CONSIDERING A REVERSE MORTGAGE?
What is a Reverse Mortgage? It is like a traditional mortgage except that the bank pays you, rather than the other way around. A Reverse Mortgage is a specific type of loan that allows homeowners age 62 and older to turn their home equity into cash, while still living in and owning their own home. With a Reverse Mortgage, you have the flexibility to choose how you want to be paid. You can choose a lump sum, a monthly payment, or even a line of credit.
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Reverse MortgageReverse mortgage is one of the best financing options available to senior citizens looking for funds to finance their home improvement, supplement retirement income, pay for health expenses or pay off mortgages. It is a financial product which allows senior citizens to convert part or all equity in their homes into money without necessarily having to pay any additional bills or sell their homes.
Unlike in a regular or conventional mortgage where the borrower makes monthly payments to the mortgage company (lender), in reverse mortgage the home owner receives cash from the lender and one doesn't have to repay the loan a long as he or she continues to relieve in the home.
The loan is paid after the home owner sells it, changes his or her primary residence from the home to another, or dies. The best thing about this product is that the proceeds are tax free and most of them do not have income restrictions.
There are several types of reverse mortgage that include single purpose, federally insured and proprietary. The single purpose reverse mortgage is the cheapest of all and is only offered by some local government agencies, states or non profit organizations. It can only be used for one purpose which is specified by the lender. On the other hand federally insured reverse mortgage also referred to as home equity conversion mortgage (HECM) is offered by all states and is backed by the government while proprietary reverse mortgage is a private loan supported by the mortgage company that develops it. Both the federally insured and proprietary reverse mortgages can be expensive than normal home loans and it is thus important to consider this fact before applying.
The federally insured reverse mortgage may be used for several purposes and has no medical or income requirements. However it is paramount to meet with a government approved housing counselor before applying for the loan. The counselor will be helpful in understands the total mortgage costs and the financial implications as well as other available alternatives to the loan.
What is a Reverse Mortgage Loan?
Reverse mortgage is a special kind of loan provided to the people (senior residents) .The citizen must have his/her own house with a minimum age of 62 years as an eligibility in order to become licensed for the loan from reverse mortgage lenders.
Eligibility and profits an individual can make the fund value that a senior resident is entitled to receive from reverse mortgage lender depends upon the age of the borrower. It is found that in the case of couples the age of the youngest borrower is taken into consideration while receiving the funds. Normally the older you are the more earnings/proceeds you are likely to receive from reverse mortgage lenders.
Benefits of reverse mortgage loans:
A great benefit and interesting part of reverse mortgage loan is that a senior resident holds the title of the house. Senior resident can continue live in their houses after taking the reverse mortgage loans as long as he/she wishes. The repayments are done to the reverse mortgage lenders when the last existing senior resident vacates the house. These repayments can be done either by using their private funds by selling the property itself on which the loan has been taken. The payback can be done either by the senior residents or it may also be facilitated by their inheritors.
Reverse Mortgage Facts
A Mortgage is a popular term among the youth and the old commonly used to refer to a premier way for homeowners to payoff for new houses, insure safety and increased equity in case one wishes to sell the property later on. On the contrast, most people do not know much about the reverse mortgages, including people who should. A reverse mortgage is a type of special loan designed to suite senior homeowners wishing to possess a home, but have little cash flow to pay for the loan, taxes, and other expenditures involved. Though the incredible benefits, there is little information on reverse mortgage facts available, and the surest way is to find out about facts and know them.
People who are eligible for this reverse mortgages should be at least 62 years old or above. The seniors should at least own a permanent house where they have enough equity. In addition, the borrower will continue to clinch to the title of the property that bears his name till he acquires the home. If the borrower wishes to depart or passes away, the next of kin can take ownership of the property after repaying the amount back to the lender.
Another significant of reverse mortgage facts is that the amount borrowed will never exceed the worthiness of the property, and for that reason, the property owner will never owe more than the worthiness of his home. Reverse mortgage is treated as an income and can never be accumulate for further use; therefore, other benefits earned by the seniors are not affected.
In case the senior passes away, the heirs will not be burdened with the debt since they will have the option to either sell or refinance the home without any obligations. However, if they decide to keep the home, they will have to repay the amount back to the lender from their personal assets, this also is a reverse mortgage facts that we should be aware of.
Lastly, if the homeowner has an outstanding balance, it can be cleared off with some or the entire amount received from the reverse mortgage scheme.