How to Use a Reverse Mortgage for Financial Relief During the Pandemic
There is no denying the impact COVID-19 has made on the economy and on the financial assets homeowners. Especially for retirees who can’t get financial assistance from family members who are out of a job, seniors need to turn to cash alternatives to manage living expenses. Namely, they can take advantage of what is known as a reverse mortgage.
What is Reverse Mortgage?
A financial tool used to allow seniors to maintain their standard of living, a reverse mortgage can be obtained by anyone over the age of 62. The home you are applying must be your personal residence and needs to meet HUD guidelines. A reverse mortgage can either be used to help lengthen your stay at your current home or help you move into another home.
As the process of applying for a reverse mortgage can be complicated, most seniors are advised to do research, seek expert financial advice, or even take a class to understand the full implications of applying for one.
How Does a Reverse Mortgage Work?
A reverse mortgage is a type of loan designed for seniors to eliminate a current mortgage expense and who need a greater source of income than their social security can provide. The loam amount is determined depending on the home’s value and will also vary based on the age of the youngest homeowner.
A reverse mortgage loan isn’t usually paid off by the applicant but rather their estate. Remaining equities computed after death will be passed onto the estate. One thing an estate is not liable for, however, is if the home eventually sells for less than the balance of the reverse mortgage.
How Do You Get a Reverse Mortgage?
To apply for a reverse mortgage, you need to have enough equity on your home to pay off an existing mortgage. The amount available will vary depending on the rising and falling interest rates as well as how the home is valued. There is a maximum loan limit that is determined by the FHA.
Though you can use a mortgage calendar on the Internet, you’ll be better off consulting with a Certified Reverse Mortgage Professional (CRMP) such as the ones we can connect you with at Move Mortgage. This way, you can get accurate numbers based on current formulas.
Who Can a Reverse Mortgage Help?
Reverse mortgages are particularly helpful to low-income families but also play a big role in the overall financial plans of other families. The amount of equity in your home is what determines whether or not you can be qualified. Employment won’t impact your chances of qualifying, although you’ll need to be able to prove that you can pay HOA fees, taxes, and insurance. The total amount of reserve is calculated based on a life expectancy formula.
If you’re past the age of seniority and need to find a way to supplement income or pay for health expenses and medication, a reverse mortgage might be for you. However, it’s important not to forget that the process itself can be very complex and require that you look up mortgage professionals in Colorado.
At Move Mortgage, our mortgage professionals in Colorado can help you pick the best loan for your circumstances and help you close it anywhere at any time. Contact us now!