As the cost of living continues to climb, people surviving off their pension, or who are on the verge of retirement, may struggle to find a way to live comfortably. Diditan Financial is a home loan company offering reverse mortgages to those who need additional income, and who qualify for this product. A reverse mortgage is a loan for homeowners aged 62 or older that allows them to take a portion of their home’s equity and convert it into cash. Its purpose is to help retirees on limited income, and those about to retire, use wealth amassed in their home to pay for standard living expenses, or to improve the overall quality of their life. There is absolutely no restriction on how funds from the mortgage proceeds can be spent. The homeowner is not required to pay the loan back until the home is either vacated, or sold. As long as the borrower lives in the home with the associated mortgage he is not required to make loan payments. However, he must continue to pay HOA fees, property taxes and homeowner’s insurance. This type of loan is called a reverse mortgage because the lender makes payments to the homeowner thus performing an action reverse to the proceedings of a traditional mortgage in which the borrower makes payments to the lender. Once the borrower is no longer living in the home, for whatever reason, the house becomes the lender’s property. To get a good idea of where you stand financially, use our reverse mortgage calculator and then call our Diditan Financial experts so we can go over the figures together, and determine what your ideal solution is.
Who Should Get a Reverse Mortgage?
A reverse mortgage is ideal for people aged 62 or older who have a need for additional cash and who wish to live the remainder of their life in their home. Traditionally a home is passed on to the next of kin after the property owner passes, or the homeowner makes arrangements to have it donated to an organization. For those who have no desire to make preparations for either of these options, and who wish to use their home’s equity themselves, a reverse mortgage is likely a perfect solution. Most people who take out a reverse mortgage use the money to:
- Pay off medical bills
- Pay off credit cards or other outstanding bills
- Finance a family member’s college education
- Make general lifestyle improvements
- Finance a down payment for a family member’s new home
- Start up a new hobby
Really, a reverse mortgage is a good loan for seniors wanting more money who own their own home outright or who have very little left to pay on the loan, and who have no desire to pass the property on to heirs. If 64 year-old Jack from Los Angeles has no heirs and has dreamed of playing golf on St. Andrew’s green before his health turns for the worse, he may take out a reverse mortgage just to have extra money to “live it up” and enjoy life. Money from a reverse mortgage can be dispersed in monthly payments, or given in one lump sum. Diditan Financial has been helping seniors get into ideal reverse mortgages with the lowest fees. Be sure to call our team before you take out a loan like this, as it is of vital importance you understand all the fine details, and we can help you secure the best terms on your home loan.
What are the Benefits of a Reverse Mortgage?
A reverse mortgage is a home loan reserved to a special few that offers a plethora of benefits, so long as you qualify. Primarily, a reverse mortgage can be regarded as a powerful tool available to seniors so they can engage in financial planning for their retirement. The many benefits of a reverse mortgage allows them to supplement their retirement income so they can live better quality lives. Some of these benefits include:
- Zero monthly mortgage payments
- You remain the owner of your home
- If the housing market declines, you are protected
- Your Medicare and Social Security Benefits are not effected
- You get to choose from a wide selection of disbursement
A reverse mortgage arms seniors with a financial planning implementation fixed on retirement by supplementing their pension’s income. Our Diditan Financial team will sit down with you and help devise a strategy that ensures your prosperous and longevity as you live comfortably with a huge chunk of your financial obligations put to bed. With our expert advice and keen insight, you can pay your medical bills, travel to London, play on the best golf courses, spoil your grandchildren, and still have funds left over to use on a rainy day.
Reverse Mortgage Interest Rates
Trying to discover rates on a reverse mortgage is very challenging and not at all as easy as it is to get rates on traditional home loans. Reverse mortgage rates are not very transparent. When you call Diditan Financial our industry veterans can do the hard work and find the lowest rates on your ideal reverse mortgage home loan that will keep you in a comfortable financial position while you get to live out the rest of your years in your home.
How Much does a Reverse Mortgage Cost?
There are many factors that play into the overall cost of a reverse mortgage home loan. Interest rates play a big role in the overall cost, but there are other contributing factors as well. For example, closing costs weigh significantly. If you decide to opt for the FHA’s Home Equity Conversion Mortgage (HECM) product, you wind up paying these fees in the guise of mortgage insurance premiums (MIP) with third-party charges, servicing fees, and origination fees. HECMs are the most prevalent in today’s landscape of reverse mortgages, and therefore shall be used as an example. To find out how much your reverse mortgage will cost, call Diditan Financial and let our team of knowledgeable experts get you the best deal while saving you one massive headache.
Origination Fees – The cost of these fees depends on your lender. However, rest assured if you go through the FHA these fees are capped. If your home is valued at $125,000 or less, the origination fee on a FHA loan is capped at $2,500. If your home is worth more than that, a lender may charge you two percent on the initial $200,000 appraised value, or one percent if this value exceeds $200,000. However, none of this is actually set in stone, which makes shopping for a reverse mortgage very tricky. Not all lenders charge the high end of the fees. In some cases homeowners can even get a rebate. This is why you need our Diditan Financial team in your corner; there is a lot to absorb and learn, and really the only way to find the best deal on a reverse mortgage is to compare multiple offers, which is time-consuming and complicated for many people.
Insurance Premiums – If you are pursuing such a loan, you will need to pay an annual MIP throughout the lifespan of the loan, as well as the standard mortgage insurance premium. When closing comes, the appraised value of your house and the HECM loan limit is calculated and the lesser of the two becomes your MIP charge. Keep in mind that you are going to pay an insurance premium throughout the life of your mortgage, which is 1.25 percent of the balance.
Servicing Fees – HECMs require servicing fees. These are the maintenance steps throughout the life of the loan that make sure the borrower is current on the payments, and that all matters of billing are correctly handled. These servicing fees also ensure you are adhering to insurance and tax mandates, you receive loan balance statements and various literature on options associated with them, and that loan proceeds are paid in a timely manner. Most servicing fees are generally billed between $25-$35, and the fee will not exceed $30 in you have an adjustable rate on a yearly cycle. You pay your first month at closing, and then continue every month after.
Is a Reverse Mortgage Right for You? Give it Thought, Talk to Family, and Call Diditan Financial.
Are Reverse Mortgages Bad?
A reverse mortgage is not bad, or good; it is all relevant and its quality depends on the profile of its borrower. For some, a reverse mortgage is an ideal solution, and for others, there are better home loans out there. Here are some cons to a reverse mortgage that you should be aware of. Try to determine if any of these may apply to you, or pose a concern that would negatively impact you:
- If you default on your property taxes and homeowner’s insurance, you can lose your home regardless.
- A reverse mortgage is known as one of the more expensive home loans.
- The longer you live in your home, the more it bleeds out its equity due to continuous fees and interest.
- If your health declines and you need to move to an assisted living facility or a long-term care environment, the loan is due.
- It will be difficult to keep the home in your family or to gift it to your heirs if you get a reverse mortgage.
- Should you require a nursing home in the future, a reverse mortgage will eat into your assets.
If none of these points are a major concern to you, then a reverse mortgage might be your ideal option and saving grace to keep you living comfortably in your home.