Guaranteed Rate, a cutting-edge mortgage lender driven to be the nation’s top FinTech, adds fuel to its reverse mortgage program, a type of loan product for homeowners nearing retirement age that allows them to tap into the equity they’ve built up in their homes. Others use a reverse purchase money mortgage to right-size and buy their dream home in retirement. This new initiative gives more systems of support to loan officers as well as a new training program to certify loan officers in this type of product.
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Reverse mortgages flip the roles of lender and borrower, where the borrower receives payments from the lender in the form of reduced, or even eliminated, monthly payments, a line of credit that can be used for any type of expense or a simple lump sum. In addition, the property title remains in the borrower’s name, and they can continue to live on the property, though the homeowner remains responsible for all property taxes, home insurance, HOA fees, and home maintenance.
Homeowners aged 62 and older can take advantage of this kind of loan arrangement, provided that they own at least 60% of the equity of their primary residence and the home is FHA eligible. While this type of loan shares many similarities with home equity loans, the requirements necessary to initiate one generally allow for more flexible terms on the part of the homeowner.
“These mortgages fit a very specialized segment of the marketplace, but for those seeking financial flexibility, they can be a game-changer,” stated Jim Hettinger, Executive Vice President of Operations. “This ensures an extra measure of security for those looking to make their retirement years more comfortable.”
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Reverse mortgages are growing-balance loans so the loan balance increases, not decreases, over time, with the understanding that the mortgage will one day be paid off, usually by selling the home once the last surviving homeowner sells or leaves the home for good.
“Equity build-up over time is one of the most compelling reasons to purchase a home,” Hettinger added. “These loans give long-time homeowners a way to enjoy the benefits of that equity in their retirement years — all while retaining ownership and continuing to live in the house they call home.”
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