Sterling Reverse Mortgage
Reverse Mortgages
Whether seeking money to finance a home improvement, pay off a current mortgage, supplement their retirement income, or pay for healthcare expenses, many older Americans are turning to “reverse” mortgages. They allow older homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.
The three basic types of reverse mortgage are: single-purpose reverse mortgages, which are offered by some state and local government agencies and nonprofit organizations; federally-insured reverse mortgages, which are known as Home Equity Conversion Mortgages (HECMs), and are backed by the U. S. Department of Housing and Urban Development (HUD); and proprietary reverse mortgages, which are private loans that are backed by the companies that develop them.
The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed.
Facts About Reverse Mortgages
Reverse mortgages were created by the U.S. Department of Housing and Urban Development (HUD) in an effort to help seniors utilize the equity built up in their homes without having to sell the home or qualify for traditional equity loans which require monthly payments. Borrowers must be 62 or older.
Borrowers retain ownership of their home. In many ways, reverse mortgages are similar to traditional mortgages. The two primary differences are: 1) the lender makes payments for you from your home’s equity 2) the borrower(s) must claim the mortgaged home as their primary residence.
Our Owner Protected Reverse Mortgage is guaranteed by the FHA so that you receive cash from the equity in your home and retain ownership that can pass on to your heirs.
Proceeds do not affect income tax, Social Security or Medicare. However as you would expect, interest from a reverse mortgage is not tax deductible until the loan is satisfied.
Your income and credit history are not deciding factors for this loan. This is one of the features HUD built into this form of financing that differentiates it from traditional loans.
Borrowers do not make any payments on the loan while they are in their home. Instead borrowers receive payments from the home’s equity. When the home is sold the mortgage is paid from proceeds. Any surplus equity reverts back to the sellers or their estate.
The borrowers decide how to use the funds, such as healthcare, home repairs, travel, gifts, etc.
Interest rates are comparable to traditional mortgage rates.
Interest accrues only on the outstanding loan balance. For example, if you elect to use your reverse mortgage as a line of credit, interest accrues only on the funds you receive as with a traditional line of credit.
There are no early payment penalties. Borrowers may sell the home at any time and pay off the mortgage without penalty.
Special programs are available for high value homes just as in the traditional mortgage market.