Link to this page Print RSS  

Reverse Mortgages In Plain English

March 29, 2010

If you currently own a home or homes over a period of time, then you most likely have built some form of equity in it. When used correctly, reverse mortgages can help you to fully utilize the equity in which you have built up in your home and provide you with some new financial freedoms in your life.

How did reverse mortgages come about?

Reverse mortgages were developed by the good people of the federal government as a means to relieve elderly homeowners over the age of 62 financially during the golden years in their lives. When a senior takes advantage of a reverse mortgage, he/she can continue to reside in their current residence, while simultaneously utilizing the equity they have built and eliminating their monthly mortgage bill. The best part of a reverse mortgage is that an individual does not have to repay any of their tax-free equity until they decide to leave their place of residence and relocate.

Who can get a reverse mortgage?

Acquiring a reverse mortgage is easier then you think.

• If you own a home and you are 62 or older you can put in an application for a reverse mortgage.
• To obtain a reverse mortgage and actually borrow from your equity, you must live in the home.
• To secure a reverse mortgage there are no or credit requirements which will allow many individuals over the age of 62 to have a great chance to secure this opportunity.

How do I apply for a reverse mortgage?

The necessary steps to apply for a reverse mortgage are pretty much the same steps that would be required to apply for any other type of loan. A great benefit about reverse mortgage is that once you secure one you can use the money from the reverse mortgage to pay for any current debt that you have.

Here is a quick list of the ways you can receive your tax-free reverse mortgage:

1. Month-to-month
2. In the form of a credit line
3. In one single payment
4. Any variation of the previous choices

Because a reverse mortgage will allow the homeowner to refrain from paying their mortgage on month-to-month basis, the mortgage amount that is owed will continue to increase and conversely the amount of equity left in the house will decrease. When an individual decides to relocate, the reverse mortgage will come to an end and the amount that will be owed on the home will either be equivalent to the actual value of the home or the current value of the mortgage whichever amount is lower.

he best news about reverse mortgages is that as you are involved in it, your home will continue to gain appreciation at the exact same rate you are involved in a regular mortgage, which will result in an increased volume of equity over time. Another great feature of reverse mortgages is the fact that you will be able to still maintain your property title and remain the sole home owner of your home which means that you will still be accountable for property taxes, insurance, and repairs however you will not have to pay any of the loan back until you decide to move from your current place of residence.

What will you purchase with your reverse mortgage loan?

A reverse mortgage loan can provide you with significant freedoms that you were not able to take advantage of before. If you are over 62 years old and would like to finally live life without worrying about paying your monthly mortgage payment then reverse mortgages may just be what you are looking for.

Closing:

Lender411.com is America's most trusted source for lending information. Make sure to check out our weekly article spotlight regularly for the most up-to-date information for all your lending needs.

Link to this page Print RSS