If you are 62 or older, a reverse mortgage loan can be used to turn a portion of the equity in your home into cash you can use for many different purposes, which may enhance and/or extend your retirement. If you currently have a forward mortgage, a reverse mortgage could eliminate your monthly mortgage payment.
A reverse mortgage loan is a type of mortgage loan that is reserved for borrowers aged 62 years or older who either own their home outright or have significant equity in their home. A reverse loan can be used to turn a portion of that significant equity stake into cash for retirement. The money received by the homeowner through a reverse mortgage loan usually comes tax free.*
You may also see a reverse loan referred to as a Home Equity Conversion Mortgage (HECM). This variation of reverse mortgage loan is insured by the U.S. Government’s Federal Housing Administration (FHA) and is only available through FHA-approved lenders, like Fairway.
*This information does not constitute tax advice. Please consult a tax advisor regarding your specific situation.
The specific percentage varies by lender and the type of reverse mortgage, but the general rule of thumb is to have at least 50% equity in your home.
Reverse mortgage refinancing is an option that makes sense in certain situations. It may have been several years since you closed, and rates may have lowered, or it may make sense to switch from an adjustable rate to a fixed rate through a refinance. Perhaps your home has appreciated in value, and you have additional equity you’d like to tap into. Refinancing may increase the amount of money you are eligible to receive.
Yes. You can sella house with a reverse mortgage already in place. However, keep in mind that when you sell the home, your reverse mortgage comes due, and you will need to pay off the reverse mortgage loan balance, plus interest and fees, at the time of the sale.
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