Home equity provides a variety of options for a qualified borrower who wants to obtain a real estate secured loan. Traditional mortgage loans require borrowers to make monthly principal and interest payments. However, a reverse mortgage loan is a unique product that does not require monthly payments.
What is a Reverse Mortgage?
A reverse mortgage is a loan that enables an eligible borrower to cash out a portion of their home equity. Unlike a traditional home loan that reduces a borrower’s principal balance with regular monthly payments, a reverse mortgage balance grows over the life of the loan. Borrowers can use the loan to get a lump-sum disbursement, to receive set monthly disbursements or to obtain disbursements as needed via a line of credit. Speaking with a licensed mortgage loan officer is a great way to inquire about reverse mortgages.
What are the Benefits of a Reverse Mortgage Loan?
Many homeowners are unaware of the benefits of a reverse mortgage loan. When a fairly fast solutions is needed to pay for items, such as unplanned medical expenses, home improvements, tuition or for an extended vacation, a reverse mortgage offers a lot of incentives for qualified borrowers. Shown below are some of the benefits of reverse mortgage loans.
- No mortgage payment
- Quick access to cash
- Financial counseling
With a reverse mortgage loan, a borrower can pay off monthly bills and other debts. Additionally, eligible borrowers can use the loan toward certain lifestyle advantages. For instance, by receiving disbursements via a reverse mortgage, a homeowner might be able to delay the use of their retirement savings.
A government-back Home Equity Conversion Mortgage is an extraordinary financial tool for seniors. The program requires financial counseling from an agency that is approved by the U.S. Department of Housing and Urban Development.
What Items are Needed to Apply for a Reverse Mortgage Loan?
Lenders often receive calls from prospective borrowers who are wondering how reverse mortgages work. Many applicants are typically concerned about the requirements for a reverse mortgage loan. Shown below are items that are needed to apply for a reverse mortgage.
- Applicant or spouse must be 62 years of age or older.
- Proof of residency and owner occupancy at the subject property.
- Certificate of counseling for a reverse mortgage loan.
- Sufficient income to pay property taxes, homeowners insurance and typical maintenance expenses.
Reverse mortgage lenders will also require a credit report, an appraisal and other financial documents.
Contact 1st USA Reverse Mortgage at (512) 288-4700 for more information about reverse mortgage loans.