Reverse Mortgages in Waukesha, WI: Your Complete 2024 Guide!
What Is A Reverse Mortgage In Waukesha, WI?
My name is Dennis Kahn and for 20 years I’ve been with TBH Mortgage, a Wisconsin reverse mortgage lender (WI). I work with clients who are trying to decide how to reverse mortgage their home. A reverse mortgage loan is a unique financial tool which lets older homeowners leverage some of the equity in their home to get cash that provides them with financial options in retirement. Wisconsin reverse mortgages are different from traditional Wisconsin mortgages in that there are no monthly mortgage payments. There are several payout options which allow homeowners to get the cash they need in the manner that suits them best to help them to enjoy financial peace of mind. The underlying fundamentals of reverse mortgages in Wisconsin are the same no matter which payment option you take.
Home Equity Conversion Mortgages In Wisconsin (HECM Loan)
A Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage loan and is federally insured by the Federal Housing Administration (FHA). There are specific requirements which must be satisfied to be eligible for a HECM reverse mortgage loan including age, property and loan, insurance and counseling requirements. Among the features provided by HECM reverse mortgages are flexible payments and federally insured financing.
General Characteristics of Reverse Mortgages
Wisconsin reverse mortgages (WI) are unique financial tools which can be employed by older homeowners who are generally 62 years of age or older. Homeowners who take out a reverse mortgage loan can borrow cash against the value of their principal residence.
Conditions for Monthly Mortgage Payments
For a typical mortgage in Wisconsin, the borrower must make monthly payments including principal, interest, taxes and insurance. For example, clients who take out a conventional mortgage to buy a home generally must make monthly payments during the life of the loan which can be 15 to 30 years in length. Additionally, clients who take out a home equity loan against the equity in their WI home must also make regular monthly payments. However, the unique characteristic of reverse mortgages is that there are no monthly mortgage payments required; instead the loan amount increases with accrued interest and fees. Please call us to learn more about reverse mortgages in Waukesha, WI and other areas.
Wisconsin (WI) Eligibility Requirements
There are several requirements which must be satisfied in order to be eligible for a reverse mortgage loan in Wisconsin (WI). The youngest title borrower must be age 62 or older and the property must be the borrower’s principal residence. The homeowner should have sufficient equity in their home.
Reverse Mortgages In Wisconsin And Home Equity
With a reverse mortgage homeowners can leverage the equity in their home to get cash. The borrower may take the cash in a lump sum, monthly installments or a line of credit or some combination thereof. The loan is usually repaid upon the death of the borrower, sale of the home or when the home is no longer the principal residence of the borrower.
Reverse Mortgage Loan Payments
Wisconsin (WI) reverse mortgage loan borrowers may elect to receive monthly payments in a lump sum, fixed monthly payments, a line of credit or some combination of the above. Each payout option offers certain advantages to borrowers depending on their financial goals.
Rates and Fees For Wisconsin (WI)
Reverse mortgage interest rates can be fixed or variable. Fixed interest rates offer costs which are predictable while variable rates vary over time. Wisconsin reverse mortgage lenders charge fees including closing costs, servicing fees and a mortgage insurance premium.
The Federal Housing Administration And The HECM Program
The FHA through its insurance program plays an active role in the HECM program by insuring the loan. This protects the lender as well as the borrower. If the loan amount exceeds the appraised value of the home, the insurance company pays the amount by which the loan exceeds the value of the home. The borrower or their heirs are not liable for this excess amount.
Homeowner’s Insurance and Property Taxes
Wisconsin (WI) reverse mortgage borrowers must pay their property taxes and homeowners insurance as a condition of their loan. The loan can become due and payable if the borrower does not meet their obligation to pay these ongoing expenses. Budgeting for these expenses is an important part of maintaining a well maintained reverse mortgage in WI.
Reverse Mortgage Loan Counseling Is Important In Wisconsin
Borrowers who wish to obtain a reverse mortgage loan must obtain counseling from a approved reverse mortgage counselor of the U.S. Department of Housing and Urban Development (HUD). The counselor educates the borrower of the details of the reverse mortgage loan including repayment, financial & eligibility requirements as well as discussing alternatives & helping the borrower in the decision making process.
Proprietary Reverse Mortgages In Wisconsin (WI)
There are also proprietary reverse mortgages in Wisconsin (WI) which are loans from private companies. These types of reverse mortgages in WI are not insured by the FHA. Borrowers who elect these types of reverse mortgages in WI should be homeowners with higher valued homes as some of these programs offer higher loan amounts.
How The Loan Balance Grows In Wisconsin
The accruing loan balance is among the most important features of reverse mortgages in Wisconsin. As the borrower receives disbursements, interest accrues on the loan and the loan balance grows. Borrowers should appreciate how the loan balance grows over time and impacts the equity in the home.
When Is The Reverse Mortgage Loan In Wisconsin (WI) Repaid?
The reverse mortgage loan in WI is generally repaid when the borrower dies, sells the home or no longer uses the home as their principal residence. At that time the loan balance including the principal limit, interest and fees are due and payable. If the home is sold, the borrower or their heirs receive any equity in the home after the loan is repaid.
Scam Protection
Scam artists unfortunately often prey on older homeowners who are seeking to reverse mortgage their home in Wisconsin (WI). Reverse mortgage borrowers should be sensitive to scams and only work with well established reverse mortgage lenders in Wisconsin. Check the lender’s credentials and do not accept obviously overly attractive offers.
Advantages of Reverse Mortgages & Additional Retirement Income
Many Wisconsin (WI) homeowners find that there are several advantages to reverse mortgages including additional income in retirement, the elimination of monthly mortgage payments and the ability to stay in one’s home. These qualities of reverse mortgages make them an attractive financial tool for many older homeowners.
Disadvantages Of Reverse Mortgages & Home Equity
Although there are many advantages to reverse mortgages for Wisconsin (WI) homeowners there are also some disadvantages. These include the accruing loan balance, the requirement to pay property taxes and homeowner’s insurance as well as possibly impacting inheritance. Borrowers should consider these before opting to reverse mortgage their home.
Reverse Mortgage Alternatives In Wisconsin (WI)
There are many reverse mortgage alternatives in Wisconsin including getting a home equity loan or home equity line of credit (HELOC) and selling the home. Each of these offer advantages and disadvantages and borrowers should consider all options before making a choice. Please call us to learn more about reverse mortgages in Waukesha, WI and other areas.
Shop Carefully For A Reverse Mortgage Lender
It is important to shop carefully when choosing a reverse mortgage lender in Wisconsin (WI). Look for a lender with well established reputation, competitive rates and clear fees. Reading reviews and getting recommendations from people you know is always helpful.
My name is Dennis Kahn and I’m here to help you with any questions or comments you might have regarding reverse mortgages in Waukesha, WI , and other areas. Please don’t hesitate to contact us.
About The Appraisal For Reverse Mortgages For Wisconsin (WI)
The appraisal for reverse mortgages in Wisconsin requires a license real estate appraiser and is an important part of the process of getting a reverse mortgage loan. The home’s appraised value establishes the amount of the loan. It is important to get an accurate appraisal to ensure that the homeowner gets the correct loan amount.
Mortgage Insurance Premium In Wisconsin (WI) Explained
The mortgage insurance premium (MIP) is a charge paid by the borrower to the FHA which insures the loan. This protects the lender in case of a loss and assures that the borrower or their heirs are not liable for any shortfall if the loan balance exceeds the value of the home.
Home Maintenance With A Reverse Mortgage
Borrowers of reverse mortgages in Wisconsin must maintain their home. Home repairs and the overall condition of the home must be kept in good repair. Maintaining one’s home properly protects the value of the home and the borrower’s investment.
Reverse Mortgages & Inheritance
There is one major consideration which Wisconsin reverse mortgage borrowers must consider and that is inheritance. As the loan balance grows, the equity remaining in the home is reduced. It’s important to discuss these considerations with family members and to consider the effects a reverse mortgage may have on their heirs.
