Despite several big-name banks pulling the product from their respective home loan offerings, reverse mortgages remain a popular mortgage choice among homeowners aged 62 or over.

A reverse mortgage is exactly what it sounds like — a mortgage in reverse. Rather than borrow a fixed amount of money then pay that loan balance down to zero as with a “forward” mortgage, a reverse mortgage starts at a given loan balance and works its way up as scheduled payments are added to the existing loan balance.

This 4-minute piece from NBC’s The Today Show highlights a few pros and cons of reverse mortgages, and the reasons why you may want to consider one, including :

  • No mortgage payments are ever due on your home
  • There is no credit check required for a reverse mortgage
  • There is no income requirement to qualify for a reverse mortgage

There are some basic qualification standards for the reverse mortgage program including a requirement that all borrowers on title must be 62 years of age or older; and that the subject property be a primary residence. Loan fees can also be higher than with a conventional-type mortgage.

If you meet the qualification standards, though, with a reverse mortgage, you have flexibility in how your home equity is distributed to you. You can receive a lump-sum payment, elect for monthly installments over time, create a line of credit, or a combination of all three. 

Like all mortgages, reverse mortgages are complex instruments. That’s one reason why all reverse mortgage borrowers are required to attend counseling — the government wants you to be certain that you understand the nuances of the reverse mortgage program.

Your lender will want you to understand the program, too.

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A reverse mortgage (also referred to as a home equity conversion mortgage) is a government insured loan that enables homeowners 62 or older to turn the value of their home into tax-free income without the burden of a mortgage payment.the reverse mortgage.  Here are some facts about Reverse Mortgages:

FACT #1: Reverse mortgages are not only for those who are “house rich, cash poor.” Homeowners from all walks of life are taking advantage of this excellent financial planning tool to enhance their retirement years. Reverse mortgages are growing in popularity because of the benefits it offers to homeowners in wide ranges of financial circumstances.

FACT #2: A senior’s home doesn’t have to be debt-free in order for them to get a reverse mortgage!  Even seniors with an outstanding first mortgage or other debt on their home may qualify.  The proceeds of the reverse mortgage, though, must first be used to pay off such debts.

FACT #3: The bank does NOT own the home after the homeowner gets a reverse mortgage. They own their home and retain title throughout the life of the reverse mortgage. Once they permanently move out of their home, or pass it to their estate, the loan must be repaid.

FACT #4: When a reverse mortgage comes due, the bank does not sell the home. When the loan must be repaid, the homeowner or their heirs can either pay the balance due on the reverse mortgage and keep the home, or sell the home and use the proceeds to pay off

Click here for more information on a reverse mortgage (HECM).

www.PaulCantor.info

 

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Lately I have had numerous inquiries on reverse mortgages, a mortgage with government insurance to help seniors over the age of 62 to live in their current home ot purchase a new home without having a mortgage payment. Today a senior may get a fixed rates reverse mortgage (HECM) and the closing in Virginia for many of these loans are less than many think.   For more information on a reverse mortgage:

 

Reverse Mortgage Comparison

www.PaulCantor.info

 

 

 

 

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