Will a Using a Reverse Mortgage on Your Mission Viejo Home Work for You?
As an official member of the Baby Boomer generation, which means I was born between 1946 and 1964 in the Post WWII Baby Boom according to the US Census Bureau, any talk about retirement strategies like using a Reverse Mortgage tends to catch my attention. So when my broker announced we’d be having a meeting to learn about using a Reverse Mortgage to buy or re-fi your Mission Viejo home, I cleared my calendar. I know! I know! Using a Reverse Mortgage sounds like falling for the Snake Oil or Swamp Land in Florida fishy sales pitch. But after I listened to the recent changes Congress has approved and how the program works, I’m a huge fan. Will it work for everybody? Heck no. But for some of the 7,982 people who will turn 62 every single day for the next 17 years, using a Reverse Mortgage just might work wonders. Here are the top eleven things you need to know about using a Reverse Mortgage on your Mission Viejo, Rancho Santa Margarita, Coto de Caza, or Casta Del Sol home.
- Reverse Purchase is an FHA insured program to allow seniors to buy a primary residence using a Reverse Mortgage.
- A Reverse Mortgage can also be used to re-finance a senior’s primary residence.
- Anyone 62 years old or older is qualified to apply for a Reverse Mortgage. The youngest person taking title to the property must be at least 62.
- You never have to make a mortgage payment again. Let me repeat that. You never have to make a mortgage payment again. As long as you keep the home as your primary residence.
- You are still responsible to maintain the home, pay the property taxes, pay the home owner’s insurance, and pay for any Home Owners Association dues while you own the home.
- You will never be responsible to pay more than the house is worth. In other words, when it is time to sell the house, even if it is upside down and worth less than what you owe, you will never have to pay back more than the current market value of the home. There’s no recourse.
- If you sell the home and you or your heirs make more that what is owed to the bank, you get to keep the earned equity. Tax Free.
- There’s no prepayment penalty. You are not required to pay the money back until you move out of the home or the last owner passes away.
- The down payment requirement using a Reverse Mortgage to buy a home depends on your age at the time of purchase, interest rates, and the price of the home. Sixty-two year olds pay the highest down payment – which today would be roughly 40% of the price of the home.
- The interest accumulates and is added on to the amount of the mortgage. Like negative amortization. You have a choice to pay this as you go, or not. If it goes unpaid, it may accumulate over time and eat up any equity you may gain.
- There are limits to the price of the house. Current FHA max lending limit is $625,000.00.
How do you figure out if it will work for you? Talk to your Realtor, your financial adviser, your therapist, your priest, your psychic, your cosmetic surgeon, your divorce mediator, and your tattoo artist. Maybe even speak to your kids and grand kids. And once you apply for a Reverse Mortgage, you are required to have a consultation with a Home Equity Conversion Mortgage (HECM) Housing Counselor – which is typically a 45 minute meeting to make sure you’re making the right choice by using a Reverse Mortgage.
I’m Leslie Eskildsen. Your Mission Viejo Real Estate expert.
Call me. 949-678-3373
Text me. 949-678-3373
Email me. Leslie@LeslieEskildsen.com
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