Reverse Mortgage

Did you know that it is possible to leverage the equity in your home? When buying real estate, we are used to taking a mortgage which accrues interest monthly, and you are supposed to make monthly payments. A Sperryville reverse mortgage is the complete opposite of that. You already have a Sperryville home, a lender gives you money upfront, the money accrues monthly interest, but you will not pay the money back until you move out or pass away. Strange, right? You must be wondering why would anybody decide to borrow against a property they struggled so hard to pay for. Here is how the Sperryville reverse mortgage program works.

What Is a Reverse Mortgage?

It is also known as a home equity conversion mortgage (HECM). This is a type of loan given to homeowners aged 62 years and above. The loan allows you to change a part of your Sperryville home equity into cash. Unlike home loans or second mortgages, you do not need to pay your loan until such a time when the home is no longer your principal residence or if you do not satisfy the obligations of the mortgage.

How Reverse Mortgages Works

Regardless of the idea in practice, not all qualified homeowners can get the entire value of their home even when the mortgage is paid off. Homeowners get an amount called the principal limit, which changes from one borrower to another. The amount is determined by:

  • The current interest rates.
  • The current market value of your home.
  • The HECM mortgage limit.
  • The age of the youngest borrower.
  • The eligible non-borrowing spouse.
  • How you decide to receive the payments.
  • The type of reverse mortgage you choose to take.
  • Other financial obligations or liens tied to your home.

It is usually possible to get a higher principle limit when:

  • The homeowner is older.
  • The interest rate is lower.
  • The property has a higher value.
  • The borrower has a variable rate of HECM.

There are various ways which you can choose to get your Sperryville reverse mortgage payments. They include:

  • Monthly payments.
  • A line of credit.
  • A lump sum.
  • A partial sum.

Types of Reverse Mortgages

Sperryville Reverse mortgages are designed differently to take care of various financial needs.

  • Home equity conversion mortgage

This is the most common type, and the federal housing administration insures it. The money can be used to serve any purpose, although the mortgage has a higher upfront cost. FHA issues HECMs.

  • Proprietary reverse mortgage

It is a private loan not secured by the government. This mortgage type gives a larger principal amount for properties with higher values

  • Single-purpose reverse mortgage

This is given by state & local government agencies and nonprofit organizations. The loan amount is usually smaller, and it is typically given to take care of a single specific need.

Check Eligibility

Who Is Eligible for a Reverse Mortgage?

It is not everyone who qualifies to get a reverse mortgage. For you to receive one, the primary homeowner must be 62 years or more, even if the spouse is younger. Here is the criterion that you should meet:

  • You must be living in the property as your primary residence.
  • You must be the owner of the house or have a large amount of home equity, 40% and above.
  • You must be current on property taxes and homeowners insurance before applying.
  • You must attend the HUD-approved counselling.
  • Existing mortgages must be paid off before or settled by the proceedings you get from the Sperryville reverse mortgage.
  • You must take care of your property and keep it in good condition.
  • Your home must be a single-family house, a multi-unit property with up to four units, a manufactured home built after June 1976, a condominium or a townhouse.

Advantages of a Sperryville reverse mortgage

  • As a borrower, you are not obliged to make monthly payments towards your loan balance.
  • The funds can be used for healthcare & life expenses, debt settlement, and other days to day bills.
  • The funds are a supplemental income for your retirement earnings.
  • The proceeds are tax-free.
  • As long as you meet the eligibility requirements, the loan is easy to apply.
  • The non-borrowing spouse, even if they are under 62, can live in the property for the rest of their lives even if the borrower dies.
  • If a borrower is facing foreclosure for an existing mortgage, one can use the proceeds to pay off the mortgage and stop the foreclosure.

Disadvantages

  • The loan is exorbitantly expensive.
  • If you pass away your heirs must repay the loan to continue living in the house otherwise your lenders will have to sell it.
  • You must maintain the property and pay homeowners insurance and property taxes.
  • The closing costs and other fees are higher, lowering the amount that gets to you.

A reverse mortgage in Sperryville is an excellent way for elderly homeowners to get additional income to supplement their retirement earnings. However, if the balance surpasses the value of your home, you might get into foreclosure or lose your home to the lender.

Sperryville is a census-designated place (CDP) located in the western section of Rappahannock County, Virginia, United States, near Shenandoah National Park. It consists of a village with two main streets along the two branches of the Thornton River, together with surrounding pasture- and farmland.[1] The population as of the 2010 Census was 342.[2]

The land on which Sperryville is located is part of 3,000 acres granted by King George II of Great Britain to Francis Thornton in 1731.[3]  This land was regranted to Thornton in 1751 by Thomas Fairfax, 6th Lord Fairfax of Cameron, owner of the Northern Neck Proprietary, after Fairfax won his suit to prevent the king from granting land in the Proprietary.[4] Part of this land was inherited by a descendant, also named Francis Thornton, in 1817.[5] He was a soldier in the War of 1812, became a Presbyterian minister, and was sent from his home in Fredericksburg, Virginia, to organize a Presbyterian church in what was then western Culpeper County.[6] In 1820 he began selling small lots of land along the main road (currently Main Street, VA Route 1001). The first deed was for a ½-acre lot “in a little town laid off by me, the said Francis Thornton Jr., and surveyed by Johnston Menefee … the village is in a flat adjoining the lands of John Menefee between the Pass Mill (today’s Fletcher’s Mill) and Thornton’s Gap.”[7] The village of Sperryville is named on an 1821 map of Culpeper County created by John Wood.[8]

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