As you approach retirement age you may want to think about a reverse mortgage loan to supplement your retirement income. Before you make a decision you need to weigh your options in order to determine if a reverse mortgage is right for you. It’s important for you to first be aware of the qualification process. Before a person can qualify for a reverse mortgage he or she must be at least 62 years old, live in the home full time and have enough equity in the home to support a reverse mortgage. The amount for which you qualify depends on many factors including the borrower’s age, amount of equity in the home, current interest rate and value of the home. A senior homeowner can usually obtain between 40-70 percent of the equity and the older the borrower is the more money he will be able to obtain.
Once you know you qualify you should consider any other options in order to ascertain if a reverse mortgage would be beneficial for you. The most important consideration there is the amount of equity in your home compared to your indebtedness, a figure that is even more crucial if you still have a mortgage on your home as the reverse mortgage holder will need to be the first lien holder. In this case it will be necessary to pay off the existing mortgage before you do anything else with the proceeds from a reverse mortgage. The amount of your first mortgage will affect the amount of additional proceeds you can obtain and will help you assess whether a reverse mortgage is right for you.
Even in the event you are only able to use proceeds from a reverse mortgage to pay off your current mortgage you will still have some additional monthly cash flow based on the fact you will no longer have to make mortgage payments on your home until you move or die. Of course, if you have enough equity in the home to also pay off your other debts you will increase your cash flow even more. That doesn’t mean you have to use the funds to pay off your other debts—you can use the money for any purpose you see fit including purchasing or paying off a vacation home.
The maximum lending limit for a reverse mortgage loan amount is $625,500 but as of October 1st the principal limit was reduced by ten percent. If you were considering a reverse mortgage but did not meet the September 30th deadline you will not be able to take advantage of the higher principal amount. However, you still need to weigh your options and determine if a reverse mortgage is the best option for you. If you don’t plan to live in the home until you die and are only searching for a way to get rid of some high interest loans you may want to look in another direction as you will need to pay off the reverse mortgage once you are no longer living in the house.
A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has helped over 3000 Americans find financial security with a reverse mortgage. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like more information, please call (866) 683-3690 or complete our Reverse Mortgage Information.
Tags: Reverse Mortgage
