The reverse mortgage is a loan that offers senior homeowners an opportunity to use a portion of the equity in their home. Instead of selling home or making payments, the lender pays for your house maintenance, repayment of a load, daily expenses, healthcare expenses or something else.
What is a reverse mortgage?
First originated in Netherlands, reverse mortgage is a form of equity release or lifetime mortgage. It is a special type of home loan that enables homeowners to convert a portion of the equity in their homes into cash without having to sell their homes, give up title or bear additional monthly bills. The responsibility of homeowners to pay back the loan is deferred until they die, no longer live in the property, violate the clause of the mortgage or the home is sold.
In general, borrowers can draw the mortgage capital through these ways: line of credit (could maximize the money available), lump sum (enables you to get the cash immediately, but the interest fees are the highest), monthly payments (over a predetermined period or lifetimes), or some combination thereof.
Today, the most typical and well-developed country for reverse mortgage is the United States. To be eligible for a reverse mortgage in the United States, borrowers are required to be 62 years of the age or older and own their homes freeandclear. Eligible homes usually include 1-4 family dwelling, condominium, co-op, permanent mobile home or manufactured home. There are no minimum income or credit requirements because borrowers make no interest or principal on the mortgage during the life of loan.
Main types of reverse mortgages in the United States
Reverse mortgages are mainly available in three types in the United States, including:
Home Equity Conversion Mortgage (HECM) – HECM is the oldest and most popular reverse mortgage product, backed by the U.S. Department of Housing and Urban Development (HUD). Compared to traditional home loans, this type of mortgage may be more expensive. However, it has no income or medical requirements and can be used for any purpose.
Single-Purpose Reverse Mortgage – This type of reverse mortgage is taken from some state and local government agencies and non-profit organizations. It may be the least expensive option on the part of the total costs of the loan. However, as specified by the lender, it has restrictions in terms of the purpose of the loan. Furthermore, it is not available everywhere.
Proprietary Reverse Mortgage – As the name implies, this type of reverse mortgage is private loans offered by private money lending companies. These private loan products seem more accommodating, especially for those who are not qualified for HECM or have special needs. However, they tend to be a bit more expensive.
How much money can you get from your home?
The amount of money available to borrowers will depend on six major factors:
The age of the borrower (In general, the older the borrower is, the more money he / she will get.)
The appraised value of the property (Whether the house needs renovation, repairing or paining, whether there is existing encumbrance on the house, etc)
Current interest rates
The value of the property
The reverse mortgage product you choose
Where you live, for some products
An Introduction to Reverse Mortgage
For homeowners who are 62 or older and have adequate equity in their home, a reverse mortgage can be the best method to get financial aid. You may ask: what is reverse mortgage? Well, it’s a type of loan designed to help seniors live a better retirement through getting money out of their home equity.
How does a reverse mortgage work? It allows the borrower to get the loan in a lump sum, via monthly payment or as line of credit. The best part is that a reverse mortgage does not require borrowers to make repayment as long as they are alive or at least still live in the house. The income is tax-free and will not be affected by the increasing or falling home price.
Besides, reverse mortgages have no restriction on how to spend the fund. That means you can use it to supplement your income, pay for your medical bills or purchase a new car. Notice that disadvantages also exist, such as high up-front costs, possibly serving fees and nondeductible interest rate, etc. So, be sure to know all the reverse mortgage pros and cons before you submit an application form.
Don’t worry if you still have a lot to ask and don’t know whether you should get a reverse mortgage. Simply do a little of research online and take advantage of reverse mortgage FAQ, and you will get all the answers.
Basic Information on Reverse Mortgage
Reverse mortgage is a very popular type of loan in the United States. With this mortgage loan, people are able to purchase new houses and properties with no down payments as well as zero monthly payments. All the senior adults over 62 are able to make use of reverse mortgage for we have reverse mortgage lenders across the United States now.
Senior residents in California must be excited to move to new homes without paying any money by applying for California reverse mortgage. The total sum of California reverse mortgage could be as much as 80% of the equity value of the applicant’s primary residence. If you are living in Florida, you can also get easy access to quality reverse mortgages. People can obtain Florida reverse mortgage easily by sending an application form including names, addresses, the lump sum they want and the appraised value of their homes(on condition that they are over 62).
The state of Texas also comes out with excellent reverse mortgage products to help its native senior residents. Texas reverse mortgage is only applicable to single family houses, condos, town houses, two to four unit homes, and manufactured houses built after June, 1976. Utah seniors who own house but lack cash can also obtain economic support from reverse mortgage. Borrowers are allowed to use the money of Utah reverse mortgage to pay for other existing loans, medical expenses, college tuitions, home improvements costs and other expenditures that can improve the quality of their life.
Reverse Mortgage Programs
Reverse mortgage is able to offer you with great help if you are seniors and try to benefit from the equity of your house. And there’re many reverse mortgage programs provided by different banks and organizations.
1. MetLife reverse mortgage comes with lower interest rates and more proceeds. Various options will satisfy all your needs of reverse mortgage and afford your living expenses.
2. Bank of America reverse mortgage comes with attractive benefits and offer dedicated help to borrowers of reverse mortgage who have troubles.
3. You must be cautious while you choose best reverse mortgage. You should do enough homework about reverse mortgage before you make decision. FHA reverse mortgage, also known as Home Equity Conversion Mortgage, is one of the most popular reverse mortgage programs. Once you meet the requirements, you can choose from five payment plans offered by this federal organization.
- Reverse Mortgage
-
- Reverse Mortgage Is Not a 100%-Safe Refuge
When you consider about a reverse mortgage and you meet all the requirements, your lender always claims that your reverse mortgage will become payable only if you pass away or lose the ownership of your property, so you don’t need to make a monthly payment as other typical mortgages. Read more
- Various Costs for Reverse Mortgages Insured by FHA
Lots of seniors keep a distance from reverse mortgage because of the high costs. My article will focus on various costs and fees when you plan to take out a reverse mortgage. HECM program consists of two types – HECM Standard and HECM Saver. The costs and fees may be different as per different programs. Read more
- Get to Know HECM Programs
HECM, the abbreviation of Home Equity Conversion Mortgage, is a kind of reverse mortgage that is insured by FHA (the Federal Housing Administration). That’s why it is also called FHA reverse mortgage. So you now know that an FHA reverse mortgage is not a reverse mortgage issued by FHA, but a reverse mortgage insured by FHA. Under FHA’s protection, lenders will be paid the difference between the house price and the reverse mortgage in the following situation: Read more
- The Best Way to Tap Into Your Home Equity
When you take out a traditional mortgage, you borrow money from a bank or some other financial institutions in order to purchase your dream house. The loan is secured by your house. You have to make a monthly payment to protect your home against foreclosure. Read more
- What Kind of House is Eligible for a Reverse Mortgage
Countless negative reviews on reverse mortgages can be seen everywhere. Yet not everyone can be eligible for reverse mortgages, because there are many requirements on borrowers. To get a reverse mortgage, your house serves as the collateral. Likewise, not all houses are qualified for reverse mortgages. Read more
- How Much Can You Get With Reverse Mortgage
When you make the decision to take out a reverse mortgage, how much money you can get may be your uppermost concern. The amount you can get in your hand is determined by many factors: the age of the youngest one between you and your spouse, your house’s location, the appraisal house value, your home equity, various costs to get a reverse mortgage, and the interest rate (fixed or variable). Let’s start with your home equity. Read more
- How to Receive Payment from Reverse Mortgage
Reverse mortgage is one of the loan options through which you can release your home equity. Homeowners who are at least 62 years old and use their properties as primary residences can apply for reverse mortgages. There are several merits of reverse mortgages when compared with other loans and traditional mortgages. Read more
- Seniors under 62: Never Use a Quit Claim Deed for Reverse Mortgage
We all know that reverse mortgage applies to seniors aged 62 or older. Does that mean couples with one spouse under 62 are not eligible for reverse mortgage? Yes, but lenders provide a way – the only way – for seniors under 62 to use a quit claim deed. Countless lawsuits on reverse mortgage indicate that many seniors took this advice and finally put themselves in jeopardy. Read more
- How to Avoid Losing Medicaid Eligibility Because of Reverse Mortgage
Reverse mortgage may render you ineligible for Medicaid, but have no impact on your Medicare. Why? Medicare, a social insurance program, has no income or resource requirements at all. All American citizens, no matter rich or poor, can enjoy it. But Medicaid is not the same, which can be influenced by reverse mortgage unless you handle this properly. Read more
- Thinking Twice about Reverse Mortgage
You may have heard of Reverse Mortgage, and even couldn’t wait to get one after running a glance at the advertisements touting various reverse mortgage products. Don’t be fooled! Years ago you took out a mortgage, and then you had to practice austerity in order to build up equity. Finally you own your house outright, and now you decide to get another loan secured against your home for the remainder of your life? You must be crazy. Read more
- How to Use Reverse Mortgage Calculator & Its Benefits
Reverse mortgage is a kind of home loan that allows homeowners to access a part of their home’s equity. Unlike other types of mortgages, reverse mortgage doesn’t require a monthly payment. However, it is among the more expensive mortgage programs, mainly because of insurance premium.
Looking to learn more about the reverse mortgage process? Then, take advantage of a reverse mortgage calculator. It is a great tool to help borrowers get an idea of how much they could receive from a reverse mortgage and how the program would cost them.
The Information that the Calculator Requires Read more
- Reverse Mortgages Pros and Cons
If you are at the age of 62 or older and own your home, you may have heard of reverse mortgage. This is a type of home loan, which enables senior homeowners to convert a portion of the equity in their home into cash. It can be helpful to those who need money for current mortgage, house improvement, healthcare expenses or other expenses, without having to sell your home or pay additional monthly payment. At first sight, reverse mortgages might seem to be attractive, but make sure about its pros and cons before locking yourself into this kind of mortgage.
Pros
1. No income or credit requirements. Unlike traditional mortgage loans, reverse mortgages have no income or credit requirement. Retirees who have fixed income can get a reverse mortgage, as can those with bad credit history or even with a large amount of debt. Some senior homeowners just use reverse mortgage to reimburse existing debt. Read more
