Is a Reverse Mortgage in Hawaii Right for Me?

Reverse mortgages can be a difficult concept to understand, especially when you hear such conflicting information about it. You may not know whether a reverse mortgage will improve or hurt your financial circumstances. If you are a good candidate for a reverse mortgage, you can lower your bills and give yourself another reliable source of income.

How Does a Reverse Mortgage Work?

A Home Equity Conversion Mortgage, also called a reverse mortgage, is almost exactly as it sounds. When you have a regular mortgage, you make payments to your lender in exchange for the equity you earn in the property. With a reverse mortgage, your lender makes payments to you. With those payments, your lender claims a larger share of the equity in your home. When your house is sold, the lender takes its portion of the equity and the remainder, if any, goes to you or your heirs.

How Much Can I Get From a Reverse Mortgage?

The Federal Housing Administration enforces a number of rules for people who want to apply for a Hawaii reverse mortgage. The first guideline, however, is practical. You must have enough equity in your home to justify the loan. Reverse mortgages are made based on a percentage of the equity you have in your home. There are also fees for the process, at the beginning of the loan and when the home is eventually sold. You will be expected to pay interest on the money you receive, although there are several options you can select for paying that interest. You can also decide how to receive the money, whether in monthly payments or one lump sum. FHA caps the amount anyone can receive at $625,500, although you may receive less if your home has a lower value.

Am I Eligible for a Reverse Mortgage in Hawaii?

FHA requires that each applicant for a reverse mortgage meet the following conditions. They must:

  • Be over age 62
  • Live in the home as a primary residence
  • Be current on any federal debt
  • Own a significant amount of equity in the property
  • Pay all insurance, property taxes and other fees

If any of these restrictions are not met, the applicant is not eligible to receive a reverse mortgage. Once FHA has approved your loan, you must stay current on all payments. Should any related account become delinquent, all debts and fees will be due to the lender at that time.

Only you can decide if these terms mean that a reverse mortgage is right for you. Zillowestimates that the average value of a home in Hawaii is currently about $538,000. If you own your home outright, that sum presents a lot of opportunity for you to increase your monthly income while you still retain your residence and the title to your home. For more information about how a reverse mortgage might fit into your life, contact us today.

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