Is A Reverse Mortgage Right For You

Is A Reverse Mortgage Right For You 1

Is a​ Reverse Mortgage Right For You?
In the​ last few years reverse mortgages have been growing in​ popularity among the​ elderly .​
While there are numerous advantages associated with reverse mortgages there are also disadvantages as​ well .​
Before you​ take out a​ reverse mortgage,​ be sure you​ have the​ whole story .​
First,​ understand what is​ involved in​ a​ reverse mortgage .​
Basically,​ this type of​ mortgage allows you​ to​ transfer a​ portion of​ your equity into cash without the​ need to​ take on​ an​ additional monthly bill,​ as​ is​ the​ case with a​ regular home equity loan,​ or​ sell your home .​
With a​ reverse home mortgage,​ unlike a​ regular mortgage,​ you​ receive money for the​ equity in​ your home and are not obligated to​ pay it​ back until you​ are no longer living in​ your home .​
It should be understood that the​ money will need to​ be paid back; either when you​ sell your home,​ move to​ another principal residence or​ die .​
In the​ event that you​ have a​ lot of​ equity in​ your home but you’re having difficulty meeting your monthly financial obligations,​ this can be a​ good option .​
Other advantages include the​ fact that the​ money you​ receive from the​ reverse mortgage is​ typically tax-free because it​ will have to​ be repaid .​
In addition,​ depending on​ which lender you​ choose,​ there are typically no income restrictions .​
There are regulations in​ order to​ qualify for a​ reverse mortgage .​
You must be at​ least 62 years of​ age and live in​ the​ home as​ your principal residence .​
There are three basic types of​ reverse mortgages .​
These mortgages are single-purpose reverse mortgages,​ federally-insured reverse mortgages that are also known as​ Home Equity Conversion Mortgages or​ HECMs and proprietary reverse mortgages .​
Single purpose reverse mortgages are offered by state and local government agencies as​ well as​ some non-profit organizations .​
One of​ the​ major advantages to​ this type of​ reverse mortgage is​ that it​ will not generally have high costs .​
Unfortunately,​ their availability is​ limited depending on​ where you​ live .​
In addition,​ there may be regulations specified by the​ lender regarding what you​ can use the​ proceeds of​ the​ loan for .​
The most common purposes include property taxes and home repairs and improvements .​
This type of​ loan may also have income restrictions; meaning you​ can’t make more than a​ certain amount of​ money in​ order to​ qualify .​
A HECM will generally have higher cost than a​ single purpose mortgage and those costs are usually up front .​
On the​ flip side,​ they are more widely available and typically do not have income requirements .​
In addition,​ there are no purpose limitations .​
Because HECMs are backed by HUD you​ will be required to​ meet with a​ counselor from a​ housing counseling agency who will explain all the​ details regarding the​ loan to​ you​ .​
The amount of​ money you​ can borrow using a​ HECM will depend on​ your age,​ the​ value of​ your home,​ where you​ live and current interest rates .​
This type of​ loan can be quite flexible; providing options such as​ a​ line of​ credit as​ well as​ fixed monthly payments .​
Because proprietary reverse mortgages are backed by private loan companies,​ the​ options with this type of​ loan can vary .​
Usually this type of​ loan will have a​ higher cost than a​ HECM.

Is A Reverse Mortgage Right For You

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