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Reverse Mortgage With Existing Mortgage

Reverse Mortgage With Existing Mortgage

Before delving into a reverse mortgage, it is important to know what a mortgage is precisely.

Mortgages, also known as home loans, are loans a borrower gets from a financial institution by using a home, land, or other types of real estate as a form of collateral. The arrangement is such that the borrower agrees to pay the lender over a period of time, broken into principal and interest.

If you intend to get a mortgage, for instance, you will have to apply for it through your preferred lender, and the lender will ascertain if you meet the compulsory requirements before it can get to the closing stage.

What is a reverse mortgage?

A reverse mortgage is a financial product designed for homeowners aged 62 and above who desire to convert some of their home equities into cash.

If you are a senior citizen, this kind of mortgage is the best for you as it will allow you to borrow equal to the value of your home with options of a lump sum, line of credit, or regular monthly payment. The remaining loan balance is only due when the borrower sells the home, permanently moves home, or dies.

If you are a beneficiary of a reverse mortgage, you may decide to be out of the house for up to 364 consecutive days, but once you no longer maintain the property as the principal residence by failing to pay insurance, taxes, and other important fees, then the loan becomes due.

How does reverse mortgage financing work in Colorado

Unlike what is obtained in a conventional mortgage, a reverse mortgage with an existing mortgage is different. You, as a homeowner, will not be required to make monthly mortgage payments, and all interest accrues to the charge on the home. You will, however, be required to pay utilities, insurance, maintenance, property taxes, and suchlike. If you receive payments every month, or you get the bulk payment commensurate with the available equity of your age, it means your property debt will increase every month.

There is a possibility that after your property has increased in value upon taking out a reverse mortgage, a reverse mortgage lender may ask you to possess a second or even a third reverse mortgage as a result of the increase in equity of the property if it is located in some areas. However, most lenders do not like taking a second or even a third charge behind a reverse mortgage as its balance increases over time. As a result, you will most likely not find a reverse mortgage that has a subordinate charge on it.

A reverse mortgage specialist will recommend you to opt for a “Jumbo” reverse mortgage if your home is valued over the maximum limit obtainable and are offered to you as a proprietary reverse mortgage. As a homeowner of a higher value home, if you opt for a jumbo loan, you will be expectant of a bigger loan amount even though this kind of loan is uninsured by the FHA and often attracts a higher fee.

The loan advances you receive from a reverse mortgage can neither be taxed nor affect your other social benefits. Also, you are not restricted as to the use of your funds. You may choose to move all of your money into investments or decide to spend the money as you wish.

Are you interested in a reverse mortgage? Call to learn how reverse mortgage can be life-changing for seniors 62 years and older.

Reverse Mortgage With Existing Mortgage

Michelle G. Coleman- Colten Mortgage


Reverse Mortgage With Existing Mortgage

6021 S. Syracuse Way Ste 104 | Greenwood Village CO 80111

Greenwood Village

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