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Reverse Mortgage: Income Or Encumbrance?

On difficult times, friends (or financial advisers) may have advised you to apply for a reverse mortgage in Reno. Before considering this option, there are some questions you need to answer, and advantages and disadvantages of reverse mortgages and other related topics such as rate, costs, and requirements you need to know.

What is a reverse mortgage and how does it work?

A reverse mortgage is a loan where declare a property lien on the equity of your residential home. Older homeowners are the target customers of this loan. With this loan, you can take advantage of your home equity while staying in your current home. You do not pay monthly mortgage expenses but the loan becomes due when you move or die.

A reverse mortgage can be your last option to earn income based on the equity of your home. Every month, you receive a part of the accumulated home equity from the bank where you applied for the mortgage.

You can use the proceeds for whatever purpose. When you decide to move out (or you die), the bank sells your home property to pay for the loan you borrowed. If the selling value is greater than the repayment value, the difference will be awarded to you (or your heirs in case you died). This is where the income-generating feature of the reverse mortgage in Reno comes in.

What are requirements for a reverse mortgage?

You must be 62 years old and above to be eligible. The house as a collateral is your residential home for at least 12 months. Furthermore, you own the house. If you will use the proceeds to pay a mortgage, the balance must be significantly lesser than the equity of your home. The process and requirements are stringent and the amount of loan depends on these requirements.

Generally, the older you are and the higher the value of your property is, the higher your loanable amount is. But in some cases, the loan amount may be lower despite your older age. One instance is the value of the mortgaged property if you are using the loan money for pay mortgage balance of your house. In some way, this is a refinancing option on your part.

What are the pros and cons of a reverse mortgage?

No monthly payment requirements

Lenders are not strict with regards to the purpose of getting a loan.

You can use to refinance a mortgage or pay repairs for your home.

The monthly funds received from the bank can improve your cash flow.

Fees and closing costs are sometimes high.

You must maintain the house. You need to pay for repair and maintenance costs while the loan is ongoing.

You must pay property taxes and insurance. Despite the lien, you are still the owner of the house. Keeping your house free from someone elses claim other than the lender remains your responsibility.

A reverse mortgage in Reno can limit your options in keeping the house as an inheritance. Remember, your house is the lien to a loan. Even if you own it, you forfeited some rights of ownership. That ownership includes the right to sell the property to another person aside from the lender.

A reverse mortgage diminishes the value of your property.

How to find a reverse mortgage lender?

The first thing to consider is the lenders appraising system. Ensure that the lender has fair and systematic appraising methods because one factor in determining the loan money is the value of your house. A little knowledge on fair market values is an advantage on your part. If you have to ask for a second opinion, you can do so. The second factor is its license or permits to offer such services. The Federal Housing Association regulates the mortgage industry and all lenders engaged in mortgaging.

What are the interest rates for a reverse mortgage?

The interest rates vary from one lender to another. Some lenders may charge as high as 4% for a fixed rate and 3% for adjustable rates. You can receive the money depending on the type of mortgage you avail. You can receive the money either a lump sum, fixed payment every month or line of credit. The manner of collection may also be a combination of these methods.


A reverse mortgage in Reno is your last resort if other avenues of earning an income during your old age. There are many factors that you should consider. These factors include interest rates and closing cost. Weigh in the pros and cons listed above and consult an experienced loan officers from a reputable company like, Fairway. You can call or send an email for your questions.

Jill Reid, a Fairway Independent Mortgage represenative, provides Reno and Sparks homeowners with expertise with mortgage related issues such as refinancing and mortgage planning.

View the video below to hear what Jill's clients have to say:


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