Your parents can access additional funds through a lump sum payment, a line of credit or monthly installments. Proceeds from a reverse mortgage first pay off the current mortgage on the home, if applicable. They will need to live in the home as their principal residence, maintain it, and pay taxes and insurance. Your parents may be eligible for an FHA Reverse Mortgage if they are 62 or older, meet financial requirements and have sufficient equity in their home. Your parents could live the remainder of their years not paying a mortgage* and maybe even getting a monthly check as long as they live in their home. The best way to decide is to balance your expectations for using any particular loan with the peace of mind that can come from being assured of stability, even if your time frame changes. A hybrid ARM provides a guaranteed savings but for a limited period of time. The Bottom Line – A fixed rate loan provides the certainty that it will never change. As well, you would already be accustomed to paying more. If the rate ultimately adjusts up, your balance will be lower and the payment change will be less as a result. Managed Risk – One way to prepare for the possibility of a higher rate and payment later is to pay extra principal each month to reduce your balance faster. You have the advantage here because you control the timing of your next step. If you sell your home or refinance again prior to that happening, it’s their loss. Inside Information – Lenders give you a discounted rate up front because they know the rate will float with the market later on. During this time, you save on interest cost, and even though your payment is less, you still pay more toward principal. Lower Rates, Flexible Terms – Today, most ARMs are “hybrids.” They start out at a fixed rate for the first 3, 5, 7 or even 10 years. If you think you might refinance for any reason anytime in the next seven years, read on. Cash out transactions for improvements, additions, repairs, weddings, tuition and major purchases occur with great frequency. Home buyers often focus on obtaining the lowest possible rate on a 30-year loan, but most mortgage loans are used for only three. The truth is ARMs are not all the same and can have great value. While the increase makes these loans less advantageous than in the past, they are still a good option if your needs and situation preclude you from qualifying for a conventional loan. Both the upfront and ongoing mortgage insurance costs have become more expensive. Purchase and Rehab Financing – The FHA 203k loan can be a great option for the purchase of homes in need of a quick spruce up or even major remodeling when you don’t have sufficient funds to do it on your own. Streamlined and Cash Out Refinancing – Subsequent refinancing can be far easier and more lenient than with conventional loans. Lower Total Cash to Close – Sellers can help pay closing costs, and borrowers can receive gift money toward their down payments. Higher Loan Amounts – In some areas, FHA maximums can exceed conventional loan limits. Low Down Payments – As little as 3.5% down will work in most instances, and 5% covers most others.
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NMLS # 169716: Corporate Office: 52 Paseo Covadonga St., San Juan, PR, 00901 78 Licensed by the Commissioner of Financial Institutions of Puerto Rico #IH-040 California: Department of Business Oversight under the California Residential Mortgage Lending Act, License #41DBO-46418 Florida: Florida Mortgage Lender License MLD821 Georgia: Georgia Department of Banking and Finance # 47451 Illinois: Illinois Residential Mortgage License # MB 6761152 Tennessee: Tennessee Department of Financial Institutions #128757 Texas: Texas SML Mortgage Company Branch License NMLS ID #1392959, for additional consumer information refer to the Texas Consumer Complaint and Recovery Fund Notice located on our main website legal page.
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