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What Is A Reverse Mortgage?

mortgageDid you know that wa reverse mortgages allow you to stay in your home while getting income from its equity? There are some great perks for those in need of income, found in this type of mortgage. Learn all about it to see if it is right for you or someone you love.

Comparing Mortgages

  • FHA – An FHA loan is one that goes through the government. It is for first time buyers with little or no credit. If you would like to buy a home and settle down but you have just not built up the necessary credit for a conventional loan, then this program might be perfect for you. It is great because it is forgiving and has a low interest rte. However, it requires a big monthly mortgage insurance payment, which may not go away at all like it would with a conventional deal. Also, sellers get less out of this deal, so it might make you less competitive in the housing market and it requires proper structure and other house requirements. So you cannot buy a totally beat up home to refurbish it with an FHA loan. The idea is that is you have that kind of money for rebuilding, then you have money for a conventional size down payment.
  • Conventional – This requires no mortgage insurance if you pay 20% down up front, saving you interest payments as well. However, few people can put this kind of cash on the table in one blow. Thus there are conventional loans that allow for a down payment of anywhere from 3% up. The higher percentage you pay now, the lower the monthly payments and interest rate will be. At some point, you might as well stick with the FHA if you cannot pay a decent amount up front. Once again, this is for those who have some money in the bank. Either way though, you need savings to buy a home.
  • Reverse – On the other hand, wa reverse mortgages are the only kind that do not require cash in hand. Conversely, they actually pay you. You sell your home at a loss, and that company will pay you for it monthly. While you may lose money in the end on this investment you have worked to acquire, this keeps you living in the house comfortably for some time where you may not have otherwise been able to do so. It depends on where you are in life.

FHA and conventional loans are great for those looking to grow equity, and wa reverse mortgages are for those seeking to live better in their older years. It all depends on where you are at in the buying cycle. Turn to a broker or lawyer to discuss your options today.

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