Reverse mortgages have increasingly gained popularity over the years specifically among seniors who want to convert their home equity into a financial resource without selling their residences. In Wales, Wisconsin, the trend is just the same. This article delves into the benefits and eligibility of a reverse mortgage making it a one-stop guide for the residents of Wales, WI, considering such a financial option.

A reverse mortgage is an available loan type for homeowners above the age of 62, which enables them to convert part of their home equity into cash. Unlike the usual mortgage case where a borrower pays their lenders a monthly installment, in a reverse mortgage, the reverse happens: the lenders pay the borrower. When the homeowner decides to sell the house or lives away permanently, the loan is repaid.

• Additional Income: Reverse mortgages provide added income for retirees since it generates a stream of income to help them pay for living expenses, medical bills, or any other expenses.
• No Monthly Payment: A homeowner is under no obligation to pay anything in the form of monthly payments on the loan, which effectively lessens the burden of monthly expenses.
• Home Retention: Homeowners can live in their house, thus maintaining their lifestyle and communities.
• Multiple Payment Options: Borrowers are given the options for payment in the form of a lump-sum payment, monthly payment, a line of credit, or a combination of these options.
• Tax-Free Income: Typically, the money received in reverse mortgages is tax-free; thus, you are not required to pay taxes on that money since it is treated as a loan advance and not as income.
• Protection Against Falling House Prices: The borrower or their heirs owe nothing if the home's value drops below the loan amount, as long as the home is sold to repay the loan.

• Age: One must be at least 62 years of age.
• Primary Residence: The home must be the primary residence of the applicant.
• Home Equity: High levels of home equity are generally required, often over 50%.
• Financial Assessment: Lenders will conduct some kind of financial assessment to evaluate the likelihood of the borrower keeping up with property taxes, insurance, and other obligations.
• Counseling: The prospective borrower must attend an information session with a government-approved housing counselor to ensure he or she understands the implications of a reverse mortgage.

• Home Equity Conversion Mortgage (HECM): This is the most commonly available reverse mortgage, available through the FHA.
• Proprietary Reverse Mortgages: These are private loans that are backed by individual companies, sometimes for higher-valued homes.
• Single-Purpose Reverse Mortgages: Offered by some state and local government agencies and non-profits, these are used for only one purpose, which is specified in the agreement—for example, home repairs or property taxes.

Looking for a reverse mortgage in Wales, WI? Talk to Dennis Kahn today!