Using A Reverse Mortgage In Your Later Years
Posted by Artgib in FinanceA popular thing with Americans today is getting a reverse mortgage. HUD created the first reverse mortgage which was used mostly by seniors to help them have better security financially. It is also used as a way to supplement their social security payments that can’t cover all their personal expenses.
What exactly is a reverse mortgage? Well, mostly it functions as a special type of loan. For example, a reverse mortgage will let the person who owns a house use a part of the equity that they have in their house and change it into cash. Unlike other loans against home equity this type of loan doesn’t need to be repaid until the home owner moves from the address.
Is it hard to qualify for a reverse mortgage? Well, the biggest requirement of getting a reverse mortgage is that you will need to be at least 62 years of age and the owner of the home. You must also own your home, with no current loan on it, otherwise the house must be paid off, or the mortgage that is left to pay must be very small. Plus you must get counseling from a HUD approved person.
Does my house need to be bought through a FHA loan? No it does not. You can still qualify for a reverse mortgage.
What homes are eligible for a reverse mortgage? It must be a single family home, or maybe a two to four unity property, but you must live in it. Townhomes, detached homes, condos, and some Modular homes are also eligible for a reverse mortgage.
How does a reverse mortgage differ from a home equity loan? A bank home equity loan needs to be repaid immediately, or should we say payments will start immediately, while the reverse mortgage you do not need to start paying back until you move from the property you have taken the reverse mortgage against.
What if I outlive the loan? Can my house be taken away? Absolutely not! As long as you continue to live in the house and pay taxes you will be fine.
How about my heirs? If you are no longer using the property, you or the estate will need to pay the cash back you received from the reverse mortgage.
How much cash can I get? The ways they decide on what you will get is your age, what the interest rate is currently, and what the house is appraised at. It is usually the more your house is worth, the older the owner is, plus a low interest rate you will be able to borrow more.
How can I receive my payments? You can choose one of five ways. The first of these is tenure, which are monthly payments that will last the rest of your life or until you move or reach term. You can also choose line of credit, which is set up as payments when the borrower picks to be paid. Modified Tenure, combines the line of credit method and tenure. And modified term, which will combine the line of credit and term payments
Reverse mortgages seem like a great idea if you qualify for them and you want to make the end of your life more comfortable. They could make it harder for you to pass your home down to posterity though.
For more information on setting up a Utah reverse mortgage, visit http://www.inspiredretired.com/. You may want to counsel with your family and a financial adviser before proceeding though. The author, Art Gib, is a freelance writer.
