Significantly lower interest rates nationwide could mean opportunities for seniors with looming mortgages and other debt. Estate planning can be a complicated task, but with current rates likely to stay low for a while, now is the time to consider applying for a reverse mortgage to alleviate some of that debt.
What is a Reverse Mortgage?
A reverse mortgage is a type of loan that lets you tap into the equity of your house. By doing this, you are able to receive money that does not need to be repaid until you move out of your home.
There are different types of loans, but the most popular are Home Equity Conversion Mortgages (HECM). HECMs are federally-insured and backed by the U.S. Department of Housing and Urban Development. They are especially popular because they can be used for anything from medical bills to home renovations.
How Important are Interest Rates?
Generally, the HECM principal limit you receive will be higher the older you are, the lower the current interest rates, and the more your property is worth. The state of Idaho has a relatively high median home market value compared to the rest of the United States; $334,900 compared to $289,000. Combining that with today’s historically low interest rates means that those who qualify for the loan could get a considerable amount of home equity paid out to them.
You can choose from a HECM with a fixed rate (you’ll receive a lump-sum payment), or a variable rate. With a variable rate, you can pick from equal monthly payments, a line of credit, or a combination of the two.
Lower interest rates mean that there will be less interest accrued over time, in turn directly affecting how much equity is left at the end of the loan.
There are resources available to calculate both the interest rate and approximate principal you will receive, so you can get a general idea if you want to take advantage of this opportunity.
If you are in the Boise area and looking for more information or want to apply for a reverse mortgage for your home, don’t hesitate to contact the team at Idaho Reverse Mortgage! We are happy to help, at any time.