A reverse mortgage is a type of mortgage loan that is typically secured over a property that is residential. It enables the borrower of this loan to access the free of debt value of the particular property. They’re mainly designed to homeowners who Are old and are not in need of any monthly mortgage payments. The goal of reversal mortgage companies such as the Colorado Reverse Mortgage company is to teach individuals and spread the knowledge on the program of Reverse Mortgage.
Individuals are always guided and educated to know which reverse mortgage option best fits them. Each option with unique characteristics and they are as follows;
This program was introduced in 2008 and is not that flexible. However, it offers an interest rate that doesn’t change ever. Funds are only disbursed in a lump sum, which means that all the money present at the closing is disbursed and doesn’t provide any option for disbursements in the future. It is often used in cases where the purpose of the money is known already.
This mortgage option was introduced in 1988. Clients are offered more flexibility with this option. IF there are changes in the need in future, the structure of the loan can also be changed. With this option, the senior can;
- Receive monthly income
- Take a disbursement at the time of closing
- Have funds made available in the form of a line of credit(LOC)
Proprietary Reverse Mortgage
It is also known as jumbo and is considerably new to the industry. It is a non-FHA reverse mortgage. The program is governed by different guidelines and rules.
Advantages of Reversal Mortgage
- It’s flexible
- The proceeds are not taxed
- The heirs can inherit the home
- It is easy to qualify the homeowner
- Any existing liens and mortgages are paid off
- It allows one to live and maintain ownership of their home.
- The homeowner and heir cannot be liable personally for more than the worth of a home
Disadvantages of Reversal Mortgage
- The loan balance usually increases over time as the value of inheritance to the heir’s decreases.
- A second appraisal which comes with additional expenses may be needed sometimes
- The home must meet certain standards and considered marketable.
- The fees for obtaining a Reversal Mortgage are relatively higher.
The Reversal mortgage program is considered a good thing for many aspiring homeowners. It helps secure their future and that of their families.