Reverse home mortgages


Reverse home mortgage There are a number of senior citizens who find it difficult to keep up with their everyday expenses and also in paying off their medical bills and other expenses. For this reason the government has made available a mortgage option for the elderly called as reverse mortgages. With the help of reverse mortgages senior citizens can cash the equity in their house and have them in the for of a lump sum payment or as monthly payments or set up as a line of credit and withdraw as and when they like.

 

These mortgages are supposed to be paid back only when the borrower leaves the house or dies. Moreover the heirs are not supposed to pay back these loans it is either the borrower or the house itself that pays back these loans.

 

Considerations while taking reverse home mortgage

Before you plan to take a reverse home mortgage there are certain things that you should take into consideration. These include:

 

  • You should decide on how long you plan to stay in the house. the reverse mortgages are expensive for the first 2-3 years. If a reverse mortgage doesn\'t work as a long-term solution, you should consider other options.
  • Before you take a reverse mortgage you should consult a HUD-approved reverse mortgage counselor. Usually this service is given free of cost. The counselor can help you decide whether a reverse mortgage or some alternative best meets your needs. These counselors would help you in deciding which option would be the best for you and would answer all your questions.
  • You should work out on the fact whether you really need a reverse mortgage. There are other loan options that can be a less costly and would also meet your financial needs. A counselor can show you alternatives.
  • Once that you have decided to take a reverse mortgage then you should shop around and compare the different offers. The reverse mortgage offers vary from one lender to another.
  • You should also decide if the reverse mortgage affects your eligibility for need based public assistance benefits you may receive.
    • Types of reverse home mortgages

    There are three basic types of reverse home mortgage.

     

    The Home Equity Conversion Mortgage (HEMC): This is the most common type of reverse mortgage. This is a federally insured program and provides the borrowers with more cash that what is available with any other program .

     

    When you take this type of reverse mortgage then you are supposed to undergo independent counseling. With this program you can get the money either on a monthly basis or as a line of credit. This program has the lowest interest rate

     

    Fannie Mae program: This is also popular as the Fannie Mae program or the Home Keeper. You can take this type of reverse mortgage if your home is a bit costlier than the average homes in your location. You can obtain higher amount of loan with this option. You can get the money as monthly payments till you live in the house.

     

    Cash out plan: This loan option is also popular as the cash out loan program. This is usually meant for seniors who have luxurious houses and a lot of equity in their house.

     

    Pros and Cons of reverse home mortgage

    Like every other mortgage reverse mortgage also has its pros and cons.

     

    Advantages of reverse home mortgages:

     

    With the help of reverse home mortgages you can maintain your financial independence or improve your quality of life.

     

    You can keep the title to your property.

     

    The money that you receive with the reverse home mortgages is tax-free. It is not usually considered as income.

     

    You are not required to make payments till the loan ends or the house is sold.

     

    Neither your income nor your credit report is taken into consideration while taking these loans.

     

    You are not liable to owe more than the value of the house at the end of the loan term.

     

    Disadvantages of reverse home mortgages:

     

    • Reverse Mortgages are more complicated as compared to the conventional mortgages and the consequences of the different options are not always obvious in the beginning.
    • These mortgages can be relatively expensive as compared to other alternatives .
    • Though the money you receive with reverse home mortgages is tax-free, it can have an effect on your eligibility for need based public assistance benefits like Medicare, Supplemental Social Security Income (SSI) and Medicaid .
    • It reduces the equity in your property that could cause a potential negative impact for your heirs.
      • Reverse home mortgage lenders

      Some of the lenders for reverse home mortgage are mentioned below.

       

      Reverse mortgage 4 u:

       

      They provide reverse mortgages for seniors in Arizona, Florida and California. If you are interested in taking a reverse mortgage then you can contact them at 866-309-6626 or fill out their online form. They are members of NRMLA and WSB.

       

      American reverse:

       

      They provide reverse mortgage options and give all reverse types of reverse mortgages. You can contact them at 605 SW First Avenue; Ocala, Florida 34471-0982; Phone: (352) 867-1111; Toll Free: (888) 370-6620; Fax: (352) 369-5985.

       

      American Mortgage Professional Inc.:

       

      They provide reverse mortgage for senior citizens and offer all the types of reverse mortgage programs. You can contact them at 465 East Grand Avenue; Escondido, Ca. 92025; Locations throughout San DiegoCounty. Phone: 800-481-9999 ext 118 -Weekends or evenings call 619-299-3863;

       

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