2 Creative Mortgage Tools You May Not Have Considered

Many consumers are missing out on genuine opportunities, as they aren't aware of the benefits of these 2 lesser-discussed mortgage products: Reverse Mortgages and FHA 203K Loans.

While these mortgage types may have had somewhat of a bad rap, they actually can be highly beneficial for a variety of clients with different backgrounds, when taken on with a bit of knowledge and care.  Here is what you should consider.

Reverse Mortgages

Reverse mortgages are beneficial typically to homeowners who have substantial equity in the home and are without other primary sources of income.  Aging homeowners typically find this type of mortgage suitable to their situation.  Here are some of the reasons why you may want to look into a reverse mortgage:

• Seniors over the age of 62 have the ability to use a reverse mortgage to access the equity of their current residence AND to purchase a new home (in most US states)
• Older adults, particularly in their 80s and 90s, are taking advantage of the market and are liquidating their primary residence in order to seek out senior living communities, making a reverse mortgage a great option for these homeowners
• Reverse mortgages can be used to make home modifications for "age-in-place" homeowners - that is, homeowners (typically older) who prefer to age at home rather than moving to a senior living community

Reverse mortgages aren't for everybody, and not all reverse mortgage products are the same.  One important caution is that they are frequently considered "expensive" due to the rates or fees charged by the reverse mortgage lender.  That said, for the right audience, that higher cost is often outweighed by the benefit.

FHA 203K Loans

FHA 203K loans are are highly useful to prospective homebuyers of all ages who interested in purchasing a home that has a significant need of repairs:

• Entry-level homes in need of repair and updating are hitting the market (coinciding with our population aging), and many find the FHA 203K loan to greatly help with this process
• First-time homebuyers typically find FHA loans help to increase affordability
• Senior sellers often prefer to list homes "as is" rather than make the repairs the home needs.  The FHA 203K loan helps expand the search pool for prospective homebuyers to help include these types of homes

FHA 203K loans do come with restrictions, and they must be executed in a very prescribed manner.  Make sure you get all the details from your lender before taking on this type of loan.

In short, these two types of mortgages can be highly useful for clients with specific needs.  We aren't licensed mortgage brokers, accountants, or attorneys ourselves, but we always encourage consumers to consult the appropriate professionals before making major financial and legal decisions.

Wondering how to get started down the path to your next home?  Don't hesitate to send me an email or give me a call, and I'll be happy to discuss.