Consider a Reverse Mortgage
Why Have One?
A reverse mortgage is a very useful tool for certain property owners, and buyers.
If a property owner is 62 years of age, he/she may be eligible for this type of loan for which there is no standard loan approval such as for a regular conventional or FHA loan. No FICO score is considered, but there must be enough income to show ability to pay property taxes and home insurance, plus homeowner association dues if applicable. Once those are met, the property owner is able to take out a reverse mortgage line of credit, according to current interest rates and guidelines pertaining to value of the property, i.e., an appraisal.
If a property owner wants to sell and only has the current equity to purchase with, using a purchase reverse mortgage can be a great tool, while again meeting the basic requirements mentioned above.
Sometimes reverse mortgages have been criticized for their expense, and touted as poor choices. Yes, they are a little more expensive than a standard purchase loan; and the borrower must agree to maintain occupancy for at least 6 months out of the year and send proof of insurance to the lender, but most lenders want to see proof of insurance anyway.
Yes, the monthly payment is added onto your loan balance each month, and perhaps an owners is concerned about not leaving an inheritance. But considering what someone's overall retirement security may be, a reverse mortgage may allow that person to keep their retirement income without having to spend monthly payments on a traditional mortgage. If there is equity left in the property after paying back the loan, the heirs can receive it. If there is no equity left, there is no balance owed by the owner's estate. Preserving the borrower's quality of life should probably be a main priority especially if there is no other financial help available to that person.
The borrower must enroll in a counseling session, typically arrange or referred to by the mortgage lender.
Finally, these are FHA loans, which means that if you own a single family home, including a PUD, or other 1-4 units you live in, the property is eligible--but a condominium must be located in an FHA approved complex under current condo rules for FHA loans.