With a reverse mortgage, you don’t pay the lender for a loan. Instead, the lender pays you. If that sounds appealing, you may be a good candidate for a reverse mortgage Las Vegas. First, however, you’ll need to understand what exactly a reverse mortgage is and why it may be a good option based on your circumstances.
What is a Reverse Mortgage?
Unlike a traditional mortgage where you borrow money from a lender, the lender provides the homeowner with funding. The funds must be repaid eventually when the borrower dies or sells the home, but there is no monthly repayment plan as there is with a conventional mortgage. There are also age limitations to consider. Reverse mortgages are designed for homeowners age 62 and over. Provided you own your home, or if you have a large amount of equity to tap into, you are eligible to withdraw some of your equity without repaying it until you leave your home.
How Does a Reverse Mortgage Work?
Like regular mortgages, reverse mortgages provide you with an income source to help pay for certain expenses. There are limits associated with reverse mortgages that may vary by several conditions, such as interest rates, the borrower’s age, and other limits established by government agencies. The home’s value also plays a role in determining the amount of money a homeowner can borrow. Generally, homeowners will have a higher lending limit if they are older, if their property is worth more, and if they get a loan with a lower interest rate. A variable-rate loan may yield higher principal limits as well.
How Do You Use a Reverse Mortgage?
Reverse mortgages Las Vegas can be used for several purposes, including covering the cost of essential home repairs, paying for medical expenses out-of-pocket, and having another source of income to supplement retirement income. Typically, situations that arise where available savings or income would not cover associated costs can be used by qualified homeowners to prevent the need to resort to more expensive loans or high-interest lines of credit.
What are the Requirements for a Reverse Mortgage?
Specific requirements apply for individuals who want a reverse mortgage. To start, homeowners must be at least 62 years old. Their spouse must be at least 62 years old as well unless they meet certain eligibility criteria outlined below:
- A borrower owns his or her own home or has one primary lien
- Existing mortgages will be paid off using funds from the reverse mortgage
- The homeowner lives in the house as his or her primary residence
- The homeowner has paid property taxes, homeowners insurance, and other legal fees
- Homeowners participate in a HUD-approved consumer information session
- The homeowner’s property is maintained and in good condition
- The primary home is a single-family home, condo, townhouse, or multi-unit home with a maximum of four units and constructed after 1976
Individuals who are not sure if they meet the eligibility criteria for a reverse mortgage Las Vegas should consult with a professional to determine whether they qualify.
Common Reverse Mortgages
There are several different types of reverse mortgages Las Vegas available for homeowners. Some of the most common include:
- Home Equity Conversion Mortgage (HECM)
- Proprietary Reverse Mortgage
- Single-Purpose Reverse Mortgage
A HECM mortgage is the most popular variety of reverse mortgages. The federal government insures HECM mortgages. They have higher upfront costs than other types of loans, but the funds can be utilized for a wide range of reasons. HECM mortgages are available to a range of homeowners, but they are only offered by the Federal Housing Administration (FHA) lenders.
Proprietary reverse mortgages are private loans. In contrast to HECM mortgages, they are not backed by the government. Proprietary reverse mortgages are ideal for individuals who want to borrow more money, especially individuals who have a home with a higher value.
A single-purpose reverse mortgage is another popular type of mortgage. This mortgage, however, is offered by more limited lenders. Usually, single-purpose reverse mortgages are issued by local government agencies and nonprofit entities. As the name implies, borrowers can use this mortgage for a single purpose only, and loans are available in much smaller amounts than other kinds of loans. Single-purpose mortgages are ideal options for homeowners who may have specific needs or who might not otherwise qualify for other types of mortgages. (Here is a guide to understanding closing costs.)
The amount of money that you can receive from a reverse mortgage varies based on multiple factors, such as your age, interest rates, your home’s value, and the kind of reverse mortgage that you choose. To learn more about reverse mortgages and to determine which one is right for you, be sure to contact an expert loan officer in Las Vegas today. We will explain the advantages of a reverse mortgage and help you determine if it’s right for you.
