Reverse mortgages are seen as a way for seniors to tap into their current homes as a source of income. By drawing from the equity they already have, they can pay off bills, make improvements to their current residence in St Paul Island Alaska , or even take a well-earned vacation. There is one option that most do not even consider: using a reverse mortgage for the purchase of a newer property.
Understanding a Home Equity Conversion Mortgage
In order to see how using a reverse mortgage for purchase of a newer property works, you first must understand the Home Equity Conversion Mortgage (HECM). The HECM is still relatively new, but it provides a way for those who are 62 years or older to borrow against the value of the home. With approval, the borrower gains access to funds without having to make monthly payments. Repayment of the loan does not occur until the borrower either passes away or sells the property.
This loan is not an option for everyone. In fact, the guidelines stipulate a minimum age of 62 years old. The borrower must also either own their home outright or have a large amount of equity built up in St Paul Island Alaska .
Using Reverse Mortgage for Purchase
For some older Americans, the idea of living closer to family members is ideal, but they do not necessarily want to give up their existing home. If this is the case, they may apply for a reverse mortgage. The borrower must occupy this second home for a set portion of the calendar, and the original residence, which the loan is against, must be the borrower’s primary residence in St Paul Island Alaska
When using a reverse mortgage for purchase, there are some limitations. For example, this type of loan only covers 47 to 52 percent of the purchase price. It is the borrower’s responsibility to make up the difference. This money can come from a retirement account, savings, or a gift. The actual amount borrowed depends on the age of the youngest borrower, current interest rate, mortgage insurance premium, and the home’s value at appraisal.
Additionally, only certain types of residences qualify for a reverse mortgage. These include single-family homes and two to four unit homes where the borrower occupies one of the units. For condominiums, the U.S. Department of Housing and Urban Development requires preapproval. In addition, manufactured homes must also have FHA preapproval. The borrower must also obtain a certificate of occupancy for any new construction.
A reverse mortgage is a great way for seniors to get a second home closer to family. As with a traditional HECM, there are no monthly payments due. A single, balloon payment, is due at the sale of the home, when the last borrower moves out or passes away. This payment is a total of the principle plus interest. If the home sells for more than this amount, the borrower, heirs, or the estate retains the remaining equity. Should the home appraise and sell for less than the amount owed, there is a guarantee of no personal liability. Lenders are insured against this type of loss in St Paul Island Alaska .
Surrounding Areas In Alaska
St Paul Island Information
Video: Mortgages in St Paul Island AK
MoneyGeek.com helps you make financial decisions. Learn about types of credit cards, compare home loans, find info about the best car insurance coverage, and more.
Online legal research service for legal and law related materials and services, including searches of United States and international legal materials, journals ...
Zillow has 3,831 homes for sale. View listing photos, review sales history, and use our detailed real estate filters to find the perfect place.
Work and jobs in St. Louis Park: detailed stats about occupations, industries, unemployment, workers, commute. Average climate in St. Louis Park, Minnesota
Geographic, community, and climate profile.
Report Last Updated: 11/08/2017 03:47 Approved Conveyancing Panel for Paragon Mortgages New Lending To locate firms within a specific area, simply use our search ...
Use this cost of living calculator to compare the cost of living between U.S. cities and determine if you will be able to maintain your current standard of living in ...
The latest news and headlines from Yahoo! News. Get breaking news stories and in-depth coverage with videos and photos.
Watch breaking news videos, viral videos and original video clips on CNN.com.
From millions of real job salary data. 0 salary data. Average salary is Detailed starting salary, median salary, pay scale, bonus data report