A reverse mortgage is a loan secured against the value of your home, but with NO monthly payments required. You always maintain ownership and control of your home. The most common form of a reverse mortgage is that you receive a lump sum of money up front. The amount depends on your age and the value of your home. Interest accrues on the mortgage amount but you do not make any payments for the life of the mortgage. Three basic criteria to qualify:
First is that you are at least 55 years old. Anyone on the title of the property must be at least 55 years old. The amount you will qualify for is dependent on a blended age of the people who are on the title. As a general guideline, here is how it works:
Age 55 = Up to 30% of your appraised home value.
Age 65 = Up to 40%
Age 75 = Up to 50%
Age 80 = Up to 55%
Second is the value and type of your home. This is determined by a CHIP approved appraiser that will come to your home and determine value. The appraiser does take pictures outside and inside and will note any deficiencies. So, it is always best to tidy up and dispose of any unmentionables before having the home appraised.
Third is your income. Don’t panic. You only need to demonstrate that you earn enough money to cover the cost of (1) home insurance, and (2) property taxes. In general, that’s it. Since there are no payments you do not need to demonstrate that you can afford monthly payments because there are no payments.
A reverse mortgage is a great solution for many people. It is easier than qualifying for a traditional mortgage. You may be wary and have a lot more questions. Get your questions answered and start a conversation with Sean today.
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