What are the truths and myths about a Reverse Mortgage
What is a Reverse Mortgage? How does it work? Do I lose my Home? Do I qualify? Is it right for me? These are some of the questions that we are asked? Reverse Mortgages have been out since 1987 and are usually insured/regulated by the Government. Their popularity has just now come to the forefront. An insured Reverse Mortgage is also known as a HECM (Home Equity Conversion Mortgage). The concept is to allow anyone over 62 years of age to be able to stay in their present residence, there are certain minimum credit and income requirements. Some key point are below:
* Individual Homeowner age 62+
* Proceeds can be used for anything desired, such as home repairs, health care, travel, grandchildren’s education, paying taxes or to help facilitate Long Term Care.
* Proceeds may be received by a line of credit, in a lump sum, monthly installments or a combination of the three.
* No Prepayment Penalty during life of loan.
* Social Security and Medicare benefits are generally not affected
* You can never be asked to repay as long as you maintain the home as your primary residence and continue to pay the appropriate escrows, ie property taxes and home owners insurance.
* Repayment is deferred until the borrower dies, sells the home, moves out of the house or defaults on other obligations such as insurance or taxes.
* Your home stays in your Estate.
* Your heirs are not responsible for repayment because a HECM Reverse Mortgae is a non-recourse loan. That means that the lender can under typical circumstances not recover more than the value of the home.
Improve your life by cashing in on your home’s equity
Whether seeking money to finance a home improvement, pay off a current mortgage, supplement their retirement income, or pay for healthcare expenses, many older Americans are turning to “reverse” mortgages. They allow homeowners to convert part of the equity in their homes into cash without having to sell their homes or take on additional monthly bills.
In a “regular” mortgage, you make monthly payments to the lender. But in a “reverse” mortgage, you receive money from the lender and generally don’t have to pay it back for as long as you live in your home. Instead, the loan must be repaid when you die, sell your home, or no longer live there as your principal residence. Reverse mortgages can help homeowners who are house-rich but cash-poor stay in their homes and still meet their financial obligations.
To qualify for most reverse mortgages, you must be at least 62 and live in your home. The proceeds of a reverse mortgage (without other features, like an annuity) are generally tax-free.
Three Types of Reverse Mortgages
The three basic types of reverse mortgage are: single-purpose reverse mortgages, which are offered by some state and local government agencies and nonprofit organizations; reverse mortgages are federally insured and regulated and are known as Home Equity Conversion Mortgages (HECMs), and must meet U. S. Department of Housing and Urban Development (HUD) regulations and requirements; and proprietary reverse mortgages, which are private loans that are backed by the companies that develop them.
Single-purpose reverse mortgages generally have very low costs. But they are not available everywhere, and they only can be used for one purpose specified by the government or nonprofit lender, for example, to pay for home repairs, improvements, or property taxes. In most cases, you can qualify for these loans only if your income is low or moderate.
Reverse mortgage loan advances are not taxable, and in most cases do not affect Social Security or Medicare benefits. You retain the title to your home and do not have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, moves out of the home or defaults on other obligations such as insurance or taxes . In the HECM program, a borrower can live in a nursing home or other medical facility for up to 12 months before the loan becomes due and payable.
Affordable Interest Mortgage has a Specialist in Reverse Mortgages. He is one of our Senior Mortgage Consultants, David Olson. He has been doing Reverse Mortgage for over 10 Years and is Co Author a book title 62. He is experienced and trained in all the different options and benefits of a Reverse Mortgage. He has helped numerous clients solve some of their financial issues without having to lose their home. These materials are not from HUD or FHA and were not approved by HUD or a Government Agency.