Many people have never heard of a Reverse Mortgage and our hope is that this post will educate you. Many lenders are promoting this type of mortgage to retired homeowners as studies have shown that 90% of the income for one-third of American retirees comes from Social Security. Reverse Mortgages supplement this income for these homeowners.
What is a Reverse Mortgage?
Reverse Mortgages are a special kind of mortgage where you can convert the monetary value of your house into cash without moving out or selling it. With this type of loan, a lender pays you rather than you paying monthly rates. It sounds like a good deal, right? Who wouldn’t want to be paid to live in their own home? However, before settling for this type of loan, you need to learn more and understand its benefits and drawbacks.
Colorado Reverse Mortgages are approved by Federal Housing Administration
These loans are approved by the Federal Housing Administration (FHA) and are not financial instruments of lenders. They are loans approved by the Federal Government specifically meant to benefit retired Colorado homeowners. Reverse Mortgages have regulatory prerequisites and regulations to cover the borrower’s financial security and protection.
Your Age is Key
In order to qualify for this loan, you must be 62 years or older and you must have enough equity and live in the house full time. There is no income necessity in order to obtain this loan as long as you meet the age and other eligibility prerequisites.
The Mortgages have Different Payment Methods
Reverse Mortgages provide various options for you to convert the value of your home into cash. There are five different alternatives set by the regulatory body from which you can choose. You can opt for payment within a fixed number of years after which you will not receive money anymore even if you are still residing in the home. Or, you can choose to be paid monthly for the entire period you are living and reside in the home as the principle tenant. There is also a flexible line of lending that allows you to decide on the amount and when to withdraw money, up to the highest amount of this option. Additionally, you can blend the lines of lending with the first two payment alternatives.
The Home Remains under Your Ownership
The title of the home remains yours as long as you reside in the home for a minimum of six months a year, maintain the property and pay relevant charges like insurance and taxes.