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Direct talk about Reverse Mortgage

Topic: Mortgage

There are too many myths and misunderstanging about reverse mortgage, so we've decided to unveil this scary word. Here are some typical questions and answers.

What is a reverse mortgage?

The senior citizens who are over sixty one years old use the reverse mortgage to get a portion of the home equity. It is tax free, because it is more like loan advance. The borrower only repays when the borrower moves, dies, or sells the home property.

How is reverse mortgage different from traditional mortgage?

The borrower uses the home equity in reverse mortgage. Thereby, the home equity of the borrower decreases. The traditional mortgage is the exact opposite. The borrowers build home equity as the borrowers pay off the mortgage.

Traditionally, the borrower qualifies for the mortgage. The financial institution checks the credit history. If the borrower qualifies, the borrower pays monthly or bi-weekly mortgage payment. In reverse mortgage, the borrower defers mortgage payment as long as the borrower lives in the home.

How much can I claim from reverse mortgage?

The total amount to claim depends on age of borrower, value of home, and interest rate of mortgage. For example, the interest rate is nine percent. If the borrower is sixty five years old, the borrower can claim twenty six percent of the home equity. If the borrower is eighty five years old, the borrower can claim fifty six percent of the home equity.

What are the requirements for reverse mortgage?

The borrower must be sixty two years or over, live in the home, took reverse mortgage counseling, or pay off most principal. The home qualifies if the home is principal residence, single family residence, one to four units, mobile home, or FHA condominiums. If the home is more than one unit, the borrower must live in one of four units.

Where can I use the amount from reverse mortgage?

There are three basic reverse mortgage types. It is single purpose reverse mortgage, home equity conversion mortgage, and propriety reverse mortgage. In single purpose reverse mortgage, the borrower can only use the amount for a specific purpose such as home improvements, and property taxes. In the other reverse mortgage types, the borrower can use the amount into any expenses.

The financial institution pays the reverse mortgage in the form of lump sum payment, periodic payment, credit line, or combination.

What are the affect on my home property?

The borrower maintains the title and ownership of the home. That means the borrower still pays the maintenance, insurance, and property taxes. After the home is sold, the capital gains pay off the amount of reverse mortgage first. If there is any remaining amount, it goes to the heirs of the home property.

Does reverse mortgage affects Social Security and Medicare benefits?

The reverse mortgage is tax free amount. It is more like loan advance. However, the amount is liquid assets. It must maintain below the maximum allowable liquid assets to get the maximum benefit from Social Security and Medicare.


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One other issue is when you are in a problem where you will not have a co-signer then you may really want to try to exhaust all of your financing options. You will discover many grants or loans and other scholarships or grants that will give you funds to help with university expenses. Many thanks for the post.
read more... 07/28/2012

I never fully understood the rveerse mortgage I mean like do you get thrown out after all the money has been used up? And in these poor economic times is the cost of the house judged on the lower amount that homes are selling for now, or if the agreement once was for the higher amount is it now adjusted downward? I had a friend who insisted that his father get one of those rveerse mortgages. His dad had to pay some kind of fee to have it done, and then after it began the people who held the rveerse mortgage rejected it and he's now up in the air as to who he should be paying for the house and how he will get the extra money to pay back the last few payments that he got money for and spent that money ..so my resposne to you is I think rveerse mortgages stink.I don't think a rveerse mortgage has anything to do with how long you live. If you run out of money from the paydown then I guess you just go to live with your kids because you would have gotten a rveerse mortgage because you were in need of money (right?) so when the money runs out from the rveerse mortgage the till is dry so you have to get help elsewhere.
read more... 05/04/2012

They can be very good or very bad. You can opt for a monthly check but I would never ssguegt that. You are better off taking a line of credit to use when needed. The bank pays off your current mortgage and you never make any payments back. Money is not due on the mortgage until you die, sell the home or move out for more than 12 months. Be aware you will be accumulating a monthly handling charge and that the interest rates are not very low and that the cost for initiating the mortgage will all be added into the final cost tobe payed back. You will never outlive your loan since they only give you about 80% of the value of your home. A lot of seniors take the whole sum and lose some of their benefits which are based on assets and income and others end up giving the money to children or blowing it on junk. If you are low income and need cash to pay your home taxes, home insurance, premium on long term care insurance, needed repairs to the home inclusing accesibility ones or pay for additional services to remain at home rather than in a nursing home, this type of mortgage can be very helpful. They are great for some situations but not good for all. Be sure that you go with one of the top three companies like Wells Fargo, Met Life or Financial Freedom and have family and friends be with you during all the discussions and paperwork.
read more... 05/01/2012

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