Entries Tagged 'Reverse Mortgage Info' ↓

Reverse mortgages are becoming more and more popular. A reverse mortgage is for homeowners 62 years of age and older. There are no special requirements to qualify for this mortgage. It is exactly what the name says, the payment is reversed. Instead of you making a payment to a lender, a lender makes a payment to you. It is ‘reversed’ from the standard way of a payment.

This type of mortgage turns part of the equity in the home into income (or cash) that is tax free. The homeowner is getting cash out of the home. This is done without having to sell the home, part with the title or add on a new mortgage payment. The mortgage balance rises each time money is taken from the lender and interest is added to the balance

The amount of money the homeowner qualifies for depends on many factors: age of homeowner, home value appraisal, interest rate and lending limit. In general, the older the homeowner and the higher the value of the home will get more money. The money a homeowner receives from a reverse mortgage can be used for whatever the homeowner needs it for. Some have used it for extra retirement income, to repair or change the home, medical expenses, debt, upgrading a vehicle, taxes, stop foreclosures or even take a vacation.

The money from the reverse mortgage can be given out in many different ways. A line-of-credit lets the homeowner take money out when it is needed. Term payments are fixed, monthly and for a certain time period. Tenure payments are given out as long as you live in the home. There is also a modified term and modified tenure to consider. No payments are required until the homeowner no longer lives in the home, in the case of death, selling of the home or moving out completely.

There are many different types of homes that are eligible for the reverse mortgage. Those include single-family homes, condos, mobile homes and town homes. When applying for a reverse mortgage there are some fees that will occur. Some will include the origination fee, insurance, appraisal fee and closing costs.

With reverse mortgages becoming more popular today, homeowners need to know the basics before they decide if this is something right for them.

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Today’s market on housing is going asunder. So what does that mean for those that have put many hard years into their homes?

For those borrowers that are 62 or older, it means that there is something they can do. Reverse Mortgages are a great solution. Also known as Home Equity Conversion Mortgage or HECM. First of all, do your homework on the company that is going to bail you out. The safest are HUD/ FHA. There are a lot of companies looking to give you only the bare minimum and often falls short of the payment that is due. The whole idea of a reverse mortgage is that you get to stay in your home and don’t have to pay back the money unless you move out of your home.

You can chose to receive your payment in different ways to suit your needs best. It could be a lump sum payment, monthly, or as a credit line that let’s you decide how much and when you need that extra cash. Some reverse mortgages allow you to combine payment options. But you do have to be careful with the credit line because there are usually set amounts that will “lend out” at a certain point.

Also you should be aware that with a reverse mortgage, you could have what’s known as rising debt, and falling equity. Basically with reverse mortgage, you are taking out the cash value on the equity that has been built up. So your debt rises and your equity falls. You see you don’t have to pay back a reverse loan, but your lender is steadily sending you money that you owe. It goes off into la la land and adds to your debt. Make sense? in other words, this still counts as money owed.

There are a few exceptions to this rule. If your home value increases, than you can gain equity. So if you decide to sell, there won’t be as much loss. The good news, is you can never owe more than the value of your home. So the most you will owe if you sell is the price the home sells for.

Depending on your type of loan, there are special insurance fees that are usually due at closing as well as to be paid each year with the reverse mortgage. So it’s important to ask as many questions as possible. You may want to consider getting one of your children or someone who is familiar with your finances to sit in with you as the loan is discussed to decide if a reverse mortgage is right for you.

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