How A Reverse Mortgage Can Benefit Homeowners 62 Or Older

How a​ Reverse Mortgage Can Benefit Homeowners 62 or​ Older
Reverse mortgages give eligible homeowners the​ ability to​ access the​ money they have stored up as​ equity in​ their homes .​
They are designed to​ build seniors' personal and financial independence by providing funds without the​ requirement of​ a​ monthly payment for as​ long as​ they live in​ the​ home.
Homeowners age 62 or​ older may benefit greatly by discussing the​ possibilities and options a​ reverse mortgage can afford them with a​ lender or​ counselor .​
These types of​ loans offer a​ way to​ borrow against the​ equity in​ your home to​ create a​ stable,​ continuous and tax free source of​ usable income or​ a​ substantial source of​ supplemental income,​ all without having to​ change your current living conditions.
The best part of​ this type of​ loan is​ that you​ aren’t required to​ repay any part of​ the​ loan as​ long as​ you​ live in​ your house and don't breach any of​ the​ terms and conditions of​ the​ reverse mortgage .​
However it​ is​ important that you​ are diligent in​ researching this unique loan product as​ it​ may not be right for every situation .​
This is​ why we encourage any potential borrower interested in​ a​ reverse mortgage to​ investigate their options first with a​ HUD certified counselor or​ lender .​

Other great sources of​ information include family and friends who have experience dealing with reverse mortgages before,​ nonprofit organizations offering help to​ seniors’,​ the​ AARP,​ American Society on​ Aging,​ and authority sites on​ the​ internet that provide helpful articles and resources concerning the​ reverse mortgage industry.
While simple to​ understand in​ theory,​ it​ is​ important to​ know how reverse mortgages work .​
the​ reverse mortgage loan product got its name due to​ the​ fact that instead of​ making mortgage payments,​ the​ lender actually pays the​ borrower creating a​ kind of​ inverse relationship compared to​ the​ traditional mortgage product .​
the​ source of​ funds for the​ money received is​ the​ equity stored in​ your home .​
the​ unique feature of​ this loan is​ that unlike conventional mortgages where the​ loan balance becomes smaller each moth you​ make a​ payment,​ the​ loan balance of​ a​ reverse mortgage grows larger over time.
The principal on​ the​ loan increases with each payment received,​ this includes interest and other charges accrued each month on​ the​ total funds advanced to​ you​ .​
you​ retain ownership of​ your home in​ all reverse mortgages,​ and many do not require repayment for as​ long as​ you​ occupy your home,​ pay your property taxes and hazard insurance charges,​ and continue to​ maintain the​ property.
When you​ leave your home permanently your loan balance becomes due .​
It is​ also important to​ note that your legal obligation to​ repay the​ loan cannot be more than the​ market value of​ your house at​ the​ time you​ leave the​ property .​
This means that your lender can never require repayment of​ the​ loan from your heirs or​ from any asset other than the​ property itself.
Today the​ 2 major reverse mortgage loan types provided by the​ Fannie Mae (Federal National Mortgage Association) are the​ HECM and Home Keeper .​
These loans assure the​ borrower that he or​ she will never owe more than the​ loan balance or​ the​ value of​ the​ property,​ whichever is​ less,​ and no assets other than the​ home must be used to​ repay the​ debt.
Also unlike conventional mortgages these loan types have neither a​ fixed maturity date nor a​ fixed mortgage amount .​
Many borrowers familiar with the​ home equity loan are often times skeptical about reverse mortgages and simply see it​ as​ a​ different type of​ home equity loan and sometimes even think it’s a​ scam .​

For this reason it​ is​ important to​ understand the​ difference between home equity loans and reverse mortgages .​
With a​ HELOC (Home Equity Line of​ Credit) you​ must make regular monthly payments to​ the​ lender in​ order to​ repay the​ loan,​ in​ fact,​ your repayments begin as​ soon as​ your loan is​ made .​
If you​ fail to​ make the​ monthly payments on​ a​ traditional home equity loan,​ a​ mortgage lender can foreclose on​ your home,​ putting you​ in​ a​ position where you​ either have to​ sell your home to​ repay the​ loan or​ lose it​ to​ the​ lender.
Another notable difference is​ the​ fact that some home equity loans also require you​ to​ re-qualify for the​ loan each year,​ and if​ you​ fail to​ re-qualify,​ the​ lender may require you​ to​ pay the​ loan in​ full immediately .​
in​ addition,​ in​ order to​ qualify for a​ traditional home equity loan,​ you​ must have sufficient funds and debt-to-income ratio in​ order to​ be approved on​ the​ loan.
Reverse mortgages however,​ such as​ the​ HECM and the​ Home Keeper Mortgage,​ do not require monthly repayments,​ saving you​ from the​ need to​ qualify through the​ traditional and often times difficult loan process .​
in​ fact,​ repayment of​ these loans is​ not required as​ long as​ your property remains your primary residence and you​ stay current in​ paying your property taxes and hazard insurance charges .​
Another stipulation that makes the​ reverse mortgage so special is​ the​ fact that your income does not become a​ factor in​ qualifying for these loans,​ nor are you​ required to​ re-qualify each year.

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