A reverse mortgage is a loan from the U.S. Government for 50% to 75% of the value of a home owned by a homeowner aged 62 and older. Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to the homeowner. The funds from a reverse mortgage are tax-free. The loan doesn't have to be repaid in the homeowner's lifetime, however, when the homeowner dies, the money received plus approximately 4% interest is repaid by their estate. The loan is repaid when the homeowner ceases to occupy the home as a principal residence, due to the homeowner (the last remaining spouse, in cases of couples) passing away, selling the home, or permanently moving out.
Alaska Home Equity Conversion Mortgage (HELM) is a type of reverse mortgage that allows homeowners in Alaska who are at least 62 years old to convert a portion of their home equity into usable cash, without having to sell their home, give up its ownership, or make monthly mortgage payments. This financial product is specifically designed to help seniors supplement their retirement income, meet daily living expenses, pay for medical bills, or fund other financial goals. With an Alaska HELM, seniors can access their home equity either through a lump sum payout, a line of credit, fixed monthly payments for a set period, or a combination of these options. The amount that can be borrowed depends on various factors, including the age of the youngest borrower, the current interest rates, the appraised value of the home, and the program limits set by the Federal Housing Administration (FHA). The Alaska HELM follows the guidelines and regulations established by the FHA, which is a part of the U.S. Department of Housing and Urban Development (HUD). By leveraging their home equity, seniors can enjoy the benefits of a reverse mortgage while still retaining ownership of their home as long as they maintain their responsibilities, such as paying property taxes, insurance, and maintaining the property as their primary residence. Different types of Alaska Home Equity Conversion Mortgages or reverse mortgages available in Alaska may include the following: 1. Standard HELM: This is the most common type of reverse mortgage and offers flexibility in accessing the loan proceeds while allowing borrowers to remain in their homes. 2. HELM for Purchase: This unique program enables seniors to purchase a new home using a reverse mortgage, eliminating the need for making a large down payment. 3. HELM Line of Credit: This option provides seniors with a credit line that they can draw upon when needed, allowing them to better manage their financial circumstances. 4. HELM Fixed Monthly Payments: With this option, borrowers can receive a fixed monthly payment for a specific period, providing a steady income stream to support their retirement needs. 5. HELM Adjustable-Rate: This reverse mortgage option allows borrowers to receive their loan proceeds in various ways, such as a lump sum, line of credit, or monthly payments, with an adjustable interest rate. It is essential for seniors in Alaska to carefully consider their financial needs, goals, and responsibilities before proceeding with a Home Equity Conversion Mortgage. Consulting with a reputable reverse mortgage counselor and mortgage lender who specializes in these products can help educate homeowners about the available options, interest rates, associated costs, eligibility requirements, and potential long-term effects on their financial situation.
