A Comprehensive Guide to Choosing a Reverse Mortgage Lender in Hawaii

Are you 62 years or older? Have you repaid more than 50% of your mortgage?

Well, if so, you qualify for another loan against your house. However, unlike other types of loans, you won’t have to pay for it while alive and living in the said home. Yes, 62 years and older, with considerable equity in the house (repaid more than half of current mortgage), then you qualify for a reverse mortgage.

Here is the deal with the mortgage.

A forward mortgage is the one you took to buy your current home in Hawaii. A reverse mortgage, on the other hand, is a loan taken out by senior citizens mostly to support their retirement fund needs due to limited income. The reasons seniors take Hawaii home loans vary, from to clear part of the forward mortgage, care, and lifestyle needs, and even home repairs, among others.

However, before you jump into signing on the dotted lines, you should know there are risks involved. Also, if you intend to pass the house to your heirs, a reverse mortgage is a bad idea. Below is a comprehensive guide to help you in choosing the right mortgage lender in Hawaii:

Understand the different types of reverse mortgage

In simple terms, a reverse mortgage is converting your home equity into usable cash. The reverse mortgage loan becomes due at the passing of the borrower, and the bank proceeds to sell the home to clear the debt.

You can choose either a Fixed Rate Mortgage or an Adjustable Rate Mortgage. And that’s not all within those two types; again, there are variations. There is the home equity conversion mortgage or HECM for properties whose value is below 600K. Then theirs is a jumbo reverse mortgage or proprietary reverse mortgage for homes of higher value.

Consult with an expert

You need to consult first before proceeding to take any form of the reverse mortgage. Look for a reverse mortgage expert with years of experience and sit down and open about your needs for the loan. Maybe you want to take the credit to purchase a different home from the one you are currently living in. That is possible too, and the loan will be due once you move away permanently.

Knowledge is profit; the better informed you are, the more profitable your loan will be to your retirement years. The best place to start is to ask for referrals to a reputable consultant in Hawaii from fellow senior citizens. A consultant can be a local mortgage broker, too, who can help you shop around for the best lenders.

Meet and speak personally to the lenders

After consulting and you have a list of reputable lenders, the next job is to do a background check. Confirm how many complaints have been reported by senior citizens about the loan they took from a lender. Naturally, a lender with lots of complain is a red flag.

In the past senior citizens have fallen into the fraud of reverse mortgage, and you may want to be careful. Therefore, it is vital that you meet each lender and judge their personality and how they treat their clients. Don’t be afraid to ask questions.

It is also an opportunity to know what each lender is offering. When you take a reverse mortgage, there are various offerings by lenders on how you can receive the proceeds. There is a lump sum payment, monthly payment or annuity, term payments, line of credit, and even a combination of either two.

It can be overwhelming to choose the right payment schedule. Look at the level of transparency, does the lender allow inclusivity of family member is meeting before one takes the loan.

Wrap up

A reverse mortgage is a better choice for retirees looking for extra cash without depleting their home assets. It is a lifesaver to seniors’ citizens who would have otherwise been forced to downsize, sell their homes, and move to a retirement home due to financial pressures. However, one still needs to pay property taxes to avoid foreclosure. And of course, insurance.

Nevertheless, one is required to complete a counseling report by the Federal Housing Administration (FHA). This is a precaution to ensure the retiree is not taking the loan for reckless spending. Also, changes in laws ensure that borrowers are not victims of a scam.

Posted in: Personal Finance

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