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When Is the Right Time to Apply for a Reverse Mortgage?

You have worked hard for most of your life to build your home equity. In fact, you home is most likely your largest asset.  If you are over the age of 62 with a small amount of debt to be paid on your mortgage and looking to enjoy your retirement with less financial stress and more freedom, a reverse mortgage might be right for you.
 

How Reverse Mortgages Work

 
A reverse mortgage converts a portion of your home’s equity into cash.  Your age, the current interest rate, the value of your home and value of your current mortgage (if any) will be calculated to determine the amount of your payments. You are no longer responsible for your monthly mortgage payments, but you continue to be responsible for property taxes, home insurance and maintenance of your home.

To qualify for a reverse mortgage you will need to schedule an appointment with one of our loan originators who will work with you to determine your financial situation and make sure that you have enough income to afford your home, including taxes and maintenance, for the rest of your life.  The primary borrower must be aged 62 or older and reside in the home and have a low debt or paid off mortgage.
 

Best Times to Apply

 

Apply When Housing Prices are High

When housing prices are high the amount of equity in your home is also high allowing you a larger payment from your mortgage. Conversely, when home values fall you may not be eligible for a reverse mortgage.

Apply When Interest Rates are Low

Just like when purchasing a home, there are less fees involved when interest rates are low which, in this case, translates to higher payments.  

Apply When You’re Older

Age can make a sizable difference in payment from a reverse mortgage because your age is a key factor in determining your eligibility. The older you are the higher your monthly payment will be.  There are no restrictions on how you use your money.

Apply When You’ve Paid Off Your Mortgage

A reverse mortgage offers you the freedom to access a line of credit at any time the need arises. This option offers a financial back up plan with no interest to pay unless you make a withdrawal. Each year you hold the line of credit without borrowing your line of credit will continue to grow giving you greater borrowing opportunities as you age.   A reverse mortgage with a line of credit gives you options and you can assess which option will have the least financial impact at the time of borrowing.
 

Commonly Asked Questions

 

What About My Children’s Inheritance?

When the home is sold or when the owner passes away the debt is repaid to the mortgage holder and the remaining equity will be paid to you or your heirs. No additional debts will be passed on to the estate since the reverse mortgage cannot value more than the home’s equity.

How Is a Reverse Mortgage Different From a Home Equity Line of Credit?

There are no payments to be made when you secure a reverse mortgage. You receive a monthly payment against the equity of your home.  With a home equity line of credit you are required to make monthly payment towards the principal and interest.
 

How Can Prysma Lending Group Help?

 
In summary, a reverse mortgage frees up your hard earned cash and allows you financial freedom in your retirement. You can apply when you simply need more money or just want a better quality of life in retirement.

Contact us today at 888-743-9985 to speak with one of our loan originators about the right option for you.