Many metro areas are experiencing some signs of home value appreciation. According to an article by Zillow1 ,
“Approximately 75% of the metros covered by the Real Estate Market Reports posted annual increases in home values – a sign of the national housing recovery continuing to take hold.”
You may be wondering if now is the best time to sell your home, right size to a smaller or more manageable home, or stay in your current home. Depending upon the amount of equity you have accumulated in your home, your age, and other qualifying factors, you may be eligible for a reverse mortgage loan.
A reverse mortgage loan may be available to qualified homeowners aged 62 and older who qualify under the Home Equity Conversion Mortgage (HECM) program insured by the Federal Housing Administration (FHA). The amount of the loan is determined by the age of the youngest borrower, current interest rates and the lesser of the appraised value of the home, sale price and the maximum lending limit.
The S&P Case-Shiller index showed that in February, 2013, home values in 20 major markets have increased by about 9% over home values from the same time last year. This is the largest 12-month gain since May 20062. If you are currently living in an area that is seeing home value increases like this, it may be a good time to apply for a reverse mortgage loan.
Though the housing recovery is uncertain, you can take a loan out at your current value and that amount is guaranteed for a reverse mortgage loan, regardless of what happens with the recovery.
Another benefit of a reverse mortgage loan is the flexibility of how the loan proceeds can be disbursed. The loan proceeds are available as a line of credit, monthly payments or a lump sum. Borrowers can choose from available loan options that offer either a fixed rate or an adjustable rate.
Reverse Mortgage Loan Product Changes
Beginning April 1, 2013, the FHA suspended the standard fixed-rate reverse mortgage loan product. However, the HECM Saver is still available as a fixed rate option. The Saver product offers lower upfront costs, but borrowers will not be able to access as much of their equity as they would under the other HECM options.
Anyone considering a reverse mortgage loan should work with a trusted financial advisor to see which reverse mortgage loan option would be best for your needs and financial situation.
If you are interested in learning about a reverse mortgage or how you may qualify for a reverse mortgage loan, please contact us for more information at 866 751.6105.