If you’ve ever wondered what a reverse mortgage is, we’re here to provide the answer. Reverse mortgages are an option for older homeowners to subsidize fixed incomes or provide extra financial flexibility.
They’re typically issued to homeowners who have already paid off their homes and are looking to borrow against the equity in their homes to bring in supplemental income. It’s important to note that the most popular type of reverse mortgage loan, a Home Equity Conversion Mortgage, is only available to homeowners 62 and older.
Like a traditional mortgage, a reverse mortgage allows homeowners to borrow money using their homes as collateral while keeping the home’s title in their name. Depending on the agreement, the loan recipient can get a lump sum or a series of payments.
To qualify for a reverse mortgage, homeowners must meet the age requirement, own their property outright or have at least paid off most of their mortgage. They also must occupy the property as a primary residence, properly maintain it and demonstrate the ability to make payments on property taxes, homeowners’ insurance etc.
Taking out such a loan is an option if a person needs money to cover unexpected home repairs or pay for out-of-pocket medical expenses, for example. As part of the application process for a reverse mortgage, there will often be a required financial counseling session to talk about the specifics of the loan and to answer any questions during the process.
At BBS Notary Services, we believe it’s important to talk about a variety of real estate transactions our readers may encounter. If you have any questions on this topic, we’d be happy to connect you with someone who can answer them. Thank you for trusting us to be your professional and experienced notary provider for all different types of transactions.