In a previous blog post, we discussed the various ways you can use reverse mortgages to help fund your retirement. In today’s blog, Family Home Loan Texas goes more in-depth describing how this type of mortgage can specifically help you buy your next home.
A Helpful Refresher
Before delving into how a reverse mortgage can help you buy a house, let’s discuss the basics of this type of loan. It allows you to leverage the equity you have built up in your home to receive a large loan. It is only available to individuals 62 years and older who have either fully paid off their mortgage or have over 50% equity in their house. While with a traditional mortgage you have to pay a lender each month, For a reverse loan, the lender pays you. While you will eventually have to pay back the loan with interest, you are not required to do so until you leave the house.
Buying A New Home With One
While one can use this type of loan to free up money for pretty much any reason, buying a new home with it is desirable for many people. By the time a lot of people reach age 62 or older, they realize it might be time to downsize their house. By this age, many individuals and families no longer need a lot of space — both practically and for financial reasons. While they could sell their house and buy a new one, they will have to take out a new mortgage and start paying monthly, which is something that is difficult for retirees or those on a fixed income. Moreover, they have to pay two separate closing costs because it is two transactions.
When one chooses to use a reverse mortgage to buy a new home, they are essentially achieving two goals at once. They are buying a more appropriate house and they are not having to make monthly payments
How It Works
If you opt for this route, you will sell your previous house and use those funds as a down payment for the reverse mortgage. Then, based on the equity earned through this down payment and the new home’s value, a lender will calculate your reverse mortgage loan amount. The benefit of this is that the new mortgage will cover most of your home’s cost and you won’t have to make any payments on it until you move out of the house. While this isn’t the right move for everyone, it is great for those who would like a smaller house without having to give up their lifestyle to make monthly payments.
Learn About Using A Reverse Mortgage To Buy Your Next Home
We know this might seem like a complicated process, but we are here to help you every step along the way. Schedule an appointment with us today. We want nothing more than to help you achieve the utmost financial freedom. Family Home Loan Texas was founded by loan originator and long-time mortgage professional Rob Bramer. Rob has helped clients secure the loans they need both locally and nationally and can help you get the loan you need to live life on your terms. Call 1-800-990-LEND (5363) to speak with Rob about reverse mortgage loans.