| What is a Reverse Mortgage?
A reverse mortgage is a special
loan program that allows senior homeowners to convert a portion of the
equity in his or her home into cash. Unlike a traditional home
equity loan or second mortgage, no repayment is required until the
homeowners no longer occupy the home as their primary residence.
Some reverse mortgages are designed and insured by the United States
Government.
A
reverse mortgage provides financial security because the homeowner does
not have to make payments, or even repay the loan, as long as he or she
occupies the home. Seniors who are “house rich and cash poor”
can use this program to turn some of their equity into cash to use to
supplement social security, meet unexpected medical expenses, make home
improvements, and more.
There
are no income or credit requirements to get a reverse mortgage, and there
are no payments required until the homeowners no longer occupy the
property as their primary residence (usually
when they pass away).
Who is Eligible for a
Reverse Mortgage?
Reverse
mortgages are available to homeowners who are 62 years old and older.
Each person named on the deed to the property must be at least 62. All borrowers must
occupy the property as a primary residence, and any existing mortgage or
lien will be paid off at the time of settlement.
As an additional safety feature, the Department of Housing and
Urban Development (HUD) requires that each potential reverse mortgage
borrower be counseled by an independent HUD-approved counseling agency.
This counseling is free of charge to the borrower.
What Type of Homes are
Eligible?
Single family
dwellings or a two-to-four unit property that you own and occupy are
eligible for a reverse mortgage. Also, townhouses, detached homes,
condominiums (must be FHA-approved), and some manufactured homes are
eligible.
|
What is the difference
between a Reverse Mortgage and a bank home equity loan?
Reverse mortgages and home equity
loans both turn equity into spendable dollars. But this is where the
similarity ends. The differences are important to understand. First,
home equity loans require the borrower to make monthly payments.
With a reverse mortgage, however, no payments are made as long as the
borrowers remain in the home. The loan becomes due only when the
borrowers no longer live in the home. Home
equity loans are based on the borrowers' income and credit history.
With a reverse mortgage, income and credit are not even considered,
because there are no payments to be made during the life of the loan.
Can the Lender take away my
Home if I outlive the Loan?
No! You do not
need to repay the loan as long as you (or one of the borrowers) continue
to live in the house and keep the taxes and insurance current. You
can never owe more than you home's value!
Will I still have an Estate
that I can leave to my Heirs?
When you sell your
home or no longer use it as your primary residence, you or your estate
will repay the cash you received from the reverse mortgage, plus interest
and other fees. The remaining equity in your home belongs to you or
your heirs. No other assets will be affected by a reverse mortgage
loan. This debt will never be passed along to the estate or heirs.
How do I receive my Money?
-
Tenure - Equal
monthly payments as long as at least one borrower lives in the home;
-
Term - Equal
monthly payments for a fixed period of months selected;
-
Line of Credit -
Unscheduled payments or in installments, at times and in amounts you
choose until the line of credit is exhausted;
-
Combination of
the above.
Are you 62 or older? Request a Free Reverse Mortgage Comparison.
|
An Equal
Housing Lender MB#0018838