Let’s talk About Reverse Mortgages.

January 31, 2015

ID-10058394You know, those mortgages touted by some really shady people trying to swindle you out of your last dime! Well maybe that’s not case. We are hearing more about reverse mortgages all the time.  Are they becoming a viable financial resource? That depends……..

What is a reverse mortgage?  It is a loan that is available to a homeowner who is 62 years or older and has equity (the value of the home after any remaining mortgages or liens have been paid) in their home.  With a reverse mortgage some of that equity can be converted into cash.

The “reverse” part of the mortgage involves the bank/lender paying the homeowner instead of the homeowner paying the bank/lender. The homeowner does not need to make any payments on the loan as long as they are living in the house.  Go to www.reversemortage.org or www.TheReverseMortgageConsultant.com for more information.

Is a reverse mortgage right for me?  Every situation is different but you can start by asking yourself a few questions.

Does living at home work for me?

Can I afford to stay in my house and for how long?

Are there expensive, extensive repairs needed?

Is it safe to stay in my house?

Can I move around my house without risking an injury?

How safe is the neighborhood?

Are there others close by that I can depend on for help if needed?

 If you find that a reverse mortgage does appear to work for you there are still some steps to take.

  • You will need to undergo a financial assessment to make sure you can afford the tax and insurance costs over the life of the loan. If the bank/lender finds that you cannot pay these expenses and have enough cash left for living expenses you will be denied.
  •  All borrowers need to have face-to-face or telephone counseling with a HUD approved independent counselor.
  •  Then there are the mortgage fees, loan options, usual paperwork, etc.

The government has tightened regulations for lenders of reverse mortgages, which is a good thing as it prevents people  from  taking on more debt than they can afford. So, after careful research, planning, and financial counseling you may find your house can become a financial resource.

 

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