Who Qualifies for Reverse Mortgages?

July 7, 2006

By Guest Authors Charles and Susan Truett

Reverse mortgages can be a great solution for seniors who wish to remain in their home but are having difficulty making their monthly payments and meeting other financial obligations. If you are over age 62 and own your own home, the bank will actually pay you money so you can stay in your home, rather than the other way around. It is important to collect as much reverse mortgage information as possible before deciding whether to take out the loan.

Anyone is eligible for a reverse mortgage loan, even if they have no income. Your home must be a single family residence in a one to four unit dwelling, a condominium or some type of manufactured home. Cooperatives and most mobile homes are not eligible. The home must be at least one year old and you have to first meet with an authorized counselor.

You can obtain the loan as a lump sum payment, a fixed monthly amount or as a line of credit that you use whenever you need it. The money can be used for just about any purpose. This can include paying property taxes or medical bills, home repairs and improvements, paying off credit cards or just daily living expenses. The amount of money you receive depends upon your age, the amount of equity in the home, its appraised value and current interest rates. The reverse mortgage loan does not have to be repaid until you sell the home, permanently move out, or pass away. Your loan could also become due if you allow the property to deteriorate, you fail to pay property taxes or hazard insurance, or if the last surviving borrower does not occupy the home for 12 months in a row due to illness.

There are some fees involved with a reverse mortgage loan, similar to those you would incur with a regular mortgage. These include origination fees which cover the lenders operating expenses and are currently capped at the greater of $2,000 or 2% of the maximum FHA loan limit. In addition you will be required to take out mortgage insurance and pay an appraisal fee which ranges between $300 - $400. Other closing costs include fees for a credit report (usually under $20), flood certification, closing and title search, document preparation, recording, courier, pest inspection and a land survey. In addition, a monthly service set-aside fee of $30-35 per month will be charged.

When you meet with your counselor, you should be able to obtain all the reverse mortgage information you require before you make your final decision. It will be nice to have the option of staying in your own home if that is what you desire.

For more information please visit our website dedicated to seniors about the pros and cons of a Reverse Mortgage. You can read more on our Reverse Mortgage Information Website.

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota

Fixed Rate or ARM?

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What Are Reverse Mortgages and How Do They Work?

May 2, 2006

Guest Article by Douglas Hanna

If you have a home that’s paid off – or almost paid off – a reverse mortgage can help you live better by providing a steady stream of dependable income.

This type of mortgage is called a reverse mortgage because instead of you paying the lender a certain amount per month for a certain number of years, the lender pays you. These payments are cash advances against the value of your home.

There are different kinds of reverse mortgages, but all of them are similar in certain ways. You continue to own your home just as you do with a normal mortgage. You pay the property taxes and are responsible for maintenance, homeowners insurance and property repairs.

At the end of the mortgage, you or your heirs must pay all of your cash advances plus interest. If you or your heirs cannot do this, the lender can foreclose on your house.

There are financing fees associated with a reverse mortgage just like with a forward mortgage. The money you get from the reverse mortgage can be used to pay these fees. These costs are added to your loan balance and must be paid back with interest when the loan is over.

How much money can you get with a reverse mortgage?

The monthly amount you get will depend on your age and the value of your home. Here’s an example. One reverse mortgage currently available is the Federally-insured Home Equity Conversion Mortgage or HECM. Assuming you have a home worth $200,000 and owe nothing on it, an HECM could get you $641 a month for the rest of your life. Alternately, you could get a credit line account in the amount of $107,466 that you then could draw from whenever you wished. Or you could choose to get a single lump sum payment for the same $107,466.

Keep in mind that, as a rule, reverse mortgages are first mortgages. In this case, if you still owe any money on your home, you must pay off the old mortgage first. If you don’t have the money to do this, you can usually use money from the reverse mortgage to pay off the old debt.

How much will you or your heirs end up owing?

The debt will equal all the cash advances you have received, plus all interest that is added to your loan balance. If that amount is less than your home is worth, you or your heirs get to keep the difference. The other good news is that you can never end up owing more than your house is worth at the time the loan is repaid.

If you are “house rich” but “cash poor,” a reverse mortgage could help make your golden years more golden, However, make sure you read the loan papers carefully to be certain you understand all the loan’s conditions.

Douglas Hanna is a retired marketing executive and the author of more than 100 articles on HD radio, the Internet and family finances.

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Article Source: http://EzineArticles.com/?expert=Douglas_Hanna

Bob Roscoe, Mortgage Marketing Associates, Minneapolis, Minnesota

Reverse Mortgage Secrets 

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