credit held in reserve, or combination of all three
• In many states can use proceeds for purchase of a new home

Reverse mortgages can be a good alternative for seniors struggling with monthly bills, yet sitting on a significant amount of equity in their homes.

Frequently Asked Questions:

Q:  Can the lender take my home away if I out live the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current.

Another safeguard is that the borrower will never owe more than the value of the property at the time it is sold.

Q:  How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less.

Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

Q: Will I still have an estate that I can leave to my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender.

The remaining equity in your home, if any, belongs to you or to your heirs.