If times are tight and traditional loans aren’t any help, you could try to take a long look at reverse mortgages for senior homeowners and see if this solution works for you.
What is it?
A reverse mortgage typically uses your home’s equity as collateral. Unlike traditional loans, wherein you send in the payments, the state will send money to you instead.
How much can you borrow?
The amount of money you receive will largely depend on a number of things: interest rates, the lesser of the home’s appraised value, the sale price of your property, the maximum lending limit, and your age. If you and your spouse are jointly signing up for one, the age of the youngest borrower is factored in. You and your spouse have to be 62 years old or older to qualify. If the age of the youngest borrower fails to meet that condition, you won’t qualify for any reverse mortgages for senior homeowners.
What makes you eligible?
Aside from your age, the Federal Housing Administration also requires borrowers to have the financial capability to continue paying property taxes on your home along with the home insurance. You must also own the home, according the Department of Housing and Urban Development (HUD). And if you took out a mortgage on that home, you can use this loan to pay off any of the remaining monthly mortgage payments.
How are the funds distributed?
Proceeds from the loan can be received in the following ways: as a line of credit, lump sum, tenure or term. You can go for just one or a combination of all four ways. To know more about the limitations of the loan, talk to a consultant. Get all the information you need before you make a choice. That way, you’ll know if this is a wise solution for you or if you need to look elsewhere.
