Maybe you want to renovate your kitchen. Maybe you’ve thought about buying another home. Maybe you want a little extra cash for a tropical vacation. If you need the money and you have home equity, a reverse mortgage is an option.
A reverse mortgage (also called a “home equity conversion mortgage”) allows you to convert some of your equity into cash. Unlike second mortgages or home equity loans, you don’t have to pay back your reverse mortgage loan until you no longer use your home as your primary residence. If you’re considering a reverse mortgage, here are a few things you may not know.
1. You Can Use a Reverse Mortgage to Buy Your Next Home
Is your current home too big and too much work? Want to save money and free up time for relaxation? You can use a reverse mortgage to buy a smaller home. Typical down payments are 50%. (If you want to learn more about upgrading your lifestyle with a smaller home, consider attending one of our webinars)
2. You May Qualify If One of These Statements Applies to You
To qualify for a reverse mortgage, you have to meet one of these requirements:
- You’re a homeowner age 62 or older.
- You own your home outright.
- You have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, have the ability to keep paying your home’s taxes and insurance, and live in your home.
- You have at least 50% to put down on a smaller home (proceeds from sale of current home or equity loan).
If you own a single-family home, a HUD-approved condo, a manufactured home that meets FHA requirements, or a unit in a duplex, triplex, or quad, then you can qualify for a reverse mortgage.
4. The Mortgage You Used for Your Current Home Doesn’t Matter
Though the home equity conversion mortgage is a FHA program, you can still apply even if you didn’t buy your current home through an FHA-insured mortgage loan.
5. A Reverse Mortgage Pays You
The key difference between a second mortgage and a reverse mortgage is the payments. With a second mortgage, you have to make monthly payments on principal and interest. With a reverse mortgage, you don’t. You are only required to pay property taxes, utilities, and insurance.
We Make Pittsburgh Home Selling Easy
Want to explore your options? We can help. We’re Pittsburgh real estate experts. We have over 35 years of combined experience helping Pittsburgh homeowners navigate the often complex real estate market. Let’s talk — call our office (724-942-1200) or call our cell (724-344-4795).