Reverse Mortgage - Q&A
The term reverse mortgage is popping up everywhere these days. TV ads, circulars, radio spots, etc. are all pitching this “new” way to supplement retirement.
For the past 75 years, owning a home has been a great way to create wealth. In fact, for many Americans reaching the retirement age, the equity build up in their home is their only real asset they possess. Reverse mortgage is a fairly conservative and prudent way to tap into this asset and create a stream of income needed for retirement assistance. Or, the monthly income could be used to take care of an unexpected financial need that is usually related to health care costs in the elderly.
One must be careful because reverse mortgage is not a standard refinance, equity loan or a second loan on your home. One must research it and realize there can be some pitfalls.
So what is a reverse mortgage?
Exactly as the term suggests, the regular dispersment of money is reversed. Instead of the homeowner paying the lender on a predetermined schedule, the lender pays the homeowner. Payment is used here loosely because it is your money after all. One great point is there aren’t any payments due until the home owner moves or dies.Reverse mortgages are viewed by most real estate and mortgage experts as a good vehicle of choice. They help many retirees handle any unforeseen financial difficulties and more importantly,helps them to have a way to retain their independence and dignity.
Can any one qualify for a reverse mortgage?
No, you must be eligible. The eligibility requirements for a reverse mortgage are:
* You are a homeowner.
* You are 62 years of age or older.
* You own your home free and clear, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan.
* You live in the home.
* In case of HUD, you are also required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on 1-800-569-4287 to obtain the name and telephone number of an HUD-approved counseling agency and a list of FHA approved lenders within your area.
* Upkeep of property taxes and staying out of bankruptcy are also required.
Remember to start with research when looking into a reverse mortgage. There should never a cost associated with getting information on reverse mortgages. Ask for a written copy of everything that should include an address and a phone number so that you can confirm the data.
