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.
A Home Equity Conversion Mortgage (HELM), commonly known as a Reverse Mortgage, is a financial product designed for homeowners in North Carolina who are 62 years or older. It allows them to convert a portion of their home equity into cash without selling their property or making monthly mortgage payments. In North Carolina, the different types of Home Equity Conversion Mortgage — Reverse Mortgages include: 1. Fixed-Rate HELM: This type of reverse mortgage provides a predetermined amount of funds at a fixed interest rate. Borrowers receive a lump sum or opt for a specific amount initially, and the interest rate remains fixed throughout the loan term. 2. Adjustable-Rate HELM: With an adjustable-rate reverse mortgage, borrowers have the flexibility to choose how they receive their funds, whether as a line of credit, monthly installments, or a combination of both. The interest rate changes periodically based on market conditions, which can affect the loan balance. 3. HELM for Purchase: This reverse mortgage option allows senior homeowners in North Carolina to purchase a new primary residence using the loan proceeds. This is especially beneficial for individuals looking to downsize or relocate, as it eliminates the need for a substantial upfront payment. 4. HELM Refinance: Homeowners who already have a traditional mortgage in North Carolina may consider refinancing it into a Home Equity Conversion Mortgage. This allows them to eliminate their monthly mortgage payments, access additional funds, or change the loan type to better suit their financial goals. North Carolina Home Equity Conversion Mortgages — Reverse Mortgages provide homeowners with a range of potential benefits. These include supplementing retirement income, paying off existing debts, covering healthcare expenses, financing home improvements, or simply adding to their financial security. To qualify for a North Carolina HELM — Reverse Mortgage, homeowners must own their home outright or have a significant amount of equity remaining. The loan amount is determined by factors such as the borrower's age, current interest rates, property value, and the chosen repayment method. It is essential to note that a Home Equity Conversion Mortgage — Reverse Mortgage is a loan and must be repaid eventually. Repayment typically occurs when the homeowner sells the property, moves out, or passes away. In such cases, the loan balance, including accrued interest and fees, is paid off using the proceeds from the home's sale. Any remaining equity is then passed on to the homeowner or their heirs. Before considering a North Carolina Home Equity Conversion Mortgage — Reverse Mortgage, it is crucial for potential borrowers to consult with a reputable loan counselor or financial advisor. They can provide personalized guidance, discuss eligibility requirements, explain the potential costs or risks involved, and offer insight into how this financial tool can align with their long-term financial goals and retirement plans.
