Find the Best Reverse Mortgages in Richmond, VA

Different types of reverse mortgages in Richmond

Richmond residents often take out reverse mortgages to supplement their income, make home improvements or take care of medical bills. According to Zillow, the average home in Richmond is worth around $250,000, giving residents access to significant home equity.

If you're considering a reverse mortgage:

1. Calculate how much money you need
2. Determine how much your home is worth
3. Find the right type of reverse mortgage
4. Compare costs and fees for different mortgage companies

There are a number of different reverse mortgages available in Richmond, including:

• Single-purpose reverse mortgages: This type of reverse mortgage is often the least expensive option, but the lender stipulates the use of the money. For example, the lender may state that the borrowed funds need to go towards home repairs. Single-purpose reverse mortgages are suitable for low- or moderate-income borrowers that need funds for a specific project or payment.
• Home Equity Conversion Mortgages: HECMs are backed by the Federal Housing Administration, and the funds they provide can be used for any purpose. The upfront costs for these loans can be high, but they usually don’t have an income requirement. The maximum amount that you can borrow with an HECM is $765,600 at the time of publishing, according to limits set by the U.S. Department of Housing and Urban Development.
• Jumbo reverse mortgages: Also called proprietary reverse mortgages, these loans are backed by private lenders who offer more than the HUD maximum, sometimes up to several millions of dollars for those who qualify. The interest rates tend to be lower with jumbo reverse mortgage loans, but the total loan and payback amounts are much higher than average. This type of loan is an option for those with high-value homes in neighborhoods like Wilton or Windsor Farms.

Richmond’s reverse mortgage requirements

According to HUD, Richmond residents who want a reverse mortgage must:

• Be at least 62 years old
• Own their property or have a significant amount already paid
• Live at the property as their primary residence
• Partake in a consumer information session hosted by a HECM counselor
• Have no delinquency on federal debt
• Have the financial resources to pay property taxes and property insurance

Upon receiving your application, the lender should also do a credit check and verify that you make timely payments for flood insurance premiums and real estate taxes.

Properties must be one of the following:

• A single-family or two- to four-unit home occupied by the borrower
• A HUD-approved condominium project
• An FHA-approved condominium or manufactured home

After your application is approved and you can start receiving funds, you may be able to choose how often you receive the funds. Your options include:

• A lump-sum payment: With a lump sum, you receive all funds at once as a single disbursement. Of all the options, it’s the only one that has a fixed interest rate. People commonly use lump-sum payments with HECMs to buy new homes.
• Monthly payments: With this option, you receive monthly installments from the lender. Tenure payments allow you to receive funds as long as you live in the house, but term payments let you receive them for a set amount of time, usually between five and 10 years.
• A line of credit: Rather than receiving payments monthly or in full, you can take funds from a line of credit as you need them. A line of credit does not immediately gather interest you have to repay, but as funds are withdrawn, they do accumulate interest.
• A combination: Some lenders allow you to combine the dispersal methods above. For instance, you can enter into a term payment agreement along with getting access to a line of credit. This means you could receive fixed monthly payments for a period determined upfront, then receive more money through a line of credit if you need it after the term.

Richmond reverse mortgage FAQ

Do you need good credit to get a reverse mortgage in Richmond?

There is no minimum credit score requirement to obtain a reverse mortgage in Richmond. However, lenders may look at your credit history to determine your ability to pay your taxes, property insurance, and any fees or interest.

How does a reverse mortgage work in Richmond?

Homeowners in Richmond can use a reverse mortgage to convert a portion of their home equity into cash. Borrowers receive funds from lenders, and, if they have a mortgage balance, use a portion of these funds to pay off their existing mortgage. The final loan balance is due after the borrower passes away, moves out or fails to meet the requirements to keep their reverse mortgage.

What is the downside to a reverse mortgage in Richmond?

The more home equity you use in your reverse mortgage, the less there is to leave to your heirs or take with you should you sell the house. Also, like any loan, interest increases the total cost of the loan over time, and reverse mortgage fees can be higher than those accompanying traditional loans.

How does a reverse mortgage get paid back?

Reverse mortgages are usually repaid in a lump sum at loan maturity, which can be when the borrower sells the house, passes away or permanently leaves the home. It can also become due if the borrower neglects the house or fails to pay real estate taxes. If the borrower cannot pay, the lender has the right to seize their property.