Հակադարձ հիփոթեքը ձեզ համար հարմար է՞: Հիմնական փաստեր և նկատառումներ

With inflation driving up costs, many seniors face challenges in managing monthly mortgage payments and covering household expenses. For people who own their homes or have significant equity, reverse mortgages can be a potential solution to their economic hardships. But it’s essential to understand how a reverse mortgage works, as well as the costs and potential risks.

Reverse mortgages allow seniors to eliminate their monthly mortgage and receive funds from their home equity. It is a viable option for seniors who are struggling financially but wish to age in place. This article discusses everything about reverse mortgages, including the different types, how they work, and the pros and cons of reverse mortgages. So, let’s get started.

What Is a Reverse Mortgage? 

A reverse mortgage allows homeowners, typically aged 62 and older, to borrow money each month from a lender, using the equity in their home as collateral. Equity is the difference between the home’s current market value and the remaining balance on the mortgage.

The amount of money the homeowner receives is based on:

• The value of the house
• Interest rates
• The loan term
• The loan type
• The homeowner’s age

It’s important to note that if you outlive the term of your reverse mortgage, you could be stuck getting a new loan to remain in your home, and you’ll be starting over with much less equity. If you have other options to support yourself without a reverse mortgage, you may be better off without one.

Are You Eligible? 

To receive a reverse mortgage loan, you must meet the following criteria:

• You are at least 62 years old (in most cases).
• You hold considerable equity in your home.
• Your home is your primary residence.
• Your home is in good condition.

How Does a Reverse Mortgage Work? 

In a reverse mortgage, a lender pays a portion of your home equity directly to you monthly or as a lump sum. The amount paid is usually 40% to 60% of your home value.

The funds have to be paid back to the lender after:

• The homeowner dies or permanently moves out of the house.
• The homeowner transfers or sells the property to someone else.
• The homeowner stops paying insurance or property taxes.
• The homeowner neglects the loan terms.

Reverse Mortgage vs Traditional Mortgage 

The differences between a reverse mortgage and a regular mortgage are discussed below: 

Reverse Mortgage 

In reverse mortgages, the borrower or homeowner does not have to make monthly payments. Instead, they receive payments from the lender, typically every month. The borrower can live in the house until they pass away or move out.

They can choose to repay the loan at any time, or their heirs can repay it after the homeowner passes away or moves out if they want to keep the home. The loan is usually paid back by selling the house.

Traditional or Forward Mortgage

With traditional mortgage loans, the borrower has to pay the lender every month, which can be challenging for some retirees. 

Moreover, if the homeowner fails to pay the loan as agreed, the lender can take the property through the foreclosure process, forcing the owner to move out.

Types of Reverse Mortgages 

There are three main types of reverse mortgages: 

Single-Purpose Reverse Mortgages 

A single-purpose reverse mortgage is the least expensive type, as it is offered by the government or non-profit organizations. Organizations that offer this type of reverse mortgage include state and local governments, local non-profits, credit unions, and participating banks. However, this type of loan is not available in every state.

As the name indicates, a single-purpose reverse mortgage doesn’t involve monthly payments. Instead, the borrower receives a single, one-time lump sum to cover a particular expense, such as home repairs or property taxes.

Federally Insured Reverse Mortgages 

Federally insured reverse mortgages, also known as home equity conversion mortgages (HECMs), are funded by the federal government. They include lower fees and interest rates and are mainly designed for homeowners with low to moderate incomes.

There are several payment options to choose from:

• A one-time lump-sum payment
• Fixed monthly payments for a lifetime 
• Fixed monthly payments for a set time (e.g., 15 years)
• Access to funds only when needed

Proprietary Reverse Mortgages 

Proprietary reverse mortgages are given to homeowners by private organizations or lenders, such as banks, mortgage companies, or other financial institutions, without any government support. They are typically designed for people whose homes have higher values and wish to tap into their equity to receive payments. 

Proprietary reverse mortgages are not federally insured and may not be available for people with low or moderate incomes. They include options for regular monthly payments, a one-time lump-sum payment, or access to funds when needed.

How Do You Pay Back a Reverse Mortgage?

There are a few options by which you can pay back your reverse mortgage loan:

Repayment When Selling the Home

The loan is most often repaid when the homeowner sells the home. The proceeds from the sale are used to pay off the reverse mortgage balance, including any accumulated interest and fees. If there is any remaining equity after repayment, it goes to the homeowner or their heirs.

Repayment After the Borrower Passes Away

If the homeowner passes away, their heirs can repay the reverse mortgage by selling the home or using other assets to pay off the loan balance. If the home is sold and the proceeds exceed the amount owed, the remaining equity goes to the heirs. If the home’s value is less than the amount owed, heirs may be responsible for paying the difference if they want to keep the property. Closely read your specific loan terms to understand what happens if there’s a shortfall.

Repayment After Moving Out Permanently

A reverse mortgage becomes due when the homeowner permanently moves out of the home, such as moving into a long-term care facility. At that point, the loan must be repaid. Like the other scenarios, this is usually done by selling the home.

Voluntary Payments

Although reverse mortgages do not require monthly payments while the homeowner lives in the home, they have the option to make voluntary payments toward the loan balance. This can help reduce the overall debt or preserve home equity for themselves or their heirs.

Reverse Mortgage Pros And Cons 

The major pros and cons of reverse mortgages include:

Առավելություններ 

• It increases your retirement cash flow.
• You don’t have to leave your house, allowing you to age in place.
• A reverse mortgage will pay off your existing home loan.
• You may have options to choose your payment amount and frequency.

Թերություններ 

• It’s not free, as interest charges apply.
• The loan must be paid off after your death or when you move.
• It can impact your eligibility for government benefits.
• If you fail to pay insurance or property taxes, reverse mortgages carry the risk of foreclosure.

Final Thoughts on Reverse Mortgages

While a reverse mortgage can be a good choice for some lower-income retirees who want to stay in their homes while receiving regular payments, the long-term costs and potential risks make it far from a perfect solution.

If you’re considering a reverse mortgage, review your options closely and discuss your plans with your family. If you understand the pros and cons and want to move ahead, you should only do so if you’re confident it’s the right decision for your financial goals.