A reverse mortgage is a loan from the U.S. Government for 50% to 75% of the value of a home owned by a homeowner aged 62 and older. Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to the homeowner. The funds from a reverse mortgage are tax-free. The loan doesn't have to be repaid in the homeowner's lifetime, however, when the homeowner dies, the money received plus approximately 4% interest is repaid by their estate. The loan is repaid when the homeowner ceases to occupy the home as a principal residence, due to the homeowner (the last remaining spouse, in cases of couples) passing away, selling the home, or permanently moving out.
Puerto Rico Home Equity Conversion Mortgage - Reverse Mortgage
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A reverse mortgage increases your debt and can use up your equity. While the amount is based on your equity, you're still borrowing the money and paying the lender a fee and interest. Your debt keeps going up (and your equity keeps going down) because interest is added to your balance every month. Reverse Mortgages | Consumer Advice - Federal Trade Commission ftc.gov ? articles ? reverse-mortgages ftc.gov ? articles ? reverse-mortgages
The downside of a reverse mortgage can be that the closing costs can be higher than a traditional loan, the property must be your primary residence, the loan is not assumable, and there may be less equity to leave to your heir as an inheritance. Here's the Truth About Reverse Mortgages (No BS) reverse.mortgage ? truth-about-reverse-mortgages reverse.mortgage ? truth-about-reverse-mortgages
A Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, is a special type of home loan only for homeowners who are 62 and older. This information only applies to Home Equity Conversion Mortgages (HECMs), which are the most common type of reverse mortgage loans.
The benefit is that HECM loans are nonrecourse, which means the homeowner or the estate (if the homeowner dies) won't have to pay more at the end of the loan than what the home is worth ? no matter whether the home value at the time of sale is less than the loan amount. Everything You Need to Know About HECM Loans | Mortgages and Advice usnews.com ? loans ? mortgages ? articles usnews.com ? loans ? mortgages ? articles
Cons of HECM You have to live in your home: When you get a HECM, your property must be your principal residence for much of the year. You'll have to pay back the HECM if you sell the home or want to move.
You've failed the lender's financial assessment If the lender determines that you have insufficient income to afford the ongoing costs, or you have defaulted on debts before, your reverse mortgage application could be denied.
Reverse mortgage cons Reverse mortgages have costs that include lender fees (origination fees are capped at $6,000 and depend on the amount of your loan), FHA insurance charges and closing costs. These costs can be added to the loan balance; however, that means the borrower would have more debt and less equity. Reverse Mortgage Pros And Cons - Bankrate bankrate.com ? mortgages ? reverse-mortga... bankrate.com ? mortgages ? reverse-mortga...
Yes, you can get a reverse mortgage in Puerto Rico just as you would in the 50 U.S. states. The same rules about residency and requirements apply.
