AARP Reverse Mortgages

2007-07-24 08:31:47

( Financial )



What is a Reverse Mortgage?

Under a reverse mortgage, you borrow an amount based on your home equity value. But unlike conventional mortgages, you don't need to pay any amortization, and the lender is the one who pays you periodically.

Since you don't pay a cent, the interest just builds up on your loan balance. Hence, it is the exact reverse of the conventional mortgage where you deplete the debt balance and increase your home equity as you pay each amortization.

Technically, it is as though you have sold your home to the lender, yet you are allowed to continue living in it. As long as you have been keeping your insurance and tax payments up to date, and continue to use the home as your residence, the lender cannot foreclose your property. On the other hand, you also have the option to sell your home, and then repay your loan balance. In fact, you can even earn from the sale if your home value has appreciated tremendously, way beyond your loan balance.

Minimum age to qualify for a reverse mortgage is sixty-two years. You don't need to state why you want borrow the money, and there are no minimum income or credit requirements to qualify for the loan.

How AARP Helps in Reverse Mortgages

AARP is the American Association for Retired Persons, and is an organization which aims to serve the interests of people who are nearing or have reached retirement age. AARP provides services such as insurance coverage, credit card and auto club membership. It also provides its members with free advice for retirement, health and social security and legal matters of interest to seniors and retirees.

While there are no direct AARP reverse mortgages, the organization provides free reverse mortgage information services to tell you about the pros and cons of acquiring such type of mortgage.

Online you can locate AARP reverse mortgages calculator, which can help you figure out how much you should borrow, and how to expect in terms of negative amortizations.

The AARP reverse mortgages section also refers the best alternative sources of loans to you, as well as the pros and cons of each.

Before taking out a reverse mortgage, be sure that you thoroughly study and understand what you are getting into.


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