Seniors who need extra cash or income to cover unexpected expenses can borrow against their home equity and get a loan that is known as a reverse mortgage. For those who plan to put their houses in living trusts or those with one already, the path to getting this loan would be a bit rockier.
This kind of loan can provide you with the extra income to cover home repairs, basic living expenses, renovations, and unexpected costs. Even with the loan’s known disadvantages, reverse mortgages remain popular. A reverse mortgage loan, inspite its limitation, could still coexist with living trusts.
Mortgage First, Then Trust
The majority of reverse mortgage lenders wont’ object when borrowers transfer the title to their houses to their living trust even after you take out a reverse mortgage as long as you notify the lender about it.
Trust First, Then Mortgage
In case your house is in your trust already and you find out that you are eligible for a reverse mortgage, you can still get the loan provided that your trust document as well as the beneficiaries satisfy all the needed requirements.
Transferring A Home With A Reverse Mortgage Into A Living Trust
In case you’ve already got a reverse mortgage loan on your house when you created your living trust, as a trustee, you can use the real estate powers given to you to transfer it into your trust. But before you initiate a transfer, you first need to notify your lender. The latter needs to check that your trust agreement will meet the requirements needed if you were a trustee obtaining a reverse mortgage loan on a house that’s in your living trust already. For instance, the lender would confirm that all existing beneficiaries who are named in the trust can live in the house for as long as they want. The lender may have other stipulations like asking the trust to legally assume the obligation of the borrower to pay off the debt to avoid difficulty in executive the mortgage, so immediate notification is important.
Qualifying For Reverse Mortgages
Now let us deal with the second situation. Getting a reverse mortgage for a home whose title is already in your living trust. You will most probably consider the most famous kind of reverse mortgage, the HECM or the Home Equity Conversion Mortgage. HECMS are issued by the government but the one who backs them is the federal government. The lender will make the cash available to eligible borrowers from their home equity.
The borrowers must be at least 62 years old in order to qualify for a reverse mortgage Myrtle Beach. They must be using the house as their primary residence and should own the home or have enough home equity.
The existing interest rate, age of the borrower, and other factors will determine the amount you’ll qualify for. Approved borrowers could choose to get unscheduled installments like a line of credit, regular payments, a mix of both, or a lump sum.
Getting A Reverse Mortgage If Your House Is In A Living Trust
Let’s say you’ve qualified for a reverse mortgage loan, you still have to get one. To get it on a house that is currently in your living trust, you have to confirm that your trust as well as all the borrowers meet the requirements set by the lender.
Before you take out a reverse mortgage loan on your home, you should check that your trust provides you with the power to get this done. Once you’ve made sure that you’ve can encumber trust real estate, you should check if you meet the requirements set by the lender for houses that are held in living trust. Whether the reverse mortgage or your living trust came first, you don’t have to pay the loan until you as well your beneficiaries sell the home or transfer title, pass away, leave the house, or violate the terms of the loan agreement.
Call Reverse Mortgage Specialist now for additional guidance about reverse mortgages and living trusts.