A reverse mortgage in Indiana allows senior homeowners in the state to borrow money against the equity of their homes in order to pay for daily living expenses and other costs. These mortgages are readily available and provide many benefits to seniors who qualify.
In a reverse mortgage, your lender takes ownership of your home equity, whatever the amount may be, and makes payments out of that equity to you as long as it lasts.
You can spend this money on anything you need or want. Most seniors put this income toward medical bills, senior living, and day to day expenses, but you can also use it to pay for a luxurious vacation or to make a down payment on a new home.
Reverse mortgages have three forms:
The most common source is the FHA HECM reverse mortgage, which is insured by the Department of Housing and Urban Development (HUD). This article will focus on HECM reverse mortgages.
Homeowners aged 62 and older who own their home outright and have most of their mortgage paid off. If the current mortgage is not paid off, the initial reverse funds or some combination with out-of-pocket cash must be used to deplete the remaining balance. Credit score is not a qualifying factor.
There are several costs associated with securing an HECM reverse mortgage in Indiana, including but not limited to:
You can select one of several different payment arrangements that lenders offer:
If none of these methods suits your financial needs and goals, you can arrange a custom payment plan with your lender to get the money you need when you need it.
The equity need not be repaid until you move, sell, or pass away. Once you take out a reverse mortgage, your lender will own the equity of your home. The lender won’t own your home, which remains in your possession for the remainder of your life or until you move into a new home.
If you live in the home until you pass away, the responsibility of paying back the reverse mortgage will transfer to your heirs, who will also receive you home. Your heirs can then sell the home to pay back the debt. If you think your home may sell for less than the loan amount in coming years, don’t worry. The government has established laws that ensure lenders can’t collect more than the value of the home, even if the home value decreases.
No two lenders offer the same reverse mortgage terms and rates. Research as many lenders as you can to determine what you’ll need to pay in closing fees and what interest amounts will be deducted from your equity. You should work with the lender who offers the best terms and rates.
When you’re taking out a reverse mortgage, fees can add up quickly. You should find out from at least four or five lenders what fees they charge before you begin your application. For more information about getting started on your new loan, read our reverse mortgage checklist.
The Indiana Family and Social Services Administration provides a number of aging resources on their website. Many, like transportation and meal assistance, enable seniors to continue living independently at home. These services are available statewide, including popular cities like Indianapolis, Terre Haute, Bloomington, and Evansville.
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