How much money will you receive from a reverse mortgage?
The amount of money that can be received from a reverse mortgage usually ranges between 40% and 60% of the home’s appraised valuation. In situations where the seniors are older, the amount of money they can receive in the reverse mortgage is usually higher.
What are the factors that are used by the financial institutions to determine the amount given to the homeowners?
There are 3 factors that are used to underwrite the homeowner:
- The age of the youngest of the homeowners,
- The value of the home, and
- The current rate of interest.
If there is an existing mortgage on the home or other liens, they must be paid off at the time a reverse mortgage is taken out. There are also closing costs involved in obtaining a reverse mortgage.
How does the homeowner receive their funds?
The homeowner can receive their funds on the reverse in any of the following manners:
- All the money at once;
- Line of credit that the homeowners draw against;
- Firm payments on a specific schedule;
- Guaranteed payments for as long as the homeowner lives.
How does a low credit score impact the homeowner’s ability to obtain a reverse mortgage?
Unlike in traditional mortgages, a low credit score is not a significant drawback when obtaining a reverse mortgage.
How does someone qualify for a reverse mortgage?
There are a variety of qualifications necessary to meet the standards of obtaining a reverse mortgage.
- To start with the homeowner must be at least 62 years of age.
- They must own their home and it must be their primary residence.
- There must be equity in the borrower’s home.
What are the benefits, if any, of homeowners obtaining a reverse mortgage?
Benefits of obtaining a reverse mortgage:
- As long as the homeowner complies with the terms of the loan, they don’t have to make any payments on the loan.
- With a reverse mortgage homeowners will not lose their Medicare benefits or Social Security benefits.
- Homeowners sometimes end up owing more than the equity in their homes. (The loan is underwritten.)
- Reverse mortgages can provide homeowners with a sense of financial freedom. It gives them cashflow to live with dignity.
The law firm of Schlissel DeCorpo LLP has been helping families deal with mortgage and foreclosure problems for more than 30 years. We can be reached at 718-350-2802, 516-561-6645 or 631-319-8262 or by e-mail at info@sdnylaw.com.
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