REVERSE MORTGAGES - SENIORS

If you have a senior family member in need of extra funds for daily living expenses, medical bills, care, or just more financial security, a reverse mortgage may be a consideration. A reverse mortgage may be an excellent way to provide financial freedom to a senior.

A reverse mortgage, also known as a Home Conversion Mortgage, is a loan for senior homeowners that use the equity in their home as collateral.  In general, it does not need to be repaid until the homeowner dies or the last surviving homeowner moves or also dies. 

The requirements for a reverse mortgage are as follows:

• 62 years of age or older
• the home must be owned free and clear or all existing liens must be satisfied with the reverse mortgage
• the mortgage balance must be able to be paid off by the reverse mortgage

Generally there are no income or credit report requirements for a reverse mortgage.  The loan does not become due as long as the homeowner lives in the house and maintains it.  In the event of death by the homeowner or upon vacancy of the home for more than 12 months, the estate can choose to repay the reverse mortgage loan or put the home up for sale.  If the equity in the house is higher than the reverse mortgage loan repayment, then the remaining equity goes to the estate.  If the sale of the house is less than the reverse mortgage loan, then the lender takes a loss.

The amount of the loan depends on four factors:

• age
• current interest rate
• appraised value of the home
• government imposed lending limits

There are several ways to receive the funds from a reverse mortgage.  They are:

• lump sum
• equal monthly payments for as long as the homeowner lives in the home
• equal monthly payments for a fixed number of years
• drawing any amount down at any time until all funds are exhausted

There are many companies offering reverse mortgages.  Check all credentials including:

• license/s
• NMLS (National Mortgage Licensing System)
• BBB (Better Business Bureau)
• National Reverse Mortgage Lenders Associations

The following guide is available to better explain the pros and cons on reverse mortgage.

A GUIDE TO REVERSE MORTGAGES
Click Here!