Reverse Mortgage Loan
If you’re aged 62 or above, you may qualify for a reverse mortgage in Colorado. A reverse mortgage is an excellent option for seniors whose primary asset is their home. There are a lot of misconceptions about what a reverse mortgage is, so let’s look at what a reverse mortgage is and how it can help keep you comfortable through your retirement years.
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What Is a Reverse Mortgage
A reverse mortgage is when a homeowner takes a loan against the value of their home. There are three types of reverse mortgages available; single-purpose reverse mortgages, which are available through state and government agencies; proprietary reverse mortgages, which are private loans; and Home Equity Conversion Mortgages (HECMs), which are federally insured.
You can receive funds as a lump sum, fixed monthly payment, or line of credit. The biggest draw is that the borrower does not have to make payments on the loan and does not receive any tax penalties. The amount borrowed in a reverse mortgage is due when the borrower dies, sells their home, or moves out permanently.
What If The Home’s Value Drops?
If the borrower or their estate is not able to repay the loan amount, it’s okay. The borrower’s mortgage insurance will cover them in the event the home’s value drops, and the loan amount can no longer be covered.
There is a lot to consider when it comes to reverse mortgages. If you have questions, give Home Loans a call. We will go over everything you need to know about reverse mortgages in Colorado.