A Pennsylvania reverse mortgage can help you retire securely with the income you need to live well if you’re over the age of 62 and you own a home in the state. This is about the extent of the qualification requirements for this loan type, making it a swift and simple financial solution for seniors everywhere.
Your lender takes over control of the equity in your home and pays you for it each month or in a lump sum; this is why these loans are called reverse mortgages - your lender is paying you instead of the other way around.
The money you receive is technically your own home equity, transformed into a liquid form that can be spent on anything you want or need. Use it to pay for medical costs, a nice vacation, other debts, or simple day to day expenses.
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 Pennsylvania, including but not limited to:
You can get the money from your lender in a number of ways.
Your lender will own the equity in your home during and after the reverse mortgage. This knowledge scares some Borrowers, who fear that they will lose their homes once the equity turns out. This is not the case. Your lender does not own the title or deed of the property and cannot repossess the home. You don’t need to worry that you’ll lose your home. This can’t happen through a reverse mortgage.
You don’t have to pay the loan off during your lifetime unless you want to sell your home or move to a new home. If you choose to do either of these things, your lender will need to collect on the amount of the equity that is owed. But if you continue living in your home for the rest of your life, you won’t have to pay back any of the debt.
Your heirs will be responsible for paying back the reverse mortgage when you pass away. This is usually done through a sale of the home. Lenders cannot collect more than what the home sells for, even if the property has decreased in value and doesn’t account for the full amount of the debt owed.
No two lenders offer the same loan terms and options, but many, if not all, lenders are willing to administer reverse mortgages. You have to be careful, though, because many lenders will charge you very high fees simply for the right of accessing your own home equity. There are closing costs tied to every loan, of course, but try to find a lender who will charge you a fair price.
The best way to do this is to compare multiple lenders in your part of Pennsylvania. Ask them what rates they offer and what fees they charge. For more information on how best to do this, read our reverse mortgage checklist.
Pennsylvania's Department of Aging has a number of community and home oriented programs that enable seniors to live at home while preserving their independence. Caregiver support is available, as well as resources for grandparents living with grandchildren. Visit the Home and Community senior services page for more information about how the Department of Aging's resources may supplement a reverse mortgage for you or your loved one.
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