If you own your home and are sixty-two years old or higher, you most likely qualify for a reverse mortgage. Many people decide to cash in on their home's equity by using a reverse mortgage in order to help pay for their retirement, home renovations, or hospital bills. Before you decide to sign up for a reverse mortgage, you need to make sure that you know all of the facts.
In traditional mortgages, you make a monthly payment to you lender on the amount of money you owe. In a reverse mortgage, the lender sends you money, and in most cases you do not have to pay it back as long as you are still living in your home. You repay the loan when you sell the home, when the home is not your primary residence any longer, or when you die. Many people find reverse mortgages appealing because proceeds are generally tax-free and many do not have income restrictions.
In order to understand reverse mortgages, you must be able to identify the different types of reverse mortgages.
Single-purpose reverse mortgages are available through some state and local governments agencies as well as some non-profit organizations.
Federally-insured reverse mortgages are financed by HUD (US Department of Housing and Urban Development) and also known as HECMs (Home Equity Conversion Mortgages).
Proprietary reverse mortgages are private loans created and financed by companies.
The least expensive option for you would be a single-purpose reverse mortgage. The lender has to agree with your use of the loan, whether if be to pay for property taxes, home repair, renovations, etc. The loan can only be used for the purpose specified by the nonprofit lender or government. The majority of home owners with moderate to low incomes would probably be able to qualify, but the loans are not made available everywhere.
HECMs and proprietary reverse mortgages cost more than normal traditional home loans and they can also be considerably more expensive. The cost is something to keep in mind, especially if you are only going to be remaining in your current residence for a short period of time or if you just wanted to borrow a small amount of money. HECM loans have no medical or income requirements, can be used for any purpose, and are widely available.
If you are thinking about a reverse mortgage, keep in mind that:
- You will owe more money are more time goes by. Interest from your outstanding balanced gets built up and charged onto the balance owed for the month.
- As time goes by the amount of money you owe grows. You are charged interest on your outstanding balance and that amount is added to the total amount that you owe every month.
- Some reverse mortgages have fixed rates, but most are bound with the financial index and will therefore change with market conditions.
- Many reverse mortgages have a non-recourse clause that prevents your estate from owing more than the house is worth once the loan is repaid.
- Because you keep the title to your house, you are responsible for the insurance, property taxes, utilities, etc. If you do not keep current on your property taxes, or if you do not take care of your home, your lender can choose to make your loan due and require you to pay it before you have left the home.
In traditional mortgages, you make a monthly payment to you lender on the amount of money you owe. In a reverse mortgage, the lender sends you money, and in most cases you do not have to pay it back as long as you are still living in your home. You repay the loan when you sell the home, when the home is not your primary residence any longer, or when you die. Many people find reverse mortgages appealing because proceeds are generally tax-free and many do not have income restrictions.
In order to understand reverse mortgages, you must be able to identify the different types of reverse mortgages.
Single-purpose reverse mortgages are available through some state and local governments agencies as well as some non-profit organizations.
Federally-insured reverse mortgages are financed by HUD (US Department of Housing and Urban Development) and also known as HECMs (Home Equity Conversion Mortgages).
Proprietary reverse mortgages are private loans created and financed by companies.
The least expensive option for you would be a single-purpose reverse mortgage. The lender has to agree with your use of the loan, whether if be to pay for property taxes, home repair, renovations, etc. The loan can only be used for the purpose specified by the nonprofit lender or government. The majority of home owners with moderate to low incomes would probably be able to qualify, but the loans are not made available everywhere.
HECMs and proprietary reverse mortgages cost more than normal traditional home loans and they can also be considerably more expensive. The cost is something to keep in mind, especially if you are only going to be remaining in your current residence for a short period of time or if you just wanted to borrow a small amount of money. HECM loans have no medical or income requirements, can be used for any purpose, and are widely available.
If you are thinking about a reverse mortgage, keep in mind that:
- You will owe more money are more time goes by. Interest from your outstanding balanced gets built up and charged onto the balance owed for the month.
- As time goes by the amount of money you owe grows. You are charged interest on your outstanding balance and that amount is added to the total amount that you owe every month.
- Some reverse mortgages have fixed rates, but most are bound with the financial index and will therefore change with market conditions.
- Many reverse mortgages have a non-recourse clause that prevents your estate from owing more than the house is worth once the loan is repaid.
- Because you keep the title to your house, you are responsible for the insurance, property taxes, utilities, etc. If you do not keep current on your property taxes, or if you do not take care of your home, your lender can choose to make your loan due and require you to pay it before you have left the home.
About the Author:
Make sure to visit us if you would like to know more about Reverse Mortgage and Reverse Mortgage Information.
Search
Custom Search