Reverse MortgageA reverse mortgage is received negative press for quite some time due to a lot of misconceptions and higher fees associated with the senior home loan. One of the more popular misconeptions is that the bank owns your home. This is in fact incorrect. The borrower maintains ownership and title of the home.
Another misunderstanding is that you cannot have any existing mortgage to obtain a reverse mortgage. As long as you have enough equity to extract from the home, you can take out a reverse mortgage to pay off the existing mortgage and even take out cash, assuming you have enough equity.
Higher FeesThe fees for a reverse mortgage is actually very comparable to a traditional forward mortgage. The mortgage insurance premium (MIP) is usually what makes up a good chunk of the differences in fees when comparing a traditional and forward mortgage.
RequirementsThere are certain requirements borrowers must meet to be eligible for a reverse mortgage, also known as a HECM.
- 62 or Older
- Equity in the home
- HUD approved primary residence which includes single family home, town homes, some condos and manufactured homes built after 1978.
- Must maintain the property to be in good condition
- Keep property taxes, insurance, HOA up to date