A reverse mortgage is exactly how it sounds; it is a loan taken out of the equity in a home you already own. Many people use a reverse mortgage to pay off debt, make home repairs, or purchase a second property. Home equity loans are another name for a reverse mortgage. While these loans can be hard to understand, the process can be quite simple. In this week’s blog post Stonebriar Mortgage helps Dallas, TX and California homeowners learn about reverse mortgages.
Understanding Reverse Mortgages
Imagine you take out a reverse payment from all the monthly payments you have made on your home mortgage. This is exactly what you do when you apply for a reverse mortgage. The lender is taking your loan out of the equity you have built in the home, and paying it back out. You will still be charged interest and fees to complete the process. Be sure that you can pay off a reverse mortgage, because if you cannot, then you may have to sell your home.
Home Equity Mortgages
Another name for a reverse mortgage is a home equity mortgage. One type of program, called the Home Equity Conversion Mortgage (HECM) is a government-sponsored program. You can apply for this program directly. Eligibility criteria include many different requirements. Some programs require a minimum age to apply. If you are older, then you have typically built more equity in homes you have owned. The amount of money you can get in this program may depend on your age.
When you apply for an HECM, you will meet with a government housing counselor. Together, you will review your income, home appraisal, credit score, debt, and abilities to handle additional financial responsibilities. The counselor will then notify you if a HECM makes sense and can also help refer you to other programs.
Other Reverse Mortgage Programs
Single purpose reverse mortgages are another alternative to an HECM. They are a program created for a single specific purpose: such as energy upgrades or home renovations. Government agencies and nonprofits typically manage single purpose reverse mortgage programs. Some agencies even create programs to help people pay off their debts.
Proprietary reverse mortgages are another type of home equity loan. These are designed by private banks, typically. If you wish to increase the value in your home or raise its worth, you can speak to a lender about the various programs available. Since the lender creates the program terms, there can be many options for your reverse mortgage.
If you want to know more about reverse mortgages, we are here to help. Stonebriar Mortgage helps Dallas, TX and California homeowners with an array of home loan needs, including equity loans. Contact our friendly team today!