Reverse mortgages in New York
New York is a wonderful city and state. One that represents the best of what the US can offer, a place where anything is possible. However, that doesn’t mean that living there is always easy, especially if you are close to the age of retirement and the increasing cost of living is starting to bite. Don’t worry though, help is at hand in the form of a Home Equity Conversion Mortgage (HECM), otherwise known as a reverse mortgage. It sounds complicated, but don’t let that scare you. Let us break it down for you.
What is a reverse mortgage?
In its simplest terms a reverse mortgage is a loan that allows you to convert some of the equity on your current home into cash. So a percentage of the money you’ve been using to pay off your mortgage can be loaned back to you. Where this kind of loan differs from your traditional loans and mortgages is when it comes to making repayments. A reverse mortgage doesn’t have to be repaid until the borrower leaves their current residence, sells the house or passes away. You will still be responsible for other costs on the house like property tax, home insurance and any day-to-day maintenance needed on the building.
Am I eligible?
So you’re interested in taking out this type of loan, but do you qualify? The biggest eligibility issue when it comes to eligibility is age. You must be 62 years or older to take out an FHA (Federal Housing Association) approved reverse mortgage in New York. You must be a current resident in the property you’re applying for the loan for and not be intending to leave it any time soon. In general, you must also be in a single-family home, a 1-4 unit building or a property that is a federally approved planned unit. Finally, a substantial amount of your mortgage must already be paid off before you apply for the loan. In most cases you can only borrow up to 60 per cent of the property’s value, although, some lenders will offer rates of up to 80 percent.
What fees do I incur?
Of course, there must be something in it for the lender and there are a few fees you should be made aware of, these include general administration costs such as document preparation, an appraisal of your home, the conducting of a credit report, and a inspection fee. During the course of the loan you will have to pay a monthly servicing charge, generally not more than $30 and any additional mortgage insurance.
How can I receive the money?
You have a number of options when it comes to receiving the money. The first one is the simplest: deciding to apply for a lump sum. This is the least complicated, but potentially the riskiest, assuming you are taking out a significant portion of your mortgage. Remember that if you were to sell the house you obviously need to pay the balance of the loan at closing.
The second option is to accept monthly payments from your lender, with the amount, once again, negotiated with the lender.
The final option is to use the reverse loan as a form of credit. This is generally the recommended route for most people to go down, as it helps keeps your costs to a minimum. Alternatively, you can just decide to use a combination of all three options. This, though, could start to get complicated very quickly.
How much can I borrow?
The amount you can borrow will depend on a variety of different things. The first being your lender of choice. The maximum amount a bank will lend can differ significantly from place to place, although it is largely affected by the value of your current home. Your age will also play a factor. The older you are the higher the amount you will be able to borrow. Current interest rates will also play an important role in any borrowing limits. The last thing that will be looked at is the type of payment you are requesting. Is it a lump sum, a monthly payment, or a line of credit you are looking for? Whichever you decide to pick will have an impact on the amount you can borrow.
When do I have to repay the loan?
The loan must be repaid if you have not been living in the residence for more than 12 months, when you decide to sell your home or when you pass away. It is crucial that you consider this final point in particular when applying for the loan. Is there a contingency plan for who is responsible for the repayments if you suddenly take ill?
Is a reverse mortgage right for me?
There are loads of benefits of taking out this kind of loan, but that doesn’t mean that it is the right type of loan for everyone. Consider a reverse loan if:
- You are not thinking of leaving your home any time soon.
- The majority of your mortgage is already paid off.
- You know exactly who will be financially responsible for your property if you were to suddenly pass away.
What are the benefits?
- There are no initial repayments.
- Borrowers can receive the cash in a variety of ways.
- There are no credit rating checks.
- The availability of credit to help against unexpected retirement costs.
Why choose Simple Fast Mortgages?
A reverse mortgage has a bit of a reputation as being a complicated form of credit. We’re here to help make the application process as simple and straightforward as possible. At Simple Fast Mortgage, we have decades of experience offering a variety of mortgages and promise to keep you informed every step of the way. We are proud of our customer service record and transparency.
If you have any questions, are looking to take out a reverse mortgage, or simply want to know a little bit more about the process, then get in touch and we’ll do all we can to answer any and all of your questions. Call us any time or fill out the form below and we will email and call you back shortly.