A reverse mortgage used to be a loan of last restore for many people. Now, reverse mortgages can provide financial help for retired homeowners who want to remain living in their homes.
Home equity conversion mortgages (HECMS) are overseen by the Department of Housing and Urban Development and the Federal Housing Administration. These organizations have put limits on how much borrowers can take out of their mortgages so that seniors don’t end up taking out large lump sums of money from their mortgages. There are also protections from default if the value of the home sinks to less than the loan amount.
As you started the estate planning process, you may have considered a reverse mortgage as an available financing option. While there are many benefits of using a reverse mortgage, there are particularly high upfront fees. But if you want to live in your home until the end of your life and are worried about outliving your savings, the cash from a reverse mortgage may be a valuable strategy, especially for unexpected expenses and long-term care.
If you want to move forward with a reverse mortgage as part of your estate planning strategy, you must go through an FHA-approved lender. The amount you can borrow through a reverse mortgage will depend on the value of your home, how much you owe on your primary mortgage, interest rates, and your age.
If you are considering a reverse mortgage as part of the estate planning process, we can provide additional information about this approach and connect you with a mortgage professional who can help you move forward with one of these loans.