Reverse mortgage

A reverse mortgage (known as equity withdrawal in the United Kingdom) is a type of loan used by older consumers as a way of converting their home equity (the value of their home, minus the amount of mortgage(s)) into a cash payment (or series of payments) while retaining ownership of their property. To qualify for a reverse mortgage in the United States, you must be at least 62 and if you have an existing mortgage you must be able to pay it off with the proceeds from the revrse mortgage and if needed, additional personal funds. The amount any individual homeowner is eligible for depends on their age and the FHA appraised value of the home. In addition the location of the home can have an impact on the amount as well.

Related Topics:
United Kingdom - Loan - Home equity - United States

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Reverse mortgages allow the home owner to continue living in the home without being required to repay the loan. The loan must be repaid, with interest, only when the homeowner is no longer living in the home as their primary residence. In the United States, the proceeds of the loan are tax-free, there are no minimum income requirements, and for most reverse mortgages, the money can be used for any purpose. These loans were once blatantly unfair to home owners. Although the old products are no longer available, the reputation of reverse mortgages is still tarnished in the United States. Having said that however, the growth in acceptance of the reverse mortgage has skyrocketed in recent years as the negative conceptions seniors have had have been proven to be inaccurate.

Related Topics:
United States

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Income and credit ratings are not considered by lenders when granting reverse mortgages unless you have a bankruptcy that has not been resolved.

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In the United States, you can be paid in a lump sum, in monthly advances (payments), through a growing line of credit, or a combination of all three. The loan advances are not taxable and do not affect Social Security or Medicare benefits. Medicaid and SSI benefits may be impacted. The cost of a reverse mortgage exceeds the costs of other types of loans. However in most cases the costs are approximately the same as the cost of selling your home and moving. With a reverse mortgage you own your home as long as you'd like to, you can sell at anytime, are protected against a fall in property values, and benefit from any increase in value.

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Most seniors are concerned about being able to leave their home to their heirs and believe that a reverse mortgage will prevent them from doing so or that all the equity in the home will be used up. The truth is the lender never owns your home. Upon your death your heirs become the owners of the home. In terms of the equity issue it is possible that most of the equity will be depleted but only if you have borrowed most of the money available to you. And in that case the money has most likely been used to improve your quality of life for several years and certainly has not been wasted.

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The majority of reverse mortgages done are FHA Insured. They have been designed with help from AARP to offer the same benefits at the same basic costs regardless of lender. They are not like traditional mortgages where shopping can lead to lower costs. You still need to be cafeful who you decide to work with. Many reverse mortgage loan officers are not full time reverse mortgage loan officers and do not have the experience required to provide accurate and objective information. Be sure you are working with a professional reverse mortgage specialist that has several years experience. Ask about their experience and credentials.

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