Considering a Reverse Mortgage? Know the Basics

When one hears the term reverse mortgage, words such as retirement, credit, and deferring loan payments come to mind. Others refuse to dive into this particular mortgage, due to its complex nature and possible complications.

But these reverse mortgages are simpler than you think.

Defining reverse mortgages

A reverse mortgage provides individuals with income they can use during their retirement. This loan is usually offered for senior citizens aged 62 years and older. One advantage of reverse mortgages is the irrelevance of borrower’s credit. It is often unchecked because borrowers need not make more payments.

Homes serve as collateral in this type of mortgage. After the borrower’s death, these homes are sold in order to repay the mortgage. Other options involve the borrower’s heirs repaying the mortgage without selling their homes.

Eligibility for reverse mortgages

The Federal Housing Administration (FHA) requires applicants and borrowers on the deed to be at least 62 years of age or older. Borrowers should also meet the financial eligibility criteria established by credited lenders.

Homes should also pass the eligibility requirements issued by the FHA. Homes with current mortgages are not allowed. Borrowers should pay everything with the proceeds from the reverse mortgage loan. Home types allowed by the FHA are the following:

  • Townhouses
  • Approved condominiums
  • Single-family homes
  • Two to four unit owner dwellings
  • Manufactured homes

The mechanics of reverse mortgages

After years of paying your mortgage, you build up equity (the amount of your property today minus the amount you owe on your mortgage and other lines of credit). Reverse mortgages allow borrowers to use money against their equity.

As the years pass, your loan balance grows. You are not required to pay the loan while you or your spouse lives in your home. When both of you pass away or move out of the house, someone should pay for the loan. Majority of individuals need to sell their house to pay for the loan. Fortunately, neither you nor your heirs will have to pay back more than your home’s current worth.

If you say yes to reverse mortgage loans, save money by borrowing less and gradually. Make the most out of your mortgage by knowing the basics.

Here at Altius Mortgage Group, we offer trusted reverse mortgage loans in Utah. Get pre-qualified now or contact us for more information on our other services.

Things That Must Factor When Choosing the Right Financing Option

Funding is one of the more important steps when buying a home, if not the most important. Even when you have money in the bank, you are going to need more than what you have to make sure that your enterprise keeps running.

In turn, you rely on banks and other financial institutions for additional finances. Before making any decision, it’s important to recognize what is important to what’s not. Here are the things that should factor when selecting the right financing option for your business:

  1. Interests and Fee Structures
  2. If there is anything that could ruin your financial strategy, it’s unexpected costs. Don’t just take the banker’s word for it and do the math. Add up all the costs within the financial option to know how much you’ll be paying exactly.
    Loans usually involve interest rates, origination fees and broker fees. Money borrowed from venture capitals, however, is manageable at first and testing in the end. You are not required to repay them for years on end, but the investor will expect you to pay all of it all at once.

  3. Financing Requirements
  4. Each lender will investigate your credit history and perform other financial background checks to make sure you’re good at your word. If the requirements are too rigid, try scouring for another lender. Make sure to discuss with your financer your background before preparing your loan application.

  5. Repayment Terms
  6. The reason you’re getting funds is to cover your short-term needs and pay them in the future. Longer loans build interests over time, but shorter loans require large amortizations. An expert’s advice would be a higher allocation to minimize the long-term cost. This way, you can use your money on equipment and other investments your company needs, and not more payments.

There’s no one good approach in finding the right financing option. Different homeowners will need varying amounts of funding, and yours might need something different, as well.

At Altius Mortgage, we pledge to provide you with the absolute best service, the lowest rates and the most comprehensive communication. Contact us and let our team help you in searching for the perfect kind of financing for your needs. You can also use our ‘Chat Option’ in the lower right hand corner of our website.