A reverse mortgage is a loan available to homeowners who are 62 years of age or older. They are eligible for this loan, considering they have good home equity. These homeowners can borrow money against the value of their homes. Furthermore, they can redeem these funds as a fixed monthly payment, lump sum, or line of credit. But this amount does not have to be paid back as loan payments.
Costs
Housing and Urban Development (HUD) have made adjustments to insurance premiums. A lender can no longer ask homeowners or heirs to pay any balance if the loan balance grows more than the value of the home. Instead, the insurance premiums offer a pool of funds that lenders can acquire when such a situation occurs. The amount one is eligible for in a reverse mortgage depends on the lender and the payment plan. In-home equity conversion mortgages, the amount that can be borrowed is based on factors like the youngest borrower’s age, the loan interest rate, and the lesser of the home’s appraised value (or FHA’s maximum claim amount. As of Jan 1, 2022, this amount is $970,800.
Tips to ease reverse mortgage
As a reverse mortgage goes on, the equity decreases while the amount owed to the lender increases. Here the interests and fees also accumulate, resulting in a higher loan balance. So, if a homeowner’s home faces complications from a reverse mortgage, they can:
Set goals to identify whether they want to stay in the home long-term or pass the property on to their heirs.
Understand the costs concerning refinancing an existing loan with either a conventional mortgage or a new reverse mortgage. Refinancing options are with closing costs.
Make partial payments if they cannot pay the mortgage as a lump sum amount. Doing so will help reduce the amount owed in the future.
Speak with the lender to discuss the issue or make changes to the agreement.
Ask a HUD-approved counselor for advice. The counselor can discuss the loan repayment process and run a benefits check to assess if the borrower is eligible for federal or state resources.
Submit a complaint to the Consumer Financial Protection Bureau if the homeowner suspects they are victims of fraud.
Top companies and features
A homeowner must pick a quality lender with reliable features when looking for a reverse mortgage.
American Advisors Group (AAG)
This is one of the largest reverse mortgage companies that offer a variety of mortgage-type options. The company also provides experts to help select the right mortgage plan. American Advisors Group also offers features like a free online loan calculator and loan options up to $4 million based on an individual’s eligibility.
Longbridge Financial
Longbridge Financial offers features like free identity theft protection. Other benefits of the company include low upfront costs. A free quote calculator is also available on their official website. Furthermore, Longbridge Financial does not sell closed contracts to other loan services that generally charge additional fees.
Liberty Reverse Mortgage
Liberty Reverse Mortgage has funded over $7.5 billion in loans and helped more than sixty thousand borrowers. The brand offers features like free online resources for those who want to learn more about reverse mortgages and other financial solutions. The company also offers a Liberty Iron Clad Guarantee where customers are entitled to fair and competitive pricing and the option for customers to change their minds or stop the process at any time before the loan is funded.
