A reverse mortgage is a specialized loan funded based on the equity in a home. It differs from a traditional loan in that payments don’t have to be made back to the lender until the borrower moves or passes away. Taking out a reverse mortgage loan is a viable way for many seniors to supplement their income in retirement.
Based in Edina, MN, the professionals at Fairway Independent Mortgage Corporation are committed to helping homeowners throughout Minnesota and Wisconsin secure the financing they need to live comfortably. Below, they explain how reverse mortgages work to solve cash flow problems and achieve future goals.
What to Know About Reverse Mortgage Loans
To qualify, the borrower must be at least 62 years old and own the home they want to use as collateral. If the homeowner still has an existing mortgage payment, the remaining balance must be paid in full with the funds received from the reverse mortgage. Eligible properties include single-family homes, two to four unit properties, condos, townhouses, and some manufactured homes. After acquiring the loan, homeowners are responsible for maintaining the property and continuing to pay for taxes and insurance coverage.
Application & Approval Process
The first step in applying for a reverse mortgage is to attend a HUD counseling session. This will provide a detailed overview of the loan process and answer any lingering questions potential borrowers may have. Then, it’s time to choose an approved lender. Next, an appraisal must be conducted to determine the value of the home and see how it measures up against the cost of comparable properties. This will factor in to how much a homeowner is allowed to borrow. Once the loan is approved, payments can either be made monthly or in one lump sum.
Reverse mortgage loans are often the ideal solution for those who have a difficult time keeping up with their mortgage payments but wish to stay in their home. The additional income also provides seniors with a way to make sure they get the most out of their retirement years. To take advantage of this option, call Fairway Independent Mortgage Corporation at (952) 797-6032, or visit them online to learn more about the variety of loans they offer.