Tag: reverse mortgage line of credit

Everything You Need To Know About The Reverse Mortgage Line of Credit

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont westminster coloradoA reverse mortgage line of credit is a financial product designed for homeowners who are at least 62 years old and have significant equity in their homes. It allows them to access a portion of their home’s value without having to sell the property or make monthly mortgage payments.

Here’s how a reverse mortgage line of credit typically works:

  1. Eligibility: To qualify for a reverse mortgage line of credit, you must meet certain criteria, including age requirements and home equity. You need to be at least 62 years old, own your home outright or have a considerable amount of equity in it, and reside in the property as your primary residence.
  2. Application and Counseling: You’ll need to apply for a reverse mortgage through a lender approved by the Federal Housing Administration (FHA). As part of the process, you’ll be required to attend counseling to ensure you understand the terms and implications of the loan.
  3. Loan Calculation: The amount you can borrow is determined based on several factors, including your age, the appraised value of your home, and current interest rates. The older you are and the more valuable your home, the larger the potential loan amount.
  4. Line of Credit: Instead of receiving a lump sum, a reverse mortgage line of credit provides you with a pool of funds that you can access as needed. This line of credit can grow over time, allowing you to access more funds in the future. The unused portion of the line of credit can also earn interest, which increases the available funds.
  5. Repayment: The outstanding loan balance, including any accrued interest, becomes due when you sell the home, move out permanently, or pass away. Typically, the home is sold, and the proceeds are used to repay the loan, but because these loans are FHA-backed, no one will ever owe more than the home is worth at the time the loan comes due. If the sale proceeds exceed the loan balance, the remaining amount goes to you or your estate.
  6. Flexibility and Payments: One advantage of a reverse mortgage line of credit is that you have the flexibility to choose when and how much to borrow. You can access funds at any time, and you’re not required to make monthly mortgage payments. However, you must continue to pay property taxes, homeowner’s insurance, and maintain the property.
  7. Interest and Costs: Like any loan, a reverse mortgage line of credit accrues interest over time. The interest rate may be fixed or adjustable, depending on the terms of the loan. Additionally, there are upfront costs involved, such as origination fees, closing costs, and mortgage insurance premiums.

It’s important to note that while a reverse mortgage line of credit can provide financial flexibility for seniors, it’s crucial to work with a reputable lender to ensure you thoroughly understand the terms. 

Jan Jordan is a Reverse Mortgage Specialist serving the Erie, Dacono, Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado, as well as the Cheyenne and Laramie communities of Wyoming.  Contact Jan and learn if reverse mortgage is right for you.

Divorcing After Retirement? Reverse Mortgage Can Help

Posted on by janjordan

reverse mortgage loveland fort collins greeley longmont coloradoIt’s becoming more and more common for seniors to divorce after retirement.  This is happening for various reasons, but a big one is that retirement now last for decades versus only years, and many people are looking to make those golden years the best yet.

 

But senior divorces can get messy, as there are often many assets to sort out.  During divorce negotiations, a home is often one of these assets.  This home is possibly owned free and clear, or with a lot of equity.  For divorcees age 62 and over, a reverse mortgage can be used as a tool to help with settling this asset during divorce.  The great thing about reverse mortgage is it allows someone to stay in the home and live mortgage payment free, AND access funds from the equity.  Here are a couple scenarios in which reverse mortgage would be of benefit.

 

Scenario 1: When splitting the home asset, instead of selling the home, one party could be allowed to stay in the home and obtain a reverse mortgage, of which the other party receives the funds from.  This can be a win-win.  In cases like this, the financial settlement can even be wrapped into the loan if the divorce is final before the closing.  This would mean a reverse mortgage would be part of the divorce settlement discussion.  It is important to understand that the party that remains in the home will be responsible for certain obligations pertaining to the home, such as property taxes and homeowners insurance.

 

Scenario 2: Possibly you’re used to living off two incomes – whether it be from work, or social security and pensions.  Suddenly dropping down to one income can be devastating.  In cases like this getting the home in divorce proceedings can be a huge benefit, as once the divorce is final, a reverse mortgage could be obtained on the home.  The funds could come in monthly installments, a line of credit (that grows), or a lump sum.  In addition, if you wanted to sell the home and move, a reverse mortgage could be used to purchase the new home – and can even allow you seek homes that would otherwise not be in your price range.  The best part?  You will always live mortgage payment free.

 

If you are considering a divorce, or sifting through the process, don’t hesitate to contact me to further understand how reverse mortgage can help, and whether or not you qualify.

 

Jan Jordan Reverse Mortgage Info for Fort Collins, Loveland, Greeley, and Front Range areas of Colorado.