Top Things You Need to Know If You’re Considering a Reverse Home Mortgage
Posted Under: Reverse Mortgage
By John Mazzara
The Origin Of This Senior Loan Product
It was HUD that actually created one of the very first reverse home mortgages, and they have become more and more popular since that time. This type of mortgage provides a way that seniors can have an easier time when they are going through retirement. Many seniors use this senior housing option to help them supplement the money that they get from social security, the improve their home, enjoy traveling, pay off medical debt, or even pay off their current mortgage. There are definitely a variety of different ways that these mortgages can be used today. Although you’ll find that there are many benefits that come with going with a reverse home mortgage, it’s important that you don’t go into one blindly. So, here are some of the top things you need to know if you’re considering a reverse home mortgage.
Understanding a Reverse Home Mortgage
First of all, before you ever decide whether or not a reverse mortgage is right for you, it is absolutely essential that you understand what this type of mortgage loan actually is. If you are not sure what it is, you won’t want to get involved in it. You’ll find that a reverse home mortgage is a very unique home loan that allows you to take at least part of the equity that is in your home and get it back in cash. The equity that is in the home can be paid out to you, either by one lump sum, monthly payments, or as a line of credit. However, you won’t be the one making payments on this type of a loan.
Qualifications for a HUD Reverse Home Mortgage
Another thing that you need to know if you are considering a reverse home mortgage as a senior housing option is what it is going to take to qualify. Well, HUD requires that you have to be older than 62 years old and the person who is the borrower must be the one that owns the home. You also have to won your home or you need to have a mortgage balance that is quite low. Also, you actually have to live in the home that you want to get the reverse mortgage on. When going with a HUD reverse home mortgage, you’ll find that you are required to go through counseling that is approved by HUD before you are able to get the loan as well.
The Homes that are Eligible
It is also important that you know what homes are eligible if you are considering this option. You’ll find that most single family homes are going to be eligible. However, 2-4 unit properties may be eligible if you own them and you also occupy it. Some manufactured homes, condo units, and even townhomes may also be eligible for these home reverse mortgage loans as well. If any of these housing options describe your situation, then your home will probably be qualified for one of these loans.
Reverse Mortgage Vs. Bank Home Equity Loan
Many people don’t understand that there is a difference between a reverse mortgage and a bank home equity loan. Well, there is actually a big difference and it’s important that you are aware of it. You’ll find that in order to get the home equity loan, you’ll have to have a certain debt to income ratio in order to get the loan that you want. Also, you’ll have to make payments on a monthly basis as well. However, you’ll find that a reverse mortgage is quite a bit different from this option. You’ll find that it is not based on your income, your debt to income ratio, or even your credit. Also, instead of making payments, you’ll actually get payments and you’ll never have to make a payment until you decide to move or sell the home that you have the loan on.
Will the Lender Be Able to Take My Home?
This is a common question that many people have when they are considering whether or not a reverse home mortgage is the right option for their needs. Well, the answer is, no. The lender is not going to be able to take away your home, even if you actually outlive the loan on the home. As long as you keep the insurance and the taxes on the home current the lender is not going to be able to take away your home.
Reverse mortgage loans are explained in more detail at http://www.MinnesotaReverseMortgage.net John Mazzara is involved with financial services in the Twin Cities, MN. Officing out of Edina, Minnesota-John is centrally located within the 7 county MN metropolitan area. John owns three separate businesses-a licensed real estate broker associate selling Minnesota real estate since 1986-affiliated with RE/MAX Associates Plus http://www.MinneapolisStPaulHomes.com, an independent CFP-certified financial planner since 1989 with an independent Minnesota financial planning firm-Financial Planning Associates and the owner of a Minnesota mortgage broker firm-Venture Development Inc-specializing in residential, commercial and investment mortgages for purchases of single family homes, investment properties and commercial property. Venture brokers FHA, VA, Conventional loans and lines of credit. If you are looking for someone to help you in the areas of real estate sales/purchase, mortgages, or and/or financial planning and insurance you should call John for a free 1 hour consultation to see if he can meet your needs. 952-929-2577. RE/MAX Associates Plus and Venture Development are located at 7300 France Ave S, Suite 410, Edina, MN 55435
Photo by Alexandre Ruoso
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