The New Mexico reverse mortgage option is one of the most effective financial tools available to seniors and retirees who need to secure a steady stream of income to live on during the best years of their lives. If you own a home and you’ve built some equity in it, you’re likely qualified to take advantage of this specialized loan option.
These loans are designed to transform equity into income. Seniors who take out reverse mortgages in New Mexico are able to live well without giving up their home ownership rights. The additional income these loans provide has allowed many retirees to pay for medical costs, bills, taxes, and living expenses with ease.
The money you receive is your money. It comes directly from your home equity. There are no stipulations as to how it can be spent.
Reverse mortgages have three forms:
The most common source is the FHA HECM reverse mortgage, which is insured by the Department of Housing and Urban Development (HUD). This article will focus on HECM reverse mortgages.
Homeowners aged 62 and older who own their home outright and have most of their mortgage paid off. If the current mortgage is not paid off, the initial reverse funds or some combination with out-of-pocket cash must be used to deplete the remaining balance. Credit score is not a qualifying factor.
There are several costs associated with securing an HECM reverse mortgage in New Mexico, including but not limited to:
Your lender will take ownership of the equity and provide you an equivalent amount of spendable income, minus fees. You can choose to receive this money in a number of ways.
You can also combine any of the above options to create the payment method that best meets your needs.
Once your lender has taken control of your equity, you will begin receiving your funds. Many seniors are hesitant to take this step out of fear that lenders will repossess their homes once the equity is fully expended. This is not the case. The title or deed to your home remains in your name at all times during and after the reverse mortgage process. Your lender will never own your home. You are free to continue living in it as long as you like.
Equity repayment is not due until the reverse mortgage homeowner moves, sells their home, or passes away.
If you live out your life in the home, your home will pass to an heir. This heir becomes responsible for paying back your reverse mortgage debt. But you don’t need to worry about sticking your children with the loan. The mortgage amount is tied to the home itself. If your home decreases in value, the repayable loan amount decreases as well. This ensures that your heir can sell the home and pay off the debt in full. The only negative aspect of this transaction is that your heirs won’t be able to keep your home unless they choose to refinance and pay off the debt themselves.
Taking out a reverse mortgage is simple and affordable if you find the right lender. If not, you may end up paying a lot of money for the right to access your own equity. Try to avoid this at all costs. Research as many lenders as possible in your part of New Mexico and ask them what mortgage rates and closing fees they charge. Find the most affordable lender to work with. This comparison is essential if you want to get the best deal on your loan.
You can also learn more about applying for a reverse mortgage by checking out our reverse mortgage checklist.
The New Mexico Aging Network lists a number of programs designed to assist seniors with maintaining independence while continuing to live in their homes. Chore, transportation, nutrition, and employment assistance programs exist statewide, especially in populous areas like Albuquerque. For more information about these programs, visit the official site in the link above.
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