Reverse Mortgages are particularly popular here on Cape Cod, with many of our older residents considering them for their home. Since we get so many questions about them, we have put together this page to answer the questions we here the most from Slade Mortgage customers.
A reverse mortgage is a uniquely tailored loan that lets a borrower convert a part of the equity in their homes into cash, meaning the equity one has accumulated over years of making mortgage payments can be paid out to the borrower. Unlike other home loans or mortgages, reverse mortgage borrowers are not obligated to repay the entire loan until they no longer use the home as their primary residence, fail to meet the obligations of the mortgage, or pass away. This loan is called a “reverse mortgage” because the process of the traditional mortgage payback stream is switched around or “reversed.”
How It Works
There are three standard loan options available for those interested in taking out a reverse mortgage in Florida or
- Line of credit
- Borrowers can draw on their loan whenever they want.
- You will only be charged interest on the amount you have withdrawn and not on the money remaining on the credit line.
- Tremendous financial flexibility that does not restrict your borrowing power.
- Credit line growth: the amount of untouched funds will increase over time. The less you take out upfront, the more you will have to borrow later on. It is important to note that withdrawn funds are not taxable.
- Monthly installments
- Tenure option: allows you to receive a monthly payout as long as you continue to live in the house
- Term plan: Similar to the tenure option, but you receive a monthly payment for a predetermined number of years. As a result, payouts are larger and you are able to determine how long you would like to receive the proceeds from your reverse mortgage loan.
- Lump sum payment can be a portion of or the entire principal limit available on your reverse mortgage. It is helpful to talk with your reverse mortgage expert, to input date of birth, value of home and any mandatory obligations to get the calculation for principal limit.
In order for you to qualify for a reverse mortgage, the following criteria must be met:
- Youngest borrower is aged 62 or older
- The mortgaged property is the primary residence of the borrower
- Have enough equity in the home
- Potential borrowers must complete reverse mortgage counseling with an HUD approved counselor. Call (508) 548-0177 to schedule a free consultation today.
Property types that are considered eligible for a reverse mortgage include:
- Single family homes
- 2-4 unit properties with one unit occupied by the owner
- FHA approved manufactured homes built after June 1976
- FHA approved condominium projects
The property must also meet the standards of the FHA. If you are unsure whether or not your property meets the approved FHA standards, we will come from our Falmouth office to you to help identify any potential issues with your home. We can also assist in identifying if your condo is FHA approved and are currently working with many local Cape Cod condo associations in order to get them FHA approved.