reverse mortgage allows homeowners 62 years old and older to turn a portion of the equity in their home into income. The reason why it is called a reverse mortgage is that the payments are sent to you rather than you sending them to your lender.
Below are some commonly asked questions regarding reverse mortgages in Richmond:
The most commonly asked question is how much money a homeowner can get. The amount depends on the homeowner’s age, the value of the home, what the current interest rates are and any lending limits in your area. Generally speaking, the older you get and the more your home is worth, the more money you will receive.
Whether or not a homeowner’s home will qualify is another commonly asked question regarding reverse mortgages in Richmond. All homes in a reverse mortgage program must be a single-family dwelling, 2-4 unit properties, a manufactured home built after June 1976, a townhouse or a condominium.
A third question asked is what payment options are available. There are several. You can receive the money in one lump sum. You can receive it in fixed monthly payments. A line of credit can be set up for you to access the money as you need it. You can also create a combination of these options to suit your own needs.
Regarding the Line of Credit Option, people have asked if the unused balance has a growth feature. The answer is, no. There is no accrual of interest as reverse mortgages in Richmond are not savings accounts.
“How can the proceeds from a reverse mortgage be used?” is yet another question asked a lot. You can use the money from a reverse mortgage for anything. Supplementing your retirement, repairing or improving your home, paying off any kinds of debts are all acceptable.
Questions regarding the interest of a reverse mortgage are easy to answer. You are charged interest on the proceeds you receive only. The rate is usually a variable interest rate tied to an index like the 1 Year T-Bill or the LIBOR, which stands for the London Interbank Offered Rate, plus an additional 1 to 3 percent margin. The interest is not paid out of the money you receive, but rather compounds over the loan’s lifespan and payable when the loan comes do.
If you have more questions, talk to a professional mortgage officer who understands reverse mortgages in Richmond. Reverse mortgages in Richmond are excellent tools for certain homeowners, and a licensed loan officer can advise you if your situation merits apply for a reverse mortgage.
