Steps to getting a Reverse Mortgage Loan
Qualified homeowners may not be able to borrow the full value of their home — even if it’s paid off. The amount you can borrow (also called the principal limit) varies based on the age of the youngest borrower or eligible non-borrowing spouse, prevailing interest rates, the HECM FHA mortgage limit ($726,525 as of February 2020), and your home’s value.
Generally the older you are, the lower the interest rates and the more your property is worth, the more likely you’ll receive a higher principal limit. This amount can increase each month because borrowers with variable-rate HECMs may be able to receive additional funds.
If you choose a HECM with a fixed interest rate, you will receive a single disbursement lump sum payment. On the other hand, if you opt for a reverse mortgage with a variable rate, you can choose to accept:
- Equal monthly payments provided at least one borrower lives in the property as their primary residence
- Equal monthly payments for a fixed period of months agreed on ahead of time
- A line of credit that can be accessed until it is exhausted
- A combination of a line of credit and fixed monthly payments for as long as you live in the home
- A combination of a line of credit plus fixed monthly payments for a set length of time
The money you borrow via a reverse Murfreesboro mortgage doesn’t need to be repaid until the borrower dies, moves out, or leaves the home for any reason.
Furthermore, the borrower will never owe more than the home is worth regardless of how much they borrow or what happens to their property value over time. The borrower or heirs keep the difference if the reverse mortgage’s balance is less than the home’s value at the time of repayment.
If you believe a reverse mortgage is the solution for you, applying for one is similar to that of a traditional home equity loan. Once you meet the eligibility criteria, shop around to find the best deal.
The lender will assess your financial situation including evaluating your credit history, any outstanding Murfreesboro mortgage and ensuring your property qualifies (as in you don’t have any active property liens). You’ll also need to provide proof that you’re able to pay for ongoing housing costs, and order a property appraisal to determine its value and how much you can borrow.
Once you close on your loan, you have the right of rescission, or your right to cancel your mortgage without penalty. In order to do so, you need to notify your lender within three business days after closing in writing.
Make sure to keep all copies of any correspondence and send your letter via certified mail and ask for a return receipt so that you’ll know it got into the right hands. Afterwards, your lender will have 20 days to return any fees you’ve paid for the reverse mortgage.