REVERSE MORTGAGE INFORMATION FOR PEOPLE AGE 62 AND ABOVE

2007-03-08 10:33:40

( Financial )



Sixty-two years old and cash strapped? If you are a certified home owner you can benefit from your situation by applying for a reverse mortgage on the equity of your home. Reverse mortgage information is available from the government agencies and non-profit organizations. The United States Department of Housing and Urban Development or DHUD can also provide you the necessary reverse mortgage information.

Reverse Mortgage Information

What is a reserve mortgage?

Reverse mortgage is a type of mortgage for homeowners sixty-two years old and above allowing them to convert into cash part of the equity of their homes. It is termed reverse mortgage since the borrower is not required to pay off the mortgage until they sell the house or dies. The house will be sold in the event that the borrower dies and part of the proceeds will be used to pay off the amount of the reverse mortgage lent by the lender.

It is designed to assist people who are in their retirement age but experiencing problems in their cash flow. The cash can be used to fund retirement and respond to restriction in income among older individuals.

Types of reverse mortgage

Single purpose reverse mortgage, federally insured reverse mortgage and proprietary reverse mortgage are the three types of reverse mortgages. Government agencies and non-profit organizations usually offer single reverse mortgage. It charged lower cost but is not available in every estate or agencies. As its name suggests, single reverse mortgage can only be used for a single purpose assigned by its lenders. Home improvement, repairs and tax payments are some of the purposes that the mortgage can be availed.

Federally insured reverse mortgage is also known as Home Equity Conversion Mortgages or HECMs which is supported by the DHUD. It is more costly than single reverse mortgage in terms of up front costs. Borrowers are given a choice on how the proceeds of the loan will be paid to them. They can choose between a fixed monthly advances and a line of credit to receive the proceeds of the mortgage. A combination of the two choices can also be designed for the borrower.

Proprietary reverse mortgage is a private loan granted by lenders of your choice offering such services. It can be expensive just like federally insured reverse mortgage. Bigger loan advances or proceeds are offered to home owners with higher appraisal value of their homes but with lower mortgage balance.

Reverse mortgages might result to your heirs not getting their home inheritance particularly when the value of the house in the future is lower than what is owed from the reverse mortgage lenders. However, it surely helps older people enjoy their retirement better.


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