Reverse Mortgages - What They Are and How They Will Benefit Seniors

Although there are several types of reverse mortgages, they all have the same basic features:

• You and your spouse (if applicable) must be at least 62 years old and own a home.
• Your home needs to be paid off or you need to have substantial equity in the home in order for a reverse mortgage to be a workable benefit for you.
• You can use the proceeds from your reverse mortgage in many ways. If your home is already paid for, you can elect to take an upfront cash payment, a monthly payment, or a combination of the two. If you still owe a balance on the home, you can use the proceeds to pay off your existing mortgage and eliminate the burden of having a monthly house payment. Any excess funds after the existing mortgage is paid can be taken as a lump sum, a monthly payment, or both. You can also set up the funds as a line of credit and make withdrawals as needed.
• Since the reverse mortgage is a loan, the proceeds are not taxable.
• You will not have a monthly payment on a reverse mortgage!
• You and your spouse always retain ownership to the home. The lender never owns the home, even after you (or last surviving spouse) permanently vacate the property.
• You are still responsible for property taxes and insurance, and keeping the home well maintained. If you are unable to pay your property taxes and insurance, then a special set-aside from your reverse mortgage may be arranged.
• The loan is paid off when you (or the last surviving spouse) permanently vacate the home. You or your heirs then repay the loan using either private funds or by selling the home. After the loan is paid, all leftover proceeds from the sale of the home go to you or the estate.
• The amount of funds you will receive through your reverse mortgage varies by age (or age of the youngest borrower in the case of couples), the home value, the mortgage rate, and the upfront costs. With the HECM product, there are county lending that must be adhered to. With all products, the older you are, the more money you will receive.
• All loan fees can be financed, or paid out of the loan proceeds. This means you pay very little out of pocket expense to get your reverse mortgage. In most cases, you will need to pay for the appraisal, which costs roughly $350 depending on the market cost in your area.
• The loan balance on the reverse mortgage grows each time you receive funds from your credit line or receive a monthly payment. In addition, you are paying interest on the outstanding loan balance and a monthly servicing fee.
• Repayment of the reverse mortgage loan is never required as long as you or your surviving spouse still live in the home. On the HECM program, you may live up to 12 consecutive months outside the home, but this may vary for other reverse mortgage products.
• Reverse mortgages are "non-recourse", which means if the total amount owed ever exceeds the appraised value of the home, then the lender or the federal government (in the case of the HECM product) will absorb that loss, not the home-owner or the estate.

In summary, millions of seniors and retirees can change their life by taking advantage of what a reverse mortgage can do for them. It only takes a few minutes to find out what it could do for you. To find out more, contact the professionals at the FHA Loan place for more information.

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