Reverse mortgages from Castle Funding Corp. (NMLS #289925) . provide financial security and independence. Many older homeowners are now taking advantage of these programs, the most popular of which is backed by the United States Department of Housing and Urban Development (HUD).
Some of the features of reverse mortgages from Castle Funding Corp. (NMLS #289925) . include:
- Secure, low risk financial solution backed by HUD
- Converts your home equity into cash without having to sell your home or incur monthly mortgage payments
- Home ownership remains with you - it’s your castle – and transfers to your heirs
- Tax free retirement cash
- No repayment of loan necessary while you occupy your home, and the amount owed cannot exceed the value of your home
Common uses of reverse mortgages from Castle Funding Corp. (NMLS #289925) . include:
- Enjoying retirement
- Eliminating mortgage and other debt obligations
- Increasing monthly income
- Creating cash reserves
- Covering health care costs
- Making home improvements and repairs
- Completing estate planning and gifting to family members
How Reverse Mortgages Work
Reverse mortgages help homeowners to convert their home equity into cash without having to sell their home or incur monthly mortgage payments. They are home loans, similar to regular home loans in most respects. Title to the home remains with the homeowners, and the reverse mortgage is attached to the home like a regular home loan.
The main difference between reverse mortgages and regular home loans is that they don’t need to be repaid as long as one homeowner remains living there. This is because monthly interest charges are added to the loan balance, and collected at the end of the loan rather than every month. Interest is only charged on the amount used (like a credit card or home equity line of credit).
Reverse mortgage proceeds must first be used to pay off any existing mortgages and liens, and complete any required home repairs. The remaining amount may be accessed anytime the homeowner chooses, or the homeowner may elect to automatically receive cash every month for life.
If the homeowners remain in their home for the rest of their lives, when the last homeowner passes away the home goes to their heirs, just like it would if there were no reverse mortgage. The outstanding loan balance must be repaid at that time. There are no prepayment penalties or hidden charges. The heirs may either sell the home, payoff the loan balance and keep the remainder, or refinance the loan balance and keep the home. Because the borrower retains ownership of the home with a reverse mortgage, the borrower also continues to be responsible for taxes, insurance and home maintenance.
Types of Reverse Mortgages Available
Castle Financial helps homeowners obtain any of the three reverse mortgage programs available, which include the Home Equity Conversion Mortgage (HECM), Homekeeper and Cash Account.
HECMs are backed by the United States Department of Housing and Urban Development (HUD). They account for most reverse mortgages obtained today.
Ways To Receive Cash From A Reverse Mortgage
The cash from a reverse mortgage must first be used in the following ways:
- Repaying existing mortgages balances and liens (eliminates mortgage payments)
- Making required home repairs
The remaining cash may be received in the following ways:
- Payments for life (Tenure)
- Payments for a stated period of time (Term)
- Line of Credit
- Lump Sum at Loan Closing
- Combination Plan
Receiving payments for life (Tenure) is the option that most people are aware of. It is usually best for homeowners that need additional cash every month. Homeowners can count on receiving Tenure payments for as long as they live in their home. This is the safest choice because the cash will never run out.
Receiving payments for a stated period of time (Term) is usually best for homeowners that need more monthly cash than Tenure will allow.
Line of Credit*
The Line of Credit option allows homeowners to receive cash whenever they want. This option is best for homeowners that need additional cash occasionally rather than every month.
Lump Sum at Loan Closing
Homeowners that need cash right away to payoff debts or cover immediate expenses may receive a Lump Sum at Loan Closing. This option is available under all programs.
Homeowners may choose a combination of the above options. For example, they may decide to receive a Lump Sum at Loan Closing, set up a Line of Credit for emergencies, and receive Tenure payments. The larger the Lump Sum at Loan Closing and Line of Credit, the smaller the Tenure payments will be.
*Credit Line Growth: An interesting feature of the Line of Credit option is that the unused portion of the line of credit grows over time. This is almost like it is invested, but what's really occurring is your borrowing capacity is increasing (similar to when a credit card company increases your limit).
Qualifying For A Reverse Mortgage
To qualify for a reverse mortgage from Castle Funding Corp. (NMLS #289925), all homeowners must be at least 62 years old. Income and credit requirements differ from conventional financing and are generally more flexible, in that income qualifying is residual-based and not based on a percentage of your income. Credit requirements are much less stringent, as well.
The amount of outstanding mortgages and liens on the property may not exceed the cash available to the homeowners. This is because the cash from a reverse mortgage must first be used to repay them.
The Process of Obtaining a Reverse Mortgage
Obtaining a reverse mortgage includes the following steps:
Responsibilities of the Homeowners
- Researching options
- Speaking to a reverse mortgage counselor
- Completing loan application papers, and supplying any required documentation and good faith deposit
- Scheduling a termite inspection and providing access to the home
- Providing the appraiser access to the home
- Obtaining repair estimates when necessary
- Signing loan documents
- Completing required repairs after loan closing
Responsibilities of the Lender
In addition to assisting the homeowners with the steps above, there are many additional responsibilities of the lender. A reputable and experienced lender like Castle Funding Corp. (NMLS #289925) . will assist the homeowners, identify and resolve any potential issues quickly, and make it easy every step of the way.
Are Reverse Mortgages For Everyone?
Just like anything in life, reverse mortgages are not for everyone. They are best suited for retired homeowners on a fixed income that prefer to remain in their home, that need or would enjoy having more cash. Homeowners that already have adequate income and assets to fund their retirement years probably don’t need one.
This material is not from HUD or FHA, and has not been approved by HUD or a government agency.