Who Qualifies For A Reverse Mortgage
A reverse mortgage or lifetime mortgage is a loan available to seniors (62 years and above)
, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves. In other words, reverse mortgages aren't loans that your parents will need to pay back. They are more like a line of credit that pays your parents from the equity that they have already earned in their home.
Reverse mortgage loan advances are not taxable, and generally dont affect your Social Security or Medicare benefits. You retain the title to your home, and you dont have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence. Unlike a regular mortgage, the homeowner makes no payments and all interest is added to the lien on the property.
A reverse mortgage, also referred to as a reverse equity mortgage, allows homeowners to receive money from a lender. There are certain
reverse mortgage tips that you may not want to ignore. Just like when getting a traditional mortgage, borrowers may evaluate different reverse mortgage offers because costs vary widely. You may remember that, when you take out a reverse mortgage on your home, you may be liable to pay the property taxes, home insurance premiums and maintenance costs. Your loan may become due if you dont fulfill these responsibilities. It is also advisable to find out whether you will qualify for Medicaid. Furthermore, borrowers can receive money tax free in a lump sum, payment stream or a retirement fund. Although borrowers keep the titles to their property, the lenders usually own the property after the homeowner dies. So the house cannot be inherited by any heirs unless the heirs want to pay off the reverse mortgage balance.
Reverse mortgages can be a great solution for seniors who wish to remain in their home but are having difficulty making their monthly payments and meeting other financial obligations. It is important to collect as much
reverse mortgage information as possible before deciding whether to take out the loan. Before borrowing, applicants must seek free financial counseling from a source which is approved by the Department of Housing and Urban Development (HUD). The counseling is a safeguard for the borrower and his/her family, to make sure the borrower completely understands what a reverse mortgage is and how one is obtained. Reverse Mortgages do not have most of the requirements of a standard mortgage like FICO scores, earnings verification, or payment histories. The loan is based purely on the age of the youngest owner, the value of the home, and any existing liens or mortgages on the home. Your home must be a single family residence in one to four units dwelling, a condominium or some type of manufactured home. Cooperatives and most mobile homes are not eligible. The home must be at least one year old and you may have to first meet with an authorized counselor. Therefore, it is essential that you feel comfortable and confident and if you use these handy bits of reverse mortgage information, it is certain that you will have the knowledge and skills you need to ensure that the reverse mortgage is what you need to work for you.
by: Ask Bill
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