How To Qualify For A Reverse Mortgage

How To Qualify For A Reverse Mortgage



How to​ Qualify for a​ Reverse Mortgage
To qualify for a​ reverse mortgage,​ you​ must be at​ least 62 and have paid off all or​ most of​ your home mortgage .​
Income is​ generally not a​ factor,​ and no medical tests or​ medical histories are required .​
If you​ seek an​ HECM,​ you​ also must undergo free mortgage counseling from an​ independent government-approved housing agency .​
Financial institutions offering proprietary reverse mortgages may require similar counseling or​ homeowner education.
The amount you​ can borrow depends on​ your age,​ the​ equity in​ your home,​ the​ value of​ your home,​ and the​ interest rate .​
If it's an​ HECM,​ federal law limits the​ maximum amount that can be paid out.You can be paid in​ a​ lump sum,​ in​ monthly advances,​ through a​ line of​ credit,​ or​ a​ combination of​ all three.
Common Features
Reverse mortgages offer special appeal to​ older adults because the​ loan advances,​ which are not taxable,​ generally do not affect Social Security or​ Medicare benefits .​
Depending on​ the​ plan,​ reverse mortgages generally allow homeowners to​ retain title to​ their homes until they permanently move,​ sell their home,​ die,​ or​ reach the​ end of​ a​ pre-selected loan term .​
Generally,​ a​ move is​ considered permanent when the​ homeowner has not lived in​ the​ home for 12 consecutive months .​
So,​ for example,​ a​ person could live in​ a​ nursing home or​ other medical facility for up to​ 12 months before the​ reverse mortgage would be due.
However,​ be aware that:
· Reverse mortgages tend to​ be more costly than traditional loans because they are rising-debt loans .​
The interest is​ added to​ the​ principal loan balance each month .​
So,​ the​ total amount of​ interest owed increases significantly with time as​ the​ interest compounds .​
· Reverse mortgages use up all or​ some of​ the​ equity in​ a​ home .​
That leaves fewer assets for the​ homeowner and his or​ her heirs .​
· Lenders generally charge origination fees and closing costs; some charge servicing fees .​
How much is​ up to​ the​ lender .​
· Interest on​ reverse mortgages is​ not deductible on​ income tax returns until the​ loan is​ paid off in​ part or​ whole .​
· Because homeowners retain title to​ their home,​ they remain responsible for taxes,​ insurance,​ fuel,​ maintenance,​ and other housing expenses.




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