Qu'est-ce qu'un prêt hypothécaire inversé ?
Despite the fact that hundreds of thousands of seniors (those 62 and over) are utilizing reverse mortgages to enhance their quality of life, many individuals remain unaware of the benefits they may provide. What is the upside of getting a reverse mortgage? There is, in fact, a single correct answer: it increases the quality of your life. You are free to spend the money anyway you see fit. If you intend on using it to replace the lost income of a deceased spouse, pay for expensive medical care or a vacation, purchase a new vehicle, boat or aircraft, etc. – it’s all fine. The money from a reverse mortgage may be used for whatever you choose. With a reverse mortgage, the lender makes the payments to you rather than the other way around, as is the case with a conventional mortgage.
You should have an established local expert working for you if you’re considering a reverse mortgage. Since 2004, Kurt Heide has been advising customers on reverse mortgages at American Nationwide Mortgage Company. In order to help you get the reverse mortgage financing you need to stay in your home and maintain the standard of living you deserve; he provides honest counsel and straightforward direction based on his 13 years of expertise in the field.
How Does A Reverse Mortgage Work?
Reverse mortgages are loans that enable eligible homeowners to borrow money, but they don’t function like house purchase loans. A homeowner who is 62 years or older with significant home equity may borrow against the home(s) and get a lump amount, fixed monthly payment, or line of credit. Reverse mortgages don’t require loan payments throughout the homeowner’s lifetime, unlike forward mortgages.
You have the option of receiving the money from the reverse mortgage loan in a single payment, in the form of a line of credit, or in monthly installments. Because the reverse mortgage loan does not require you to make monthly mortgage payments, the money you borrow may be used toward paying off existing debt, getting rid of other recurring bills, or improving your standard of living.
Who Is a Reverse Mortgage Right For?
To be eligible for a government-sponsored reverse mortgage, the youngest owner of the house being mortgaged must be at least 62 years old. Borrowers may only borrow against their primary residence and must either own their property entirely or have at least 50% equity with no more than one primary lien (form of debt)—in other words, borrowers cannot have a second lien from a home equity line of credit (HELOC) or a second mortgage. Money from a reverse mortgage is often used to pay off the borrower’s current mortgage if the borrower doesn’t already own the home entirely.
Reverse mortgages backed by the government are only available for certain kinds of property. Property types that qualify include:
- Single-family homes
- Multi-unit properties with up to four units
- Manufactured homes built after June 1976
- Condos or townhouses
What Are the Costs of a Reverse Mortgage?
It is crucial to have a thorough grasp of the related fees with any sort of financial product, but it is particularly important to do so with one that you are considering for your retirement. Having this data at hand will help you begin making an educated decision about your home equity plan, whether it a reverse mortgage or another option like refinancing or selling.
If you decide to sell your home, for example, you may incur expenses such as $30,000 in real estate commissions (6% of a sale of $500,000 equals $30,000), and that’s before you factor in the costs of home repair, staging, inspection, relocation, title insurance, transfer tax, and any other costs and fees that may be incurred.
To assist you in gaining a deeper understanding of the expenses associated with a reverse mortgage, we have categorized those expenses into the following categories: fees, interest rate, insurance charges, and ongoing expenses.
An appraisal provides a value to your house, which is significant in deciding the amount of your loan.
Appraisal prices vary depending on geography, house type, and value, but they average $450.
The evaluation also ensures that the house is physically sound and meets all safety and municipal construction requirements. If the appraiser finds structural flaws, you must employ a contractor to execute the repairs, which will need a follow-up inspection by the appraiser for approval. This second inspection usually costs $125 to appraise.
The origination fee is used to pay your lender’s operational costs related with the origination of your reverse mortgage.
Fees vary per lender and are limited by the FHA. The origination charge is set at $2,500 for residences worth less than $125,000. For residences valued more than $125,000, the lender may charge 2% on the first $200,000 and 1% on every amount beyond $200,000, up to a maximum of $6,000.
Closing Cost Fees
Closing charges comprise a variety of services necessary to finalize your reverse mortgage. The National Reverse Mortgage Lenders Association (NRMLA) has offered a concise summary of usual charges. These fees may be rolled into the amount of your reverse mortgage loan, minimizing your out-of-pocket expenses.
The service charge covers the estimated cost of servicing your account during the loan’s term. The FHA limits this cost at $35 per month.
Fee for Counseling
Counseling covers all parts of the reverse mortgage procedure, including the benefits, downsides, and qualifying criteria. According to NRMLA, the price is about $125. It is one of the few fees that cannot be rolled into your loan or financed.
Reverse Mortgage Interest Rates
Although a reverse mortgage’s interest accrues continually, principle repayment, fees, and interest payments are postponed until the homeowner has moved out of the house.
Reverse mortgages can have fixed or variable interest rates. For the whole time that interest is accruing, fixed rates stay constant. Variable rates have an underlying index and a margin rate.
There is one drawback to choosing a set rate for a Home Equity Conversion Mortgage (HECM): You’re normally obligated to accept the money in a lump sum. Choosing a fixed rate may give some predictability in terms of estimating how much interest will accumulate on the amount.
Home Equity Conversion Mortgage (HECM) Rates as of April 14, 2022
How Much Can You Borrow with a Reverse Mortgage?
A reverse mortgage enables you to borrow money while utilizing the equity in your property as collateral. If you’re 60, the maximum you may borrow is likely to be 15-20% of your home’s worth. As a rule of thumb, add 1% for each year above 60. So, at 65, the most you may borrow is about 20-25%.
A 62-year-old, for example, would be able to borrow substantially less than an 82-year-old — on a $500,000 property at 5.25% interest, the difference would be almost $77,000.
Is a Reverse Mortgage Expensive?
A reverse mortgage loan is often more expensive than other types of house loans. With a reverse mortgage loan, you will be responsible for the amount borrowed as well as interest and fees. In contrast to typical mortgage loans, the amount owed on a reverse mortgage loan grows over time.
Can You Owe More Than the Home Is Worth with a Reverse Mortgage?
Reverse mortgages may deplete the equity of your home, leaving you and your heirs with less assets. A “non-recourse” provision is included in the majority of reverse mortgages. This ensures that when the loan matures and the house is sold, you or your estate cannot owe more than the home is worth.
Can You Refinance a Reverse Mortgage?
The answer is yes; it is possible to refinance a reverse mortgage with a conventional loan or some other sort of mortgage. In order to qualify for the new loan, you will need to meet certain eligibility requirements. These requirements will vary depending on a number of factors, including the amount of equity you currently have in your home, your capacity to handle the payments on your mortgage, as well as your credit score.
Reverse Mortgage Pros and Cons?
Reverse Mortgage Pros
A reverse mortgage might be the solution for you if you’re having trouble keeping up with your monthly bills and other financial commitments. Here are a few advantages that come along with choosing to go with a reverse mortgage.
1. Helps Secure Your Retirement
The best candidates for reverse mortgages are retirees who have amassed a substantial amount of money in their houses but have few liquid assets or investments to draw upon in retirement. With the help of a reverse mortgage, it is possible to convert an asset that would normally be difficult to sell into cash that can then be used to pay for costs associated with retirement.
2. You Are Able to Remain in Your Own Home
You don’t have to give up the house in order to turn your asset into cash; you may do it while still benefiting monetarily from the sale of the property. This means you won’t have to worry about downsizing or being priced out of your community and forced to move.
3. You Will Be Able to Pay Off Your Current Mortgage
To qualify for a reverse mortgage, the mortgage on your property does not need to be paid in full. In fact, the money you get from a reverse mortgage may be used to pay down an existing mortgage on your house. This frees up funds that may then be used towards other expenditures.
4. You Won't Be Responsible for Paying Any Taxes
The Internal Revenue Service classifies the funds that you receive from a reverse mortgage as a loan advance rather than taxable income. This implies that the funds are exempt from taxation, in contrast to other forms of retirement income such as withdrawals from an individual retirement account (IRA) or 401(k).
5. You’re Protected If the Balance Exceeds Your Home’s Value
There is a possibility that the value of your house may wind up being lower than the entire amount that is owing on the reverse mortgage in certain circumstances. This may occur, for instance, if the prices of homes went down. If anything like this happens, your heirs won’t have to worry about how they’re going to pay the remaining sum.
6. Your Heirs Have Different Choices
In the case of an inheritance, the inheritors have various options: They may retain the house and refinance the reverse mortgage amount if the property’s worth is adequate; or, if the debt is more than the value of the property, they can settle the loan by handing the title back to the lender.
Reverse Mortgage Cons
The question now is, what are the drawbacks of a reverse mortgage? Although it could seem that there are a lot of advantages, you should also be aware of the fact that there are some significant risks involved.
1. The Risk of Having Your Home Go into Foreclosure is Always There
In order to be eligible for a reverse mortgage, you must be in a financial position to pay the property taxes, homeowner’s insurance, and HOA fees that are connected with your house, as well as any other expenditures that are involved with home ownership. You are also obliged to use the property as your primary residence for the majority of the year when you are renting it out.
If at any time throughout the term of the loan you fall behind on these payments or if you spend the bulk of the year living somewhere other than the property, you run the risk of defaulting on the reverse mortgage and having your house taken back by the bank via the foreclosure process.
2. The Amount That Your Heirs May Inherit May Be Reduced
One of the most important ways to accumulate money for future generations is to become a homeowner. However, in order to settle the debt associated with a reverse mortgage, the residence often has to be sold. When you die, your heirs will be compelled to pay the whole loan sum or 95% of the home’s assessed worth, whichever is less. In most cases, this requires either selling the house or handing over the property to the lender so that the loan may be paid off.
Not to mention the fact that a reverse mortgage would reduce the equity in your property. It is possible that by the time it has to be paid off, there may be no equity left for your heirs to inherit at all.
3. It’s Not Free
Even though you won’t have to make monthly mortgage payments if you have a reverse mortgage, there are still a lot of costs connected with having one. You are required to keep up with your taxes, insurance, and homeowner’s association payments, and in addition to that, you must pay an upfront insurance premium. In most cases, this amount is equal to 2% of the assessed value of your house. At the closing, you will also be responsible for paying any origination costs. You do have the option of rolling these fees into your loan balance; however, doing so will result in a reduction in the amount of money that you receive.
4. It Might Have an Effect on Your Other Benefits Upon Retirement
Although a reverse mortgage may not be counted as taxable income for the purposes of the Internal Revenue Service (IRS), it can affect your eligibility for other need-based government programs like Medicaid or Supplemental Security Income (SSI). It is in your best interest to have this conversation with a benefits expert in order to ensure that your eligibility will not be jeopardized in any way.
5. Reverse Mortgages Are Notoriously Difficult to Understand
Reverse mortgages are not without their share of restrictions and stipulations. These loans come with a number of hazards, some of which may prevent them from being worth the additional cash. You should approach any offer for a reverse mortgage with extreme caution unless you have a solid understanding of the conditions.
Use A Reverse Mortgage to Access the Existing Equity in Your Home
Reverse mortgages should not be a short-term financial solution. A solid rule of thumb would be to have the intention of living in your house for at least five years from the day that you close on the transaction. This ought to provide you with sufficient time to recuperate the expenses associated with the closing costs and make the most of the benefits. Consider your own circumstances while analyzing the benefits and drawbacks of getting a reverse mortgage. You are the only one who can determine what the drawbacks are.
Think about having a conversation with your loved ones before making contact with a reverse mortgage expert. It may seem as if you have let your children or even your spouse down if you have to tell them that you need to take money out of the equity in your house. Thankfully, in many situations, assistance from family members is offered, which eliminates the need for a reverse mortgage.