A reverse mortgage is a loan for homeowners over 62 years of age who have substantial equity in their homes. With this loan, they can borrow against their equity and get access to cash to pay for any cost-of-living expenses they may have. Rates typically start at less than 3.5% per year, and the loan lasts until the borrower dies or moves from the property, after which they (or their heirs) repay the loan or sell the property to repay the lender.
Most reverse mortgages are government-insured programs that have stringent lending standards. Private or proprietary reverse mortgages are also available, but those are less regulated. Use caution with unregulated loans from private, non-bank lenders as there is an increased risk of scams with this option.
It starts with a borrower who already owns a property with considerable equity --usually at least 50% of its value. Once the borrower picks a loan program with help from their loan advisor, they can apply for a loan. After a credit check, reviewing the borrower's property, its title, and appraised value, the lender can either approve or decline the application.
If the loan is approved, the lender funds it as either a lump sum, a line of credit, or periodic payments (monthly, for example), depending on the borrower's choice.
Some reverse mortgages limit how the funds are used, such as for home improvements or renovations. Others are unrestricted and can be used for any variety of life's expenses.
To qualify for a government-sponsored reverse mortgage, the applicant must be 62 years old or more. Also, they can only borrow against a primary residence and must have at least 50% equity or own the property outright. There also can't be a second mortgage on the property. The following are reverse mortgage-eligible properties:
Private reverse mortgages have qualification requirements that vary by lender.
The two primary costs for government-backed reverse mortgages are:
Mortgage insurance protects lenders in case of default. So while reverse mortgages can't default in the same way as a conventional mortgage (such as missing a payment), the loan can still default if the owner fails to pay property taxes or the insurance.
There are also origination fees, and the amount varies by lender but typically ranges from 1% to 2% of the loan amount. Lenders may also have fees for other closing costs, such as credit checks and property appraisals.
However, these are usually rolled into the loan, so you won't need to pay it upfront.
Are you a homeowner over 62 years of age? A reverse mortgage may be just the thing to have more liquid cash flow! Contact us today to learn more about your loan options.
We've been helping customers afford the home of their dreams for many years, and we love what we do.
8084 W Sahara Ave. #A
Las Vegas, Nevada 89117
Dara Capital Group strives to ensure that its services are accessible to people with disabilities. Dara Capital Group has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Dara Capital Group makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows daracap.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Dara Capital Group accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Dara Capital Group continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Dara Capital Group website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Dara Capital Group website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: firstname.lastname@example.org