When Is It Time To Consider A Reverse Mortgage?
When To Think About A Reverse Mortgage Loan
Anyone elderly with a financial crisis should think about a reverse mortgage loan. The loan will pay off what is left owed on the existing home mortgage, which eases the burden of owing monthly payments. That frees up more money for elderly homeowners to meet living expenses, health costs, and other financial burdens.
An excellent time to consider a reverse mortgage is when the economy and the housing market are soaring. Increased housing prices make the loans more attractive to elderly homeowners with higher loans offered for those that qualify.
Low-interest rates make reverse mortgage loans more appealing. More money can be borrowed when the interest rate is low. The age of homeowners makes it easier to qualify for a reverse mortgage. It can help them stay in their own homes as long as they’re physically able. The loan helps elderly homeowners live a better quality of life.
A reverse mortgage loan can help homeowners have more financial flexibility. They can place the money into a savings account to use for emergencies. Some homeowners prefer to secure a reverse mortgage with a line of credit to know they have access to money if they need it. They don’t have to pay interest unless they withdraw some money from the account. Reverse mortgage lines of credit are something to think about when you don’t have a home mortgage to pay anymore.
How Long It Takes To Be Approved For A Reverse Mortgage
An application takes several weeks to complete. It involves decisions by the applicant on whether they want to complete the process. Elderly homeowners typically make wise decisions with assets or money.
During stage one of the process, the lender will start the application. Reverse mortgage fees, interest rates, and loan amounts will be included during the application. Stage two involves counseling. People have to go through a session and sign an HUD-approved document that certifies they completed the class.
Stage three involves an appraisal of the homeowner’s property. An FHA-approved appraiser will be the person who handles this stage in the process. Stage four involves the legal underwriting, which includes a title search and purchasing title insurance for the property.
Problems with liens, trusts and other issues are cleared before the appraiser will approve the application. The application status will be changed to approved after all matters legal are in the clear. A closing date will be set to finish the documents to sign by all parties involved.
Stage five is the day when the lender and applicant sign all closing documents. The applicant reviews the documents to make sure everything agreed upon is in the contract for the reverse mortgage loan. The applicant has three days from the closing date to cancel the process should they decide to back out of the agreement. A check will be issued to the applicant from the title company after the three-day waiting period. A check will be sent to the lender to pay off the existing mortgage if money is still owed on the property.
When A Reverse Mortgage Loan Is A Bad Choice
Reverse mortgage loans aren’t tailored for everyone. Hanging on to a large home can become a huge problem with cleaning and maintaining the property surrounding the home. Interest on the loan compounds against homeowners over time. Homeowners don’t receive the full value of the property for the loan. People no longer have a major asset to leave their children. These are only a few things for people to consider before signing the documents to secure a loan.