Principle Home Mortgage offers a mortgage product specifically designed for borrowers age 62 or older to utilize the equity in their home. In State College, PA or the Centre County region, a reverse mortgage gives the borrower flexibility in their retirement income. There are several options to acquire money from the equity in your home, including lump sum cash out, monthly payment to the borrower, or a line of credit. None of the options require the homeowner to make payments back to the bank until the home is sold, or the homeowner passes away (whichever comes first). There are monthly interest costs and mortgage insurance associated with the loan, and they’re added to the balance of the mortgage. No matter the homeowner’s reason for opening a reverse mortgage, such as supplementing retirement income, buying a second home, or traveling the country, the money can be used to suit your needs. To learn more about this reverse mortgage product contact Principle Home Mortgage and continue reading below.
- Agency: Federal Housing Administration
- Also known as: HECM or Home Equity Conversion Mortgage
- Max Loan Amount: As of January 2019, the FHA lending limit on a HECM is $726,525 but your personal maximum loan amount will vary based upon several factors.
- Mortgage Insurance Premium: 0.5% annually and is required for the life of the loan
- Upfront Mortgage Insurance Premium: Required 2% of the lesser of the home’s appraised value or the maximum lending limit; can be financed
- Max Income: No restrictions
- DTI Requirement: No restrictions
- Credit Requirement: No restrictions but a credit report will be needed to assure the lender that no outstanding tax liens remain against the property
- Required counseling: As the reverse mortgage industry has been plagued by confusion and predatory lenders, part of the process of obtaining a reverse mortgage is counseling provided by a HUD-approved counselor. Principle Home Mortgage finds this to be greatly beneficial to the homeowner as they may understand the product better before committing to the mortgage.
- Money how you need it: One of the greatest advantages to the homeowner is the ability to draw on their home equity how they would like or need to. It is available in a lump sum, monthly amounts, periodic advances through an open line of credit, or any combination of these.
- Your home can qualify even if you have a current mortgage: One of the biggest misconceptions is that the borrower must own the home free-and-clear. This is not true. As long as there is enough equity in the home to generate the proceeds needed to cover the existing mortgage balance, a homeowner can qualify for a reverse mortgage.
- You still own the home: A common misconception of a reverse mortgage is that the bank owns the home. This is untrue. You hold the title to the home, and when the mortgage becomes due (either through the sale of the home, or the death of the last borrower), the estate of the homeowner can either pay the reverse mortgage through a forward mortgage or sell the home and inherit the proceeds beyond the reverse mortgage balance. As a reverse mortgage is a “non-recourse” loan, you or your heirs will never owe more than the value of the property or the loan balance, whichever is less. This also means that if the borrower passes away, and there are no heirs, or the heirs do not wish to do anything with the home, there is no legal action against the heirs and the bank will foreclose.
HOW DO I APPLY?
Principle Home Mortgage is happy to discuss reverse mortgages with prospective clients and their families in State College, PA and the Centre County region. To apply for a reverse mortgage loan, you will need 2 forms of ID and proof of income at a minimum. To determine if a renovation mortgage is your best option, reach out to Principle Home Mortgage at (814) 308-0959 to discuss your home financing needs.