Reverse Mortgage Refinance or Purchase
How Much Money can be Borrowed?
The amount of money that a borrower can receive through a reverse mortgage is determined by a specific formula. It takes into consideration the age of the borrower (in the case of multiple borrowers, such as with a married couple, the youngest borrower’s age is used), the appraisal value of the property, the current interest rates, the sale price of the property, and the maximum amount that can be borrowed. The entire amount of the reverse mortgage may also not be available right away—guidelines may restrict the amount available for 12 months following approval of the reverse mortgage.
In order to receive a reverse mortgage, the borrowers must meet certain financial guidelines, and all borrowers listed on the property’s title must be at least 62 years old. If they still owe on the home’s current mortgage, the balance must be paid off with the reverse mortgage. Most properties, including single-family, multi-family, townhouses, and condos, qualify for a reverse mortgage provided they meet FHA property standards.
Repaying the Reverse Mortgage
The repayment schedule of a reverse mortgage is one of the things that makes it so attractive: usually, no payment has to be made on this loan until the borrowers move out of the property. In fact, usually payment isn’t due for six months after moving out. If the homeowners die without moving out and paying on the reverse mortgage, the estate is liable for the loan.