Do your reverse mortgage homework and research as thoroughly as possible. Though you may be mentally prepared to convert your home’s property value, you will never know if there are other things you have not yet touched down. Look for a list of reverse mortgage lenders and note down their rates and conditions so you can compare these agencies. Reverse mortgage kits and guidelines can also be found online for free. When you have done enough reading and researching, seek an independent third party consultation from the HUD list. They conduct the private counseling in person or over the phone. This is especially useful is you have encountered terms which you do not quite understand. Additionally, if you have heard myths about reverse mortgage, they can debunk it for you.

Once all your doubts are settled, fill out an application form from your preferred lender and choose your mode of reverse mortgage payment. You can receive payment through a lump sum, term, modified term, tenure and modified tenure. Your previous session with the financial counselor would have already provided you with the necessary payment options information.

Your chosen lender will process your application and this involves a full investigation and appraisal of your home. They will be able to determine the value of your property based on its location and status. Afterwards, the lender will finalize the loan parameters and submit the full package for underwriting.

When your loan has been successfully underwritten and approved, they will make a computation of the initial interest rates and closing expenses. You will then be presented with the loan contract that states the final figures and closing papers. Once the contract has been closed, you have three business days to cancel the loan. Should you decide to do so, you must cancel in writing otherwise, the disbursement will begin to process on the fourth business day.

If you have existing loans placed on the property, the lender will arrange to cover the payments necessary. It is imperative that you are only obligated to the reverse mortgage while it is in effect. That is why before the loan money is released to you the existing debts will have to be paid. The rest of the funds will form part of your line of credit or monthly amortization no matter how big or small the excess is. There are instances wherein the existing loan repayments have consumed the full mortgage fund. When this happens, the reverse mortgage remains in effect but no other payments will be made to you.

When the existing debts have been repaid, you reverse mortgage amortization will commence and you receive the payment according to your preferred payment option. You reverse mortgage will expire when either of the three has transpired: the borrower dies, the home is sold, or it ceases to be the primary residence.

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It might sound crazy but it’s true. In fact, this is becoming more and more popular in the US for the convenience that it features. But, if there are those that are advocating for this type of mortgage, there are also those who are advising against it. In reality though, obtaining a loan on your home equity can be helpful but not everyone and not all situation is right for it. So here are things that you should know about reverse home mortgages:

Are you qualified to obtain a reverse home mortgage?

According to the FHA, the borrower must be at least 62 years old or older and a homeowner. You must be the outright owner of the home and must have low mortgage balance. You should be able to pay off your mortgage balance at closing with the proceeds of the loan. It is also required that you live in the home. Some financial institutions will also ask you to obtain consumer counseling from an HECM counselor.

Is your home eligible?

Financial institutions require that your home is a single family home type. It could also be a several-unit type of home providing one of the units is occupied by the individual who is obtaining the loan. If you are living in a condominium or manufactured homes, you can also be eligible for reverse loans but you have to meet the FHA requirements and your unit must be HUD-approved.

If I outlive my loan, can the lender take my home?

It is stated that in a reverse loan, you don’t have to repay as long as you are living in the house. But you should maintain the taxes and insurance as well as the state of the property. So, as long as you live and stays in your house, there’s no need to worry about lenders coming after your property.

How much can I borrow?

Depending on your age, the value of your home upon appraisal and the prevailing rates, you can get as much money as you need. The current mortgage limit set by the FHA is also another factor affecting the amount of money that can be released to you in your reverse loan. There are reverse loan calculators online that you can use to help you calculate the amount of money you can get. In general, though, you can get more money if you are older, if the interest rates are lower and if your home is more valuable.

These are just few of the things that you need to factor in when deciding whether to get reverse mortgages or not. Just a rule of thumb, avoid seeking paid services for reverse loan referral because the FHA does not recommend this. Besides, agents can take advantage of you and persuade you to get a loan though you don’t really need it.

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In today’s struggling economy many elderly folks are considering reverse mortgages in order to acquire funds to help their children through rocky times. There are pros and cons to this strategy, and homeowners should examine them thoroughly before taking this drastic measure. Common questions involved pertain to taxability of the funds obtained from a reverse mortgage, taxes involved with gifting the money to children, and the effect of surrendering equity on Medicare and Medicaid eligibility. Anybody considering taking out a reverse mortgage, also known as a home equity conversion mortgage, should consult an attorney specializing in elderly-specific law.

First of all, funds gained from a reverse mortgage are not considered income, and are therefore not taxable for the homeowner. Any funds given to children, however, are considered a gift and thus subject to applicable gift-taxes. As far as Medicare and Medicaid are concerned, the former is considered insurance, and would be unaffected by a reverse mortgage. Medicaid, on the other hand, is considered a means-tested program, so acquisition of funds through a reverse mortgage could have an impact on eligibility. Medicaid eligibility requirements do vary widely from state to state.

You should beware, however, of trying to manipulate the system to draw down equity in the hopes of gifting the money in order to improve your chances to qualify for Medicaid. This trick has been tried many times only to leave the elderly without Medicaid and facing charges. If the money coming in from a reverse mortgage is spent as it comes in, however, it should have no impact on Medicaid eligibility; it’s when that money sits in the bank thus becoming an asset that it can become an issue.

So be sure to thoroughly research all aspects of your situation and then consult with elder-specific law experts before seeking one. Present needs, future care expenses for the parents, and any tax issues should all be looked at, as well as the pros and cons of leaving the house as an inheritance after the parents pass. Investigate how local and state laws affect the issues at hand and tread carefully, as any consequences from a bad decision can linger long after the parents are deceased.

George Mills specializes in Asheville real estate and Waynesville real estate.

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In order to avail of this reverse mortgage insurance, one must first be able to comply with the requirements of a reverse mortgage. Firstly, the person availing of this kind of mortgage must be at least 62 years of age. This is a requirement that cannot be waived since the spirit of the law that created this type or mortgage specifically ensured that the individuals who are already of old age have better benefits than younger ones. This coincides with the principle of the older the person gets then the easier and more lenient the requirements to avail of this mortgage become. The debtor or borrower of the money must be exactly 62 years old once the contract of mortgage takes effect as specified in the date contained in it.

Secondly, the debtor or borrower must undergo credit counseling. This credit counseling must be done with a financial specialist or expert through a third party counseling service provider. The objective of this requirement is to ensure that the senior citizen debtor is well informed of what will happen once he or she engages in this reverse type of mortgage. This will equip him or her of the necessary knowledge that will ensure that he or she will not be, in anyway, put into a position that is not favorable. This is a method of the law in itself to protect the rights, privileges and interests of the old individuals of the United States of America.

Thirdly, the debtor must not have any subsisting or pre-existing mortgage in order to avail of this reverse mortgage. This is the protection allotted by the State and the law in order to protect the rights, interests and privileges of the creditor or lender of the money. This will ensure that both the creditor’s and debtor’s rights have equal protection of the laws that pertain to mortgages and loans. If you want to avail of reverse mortgage insurance then make sure that you first comply with these three requirements in order to prevent any further complications regarding the mortgage itself together with the insurance for such mortgage that you will avail of.

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If you are considering a reverse mortgage you should know that there are four ways to get the money that is coming to you. Knowing all of your options will allow you to pick the best option for you. The program you choose could also dictate if you have to take an adjustable rate mortgage (ARM) or a fixed rate.

1. Up Front Draw - Taking all the funds as a lump sum is a very common option. Since the money is yours, you are allowed to spend it on anything you please. Most commonly, the reverse mortgage funds are used to pay off your existing mortgage. You can choose an ARM or a fixed rate for this plan.

2. Monthly Payments - Payments to you that is. The two options are payments that continue for a specified amount of time or a lifetime payment. Since the lifetime payment continues for both your and your spouse’s lifetime, it is the most common choice. This option does not allow for a fixed interest rate. An ARM is all that is available.

3. Line of Credit - In the event that you don’t need the money today, or you would like to keep in in reserve for an emergency, choose this option. No interest will be charged to you if you don’t take the money. It is only charged in the event you borrow it. ARM only on this on too. No fixed interest rates on the line of credit.

4. A Combination of the Above - You can customize your loan to combine any of the above options. If you need a small lump sum, a monthly boost to your income, and you want the rest to be in a line of credit, mixing and matching is the way to go. Additionally you can alter your plan anytime you want to get more monthly or get an additional lump sum for a small fee. By combining the above options, you are by default going into an adjustable rate mortgage.

In the event you want an option other than a lump sum, know that you must take an adjustable rate mortgage (ARM). When choosing the fixed rate reverse mortgage, there is only one option - you have to take it all when you close your loan.

Prior to committing to any reverse mortgage programs, get the facts. Visit our website for more reverse mortgage information. We have a free reverse mortgage calculator to see how much money is available to you.

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That’s right - once you turn 62 years of age and own your own home, you become eligible for a reverse mortgage. This relatively new mortgage vehicle can provide you with income from the equity in your home. In fact, if you owe less than 20% to 40% of the value of your home, you can use a reverse mortgage to pay off your existing loan and provide yourself with a monthly income - all at the same time.

Know your options!

Whether or not you intend to get a reserve mortgage at this time, you at least need to understand how reverse mortgages work so that, if needed, you will know about our home equity ‘ace in the hole’. Let’s say that you are going merrily though retirement without many cares and with your financial life pretty much in balance when a serious illness, hospital bill, or other catastrophe confronts you. Understanding the equity in your home and how a reverse mortgage works, you’ll have the security of knowing how to handle the crisis situation, should it occur.

As you have paid on your home mortgage for years, you have reduced your debt and increased your equity in the property. Now, with a reverse mortgage in place, your equity is decreased and your debt increased. You never have to repay the debt as long as you live in the house. The mortgage balance only must be repaid when you move or pass away. If the home and mortgage are in joint names, your surviving spouse can continue to own the home and to live there after your death. In fact, if you live to be 110 and outlive the equity in your home, the shortfall is covered by reverse mortgage insurance provided by our Federal government. If and when you should decide to sell your home, the outstanding mortgage balance must be repaid.

Improve Your Family’s Cash Flow

When you get a reverse mortgage, you will have several options available to you, You can take your equity as a lump sum, payoff any outstanding mortgage balance, and invest or spend the remaining funds or take a monthly amount for the remainder of your life. Such an option has a very beneficial effect on your monthly cash flow. Just imagine, your mortgage payment obligation is replaced by a monthly check. That’s what we call a Double Whammy on your budget!

Since reverse mortgages (sometimes called a conversion mortgage) first became available a few years ago, they have become one of the most popular forms of mortgages available. Many experts attribute this to the increase in the cost of living, particularly medical costs, over the past decade. As the costs have increased, the fixed incomes of many retirees have proven inadequate to make ends meet and the reverse mortgage provides the net cash flow difference needed by so many seniors.

Plan on living in the home for a while?

Since there are significant fees and closing costs related to originating a reverse mortgage, it should only be considered if you plan on staying in the home for at least five years or so. Otherwise, refinancing to a reverse mortgage may not be financially justifiable.

How to get started

There are many options, details, fees and other considerations related to obtaining a reverse mortgage, so it can be somewhat confusing. Therefore, you should not rush into it and you should obtain the advice of your trusted family attorney and/or accountant. There have been scams out there, so beware! Make certain that your lender or broker provides you with trade references and be sure to check them out with the Better Business Bureau.

Investigate reverse mortgages and learn more about your options. It will increase your feeling of security immensely! The accompanying articles explore many of the risks, benefits, and options of Reverse Mortgages.

Don Seibert is a retired business executive who, as an Expert Author, writes timely articles on many issues concerning retirement

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So what are the things that you need to know before getting a reverse loan? Here are few things to help you out:

Requirements in getting reverse loans

Among the basic things that you should know about this loan is that you must be at least 62 years of age. You must also live in the house where the home equity conversion will be based and you should pay off existing mortgages on that house, if there is any. The value that you can get out of the loan depends on several factors: the value of you house, the mortgage limit imposed by the government for your area or the limit imposed by the lender, both future and current rates, your age and also the fees that shall be deducted upon release of the loan.

The lender will also require you to stay in your home and they cannot seek repayment unless you die or move out. So a disadvantage to this kind of loan is that you are not free to move out and enjoy other places during your retirement.

Mode of getting your money

Most reverse loan lending institutions will give you three options on how you will receive the proceeds of your loan. You can either get the money in a lump sum, as a line of your credit or in monthly payments. But most lenders will allow you to combine these three modes of payout.

The cost of getting reverse loans

Among the most important things to consider is the cost of obtaining a reverse loan. This is because this type of loan can be very expensive. From origination fees and insurance premiums that typically cost about $25,000 or higher – and that’s only for a mortgage of $250,000. To add to that, there are still interest rates to think about.

Effects on eligibility for government assistance

If you are already enjoying any assistance from government, you should first seek more information on whether getting a reverse loan could affect this. Some of the government aids that could be affected are Medicaid, Supplemental Social Security Income and even food stamps.

These are the just few of the important factors that you should consider and think about before starting to seek reverse mortgages. And if you are just seeking the loan just for luxuries and any unimportant investments, you should think this several times over. Reverse loans equate very expensive and high-cost debts to pay off just to spend on things that aren’t even a necessity.

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What is FHA Reverse Mortgage Insurance?

A reverse mortgage for seniors is a loan based on the equity of your home that is designed especially for those 62 and older who own their own homes. This loan program allows homeowners to enjoy the benefits of retirement with tax free income that need not be repaid until the owners leave the home and it is sold or they pass on. The proceeds from the sale revert first to the lender of the reverse mortgage to repay the mortgage before any net equity disbursement is made.

Many reverse mortgages are backed by the US Department of Housing and Urban Development (HUD). HUD backs these reverse mortgages that are provided by approved lenders. If the reverse mortgage is not repaid with the amount of the sale of the home, HUD will pay the remainder of the balance due to the lender, and no debt is uncured on the part of the estate or heirs. For example, if you have a reverse mortgage for seniors and you outlive the actuarial tables, the HUD insurance will continue the monthly payments to you as long as you live!

The ability to back these reverse mortgages is through the Federal Housing Administration (FHA). FHA reverse mortgage insurance allows HUD to provide this backing for reverse mortgages for seniors. Basically, the FHA reverse mortgage insurance allows HUD to help lenders provide lower cost reverse mortgage loans than other, private loan products. The FHA also sets the limits for the amount of a reverse mortgage loan based on FHA loan caps for the area.

FHA reverse mortgage insurance is paid for by consumers who use HUD reverse mortgage loan programs. Two percent of the value of the home is paid up front for FHA reverse mortgage insurance. Throughout the lifetime of the loan, an additional half percent of the loan balance is paid yearly for the FHA reverse mortgage insurance.

However, many consumers do not see the impact of these costs. The FHA reverse mortgage insurance is often covered by the loan itself. The lender adds the amount of the FHA reverse mortgage insurance, as well as any closing costs and fees, to the balance of the loan amount. These additional loan costs are taken into account with the loan amount is determined for the reverse mortgage.

These additional costs can make a reverse mortgage for seniors rather expensive in the cost department. If you do not plan on living in the home for at least 5 years, a reverse mortgage for seniors may not be for you. Be sure in investigate all of the pros and cons and be fully aware of the insurance and their respective costs before proceeding. Some really good advice about reverse mortages for senior can be had for free from the AARP.

Don Seibert is a retired business executive who, as an Expert Author, writes timely articles on many issues concerning retirement.

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A lien is a form of security interest or right granted to a person or entity that the latter can enforce against the debtor or borrower of the money. Due to this fact, the lender or creditor will have a right on the home or property of the debtor if ever the latter fails to make payments as stipulated in the contract of mortgage or loan. Federally insured reversed mortgage on the other hand, is a reverse mortgage that has been automatically insured through the laws mandated by the federal government. This is particularly true with regard to the reverse mortgages entered into in the United States and Canada, wherein the government takes part in ensuring that the rights and privileges of the senior citizens are protected to some degree or manner.

There are several requirements in order to get a reverse mortgage. Firstly, the age of the senior citizen or individual must at least be 62 years old. This is a mandatory requirement that cannot be waived in any manner. The principle in this type of mortgage is that the older the senior citizen gets then the more lenient the requirements will become for him or her. Secondly, there must be no pending or subsisting loans or mortgages during the application for this reverse type of mortgage. This is mandated by law in order to ensure that creditors and lenders will not be abused by unscrupulous individuals who want to take advantage of this reverse mortgage the unlawful way.

Thirdly, the senior citizen or individual must undergo credit counseling. This credit counseling must be done with an independent third party financial specialist or expert. The latter will explain to the former all of the things that the senior citizen must know, including the contract that the said individual will enter into and the repercussions of abusing or not fulfilling the stipulation or agreement contained in it. This counseling will thus equip the senior debtor or borrower with the right knowledge in order to protect his or her rights and interests. If you are thinking of availing of this kind of mortgage then it’s best if you make sure that you fit and have accomplished these three requirements as soon as you can.

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Reverse Mortgage Information You Need to Know

When you ultimately pass on, you will not likely be able to take your home with you! So, why not let your home (or rather the equity in it) help fund the rest of your days? That’s why they created the “Reverse Mortgage for Seniors”. Every senior really needs to check into the reverse mortgage programs if only to be up to date and to have an “ace in your back pocket” should an unforeseen catastrophe occur. Many seniors are wiped out each year when a sudden huge medical bill or other unexpected expense jumps up out of the blue. A reverse mortgage may very well be your financial salvation in case something like that happens to you.

A reverse mortgage can be a great way to receive additional retirement income that is much needed in today’s society. But there are several factors that come into play when you apply for and receive a reverse mortgage. Before you jump into this advantageous program, make sure that you have all of the reverse mortgage information that you need to know.

The first piece of reverse mortgage information that you need to know is who can qualify. Anyone homeowner over the age of sixty-two who has sufficient equity built up in their home can qualify for a reverse mortgage. Condominiums usually qualify, however, co-ops are not generally allowed as collateral for a reverse mortgage except in certain areas, so make sure you get all information specific to your home and area before applying.

The second piece of reverse mortgage information that you need to know is how the loan works. When you get a reverse mortgage, you receive money from a lender based on your age, the amount of equity in your home, home value, and interest rates. The reverse mortgage loan does not become due until you or your spouse pass on, move to another principle residence, or sell the home. Most often, a reverse mortgage is repaid by the sale of the home. Therefore, if you plan to leave your home to your children, you should gather all of the necessary reverse mortgage information to make sure that you are making the right decision.

Finally, you should not make any major financial decisions without doing personal research and receiving independent advice from a trusted source. There are many not for profit associations, organizations, and websites that contain reverse mortgage information. You should get reverse mortgage information from several sources, and compare the information that you receive. This will help to protect you and your estate from bad investments and unreliable lenders. Be alert for scams, particularly those who contact you by telephone and do not, under any circumstances give your personal information to anyone that you don’t personally know.

A reverse mortgage for senior package may well be just the ticket for you, but be sure to do your homework and take your time.

Don Seibert is a retired business executive who, as an Expert Author, writes timely articles on many issues concerning retirement

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