What does “reverse mortgage” mean? Who benefits from a reverse mortgage and how does it work? The premise is simple enough for reverse mortgages, which are also referred to as a home equity conversion mortgage or HECM. More or less, against your house, you’re taking out a loan.
However, a reverse mortgage for seniors also means that, while you’re alive, no monthly payments need to be made (if you’re over 62 years of age and it’s your main residence). To supplement your retirement, if you have accrued home equity, this could be a great opportunity.
Keep in mind, however, that this loan comes with a number of questions. It’s not as straightforward as it sounds. Here is some information about a reverse mortgage for seniors.
Reverse Mortgage Explained
Here is the official, if not oversimplified, explanation for a normal reverse mortgage: This is an agreement of a financial matter. In exchange for regular payments, a homeowner relinquishes their home’s equity. As an example, this may be done as a retirement income supplement.
Important note: Over time, reverse mortgages rise as loan interest accrues – this is unlike traditional mortgages which, as you pay down the loan, decline.
Qualifying for a Reverse Mortgage
Reverse mortgage qualifications include the following:
- The property in question must be your principal residence in which you reside
- You must be 62 years of age or better
- You must have substantial equity in the property or own the home outright
- The home must be in an approved manufactured condo or house, or it must be a multifamily home or single-family home
- Before you take the loan, the house must be in good condition
- To make sure it’s what you need, before getting the reverse mortgage, you will need to have a counseling session with a counselor from HUD
But wait, there’s more. A financial assessment will be necessary to make sure that you can afford:
- Basic home maintenance
- HOA fees (if necessary)
- Property taxes
- Homeowners insurance
What Happens to the Loan?
Let’s just say that someone 62 years of age or older gets a reverse mortgage. When they pass away, what happens to the loan? Here’s the official weigh-in on that question:
Upon the death of the borrower, the loan becomes payable and due. Within 30 days (time limit may vary) of receiving the payable and due notice, the heirs will either need to sell the home, buy the home, or, to satisfy the debt, turn it over to the lender.
Is It Time to Stop Worrying About Your House and Enjoy Life at Rittenhouse Village At Muhlenberg?
Personal care services and respite care are the two types of senior living choices offered at Rittenhouse Village At Muhlenberg. Those choosing personal care can live out their days in a resort-like retirement community that offers numerous programs for the enjoyment of our residents. Senior living has never been so incredible! Play a game, watch a movie with a friend, enjoy fine dining with chef-prepared meals, take a trip into town, join in an exercise or crafts class – your options are nearly limitless. All of this while receiving the care and assistance you need in your golden years.
No more housekeeping, lawn care, fixing things around the house, grocery shopping, or cooking – your time is completely free, to enjoy as you choose. We’re pet friendly, as well, so your beloved pet can enjoy life with you in our retirement community.
Do you have questions regarding sales and leasing? If so, you can phone us at 610.477.3936. With other questions, please phone 610.208.8890.