What are Reverse Mortgages?Reverse MortgagesUpdated on Sep 25, 2010 View more like this | Visit BLOOMFIELD, NJ | Contact NJ Mobile Fusion, LLC |
Reverse Mortgages:
What Are They And How Do They Work?
- By Derrick Miller
A reverse mortgage can help you improve the quality of your life by providing you with a lump sum of cash or a steady stream of dependable income if your home is either paid off or has a significant amount of equity in it. Instead of making payments to a lender, the lender gives you the cash or sends you money every month, which is why it's known as a reverse mortgage.
There are various types of reverse mortgages but most of them are similar. You will STILL be the owner of your home just the same as with a normal mortgage. You will be responsible to pay for all the taxes, insurance and repairs for necessary maintenance. However, there are no mortgage payments due for as long as you and your spouse are living in the house.
Just like with any other mortgage, there are fees associated with getting a reverse mortgage. These fees can be paid with the money you receive from the reverse mortgage. Your loan balance has these costs added to it, and they must be repaid with interest at the end of the loan period. However, there are no out of pocket upfront expenses.
Many wonder exactly how much they can receive with a reverse mortgage. The amount you get will be based on your age and what the value of your home is. Here is an example: The Federally insured Home Equity Conversion Mortgage - also known as HECM - is one currently available reverse mortgage. A HECM could bring you $641 a month for the rest of your life if your home is worth $200,000 and you owe nothing on it. Other options are a $107,466 lump sum cash, a home equity line of credit or any combination of the three options.
Remember reverse mortgages are primary mortgages, so you will need to pay off all balances on any existing mortgages. Money from a reverse mortgage can be used to pay off other debt if you don't already have the money to do this.
Your total debt will be the sum of all cash advances plus all of the interest that is added to the balance of the loan. You or your heirs are allowed to keep any excess below what your home is worth. However, your reverse mortgage loan balance will never be more than the appraised value of your home, even if you live to be 130 years old!
Your golden years could be made more golden by taking out a reverse mortgage!
But before you make your decision, be certain to go over all of the loan papers with your mortgage professional carefully to make sure that you understand everything, and ask a lot of questions! You will also have to take HECM counseling before you can do a reverse mortgage, your mortgage professional will also assist you with this process.
For more information you can visit the Department of Housing and Urban Developments website for reverse mortgages at:
http://www.hud.gov/offices/hsg/sfh/hecm/hecmabou.cfm
In these tough economic times, seriously think of how you can use a reverse mortgage to gain extra cash. Please contact me for a no fee assessment of your situation. I stand ready to answer your questions.
Derrick Miller is a Mortgage Banker for Home Savings of America, he specializes in all types of Government loan programs. You can contact him at (973) 743-9263 or via email at [email protected].
What Are They And How Do They Work?
- By Derrick Miller
A reverse mortgage can help you improve the quality of your life by providing you with a lump sum of cash or a steady stream of dependable income if your home is either paid off or has a significant amount of equity in it. Instead of making payments to a lender, the lender gives you the cash or sends you money every month, which is why it's known as a reverse mortgage.
There are various types of reverse mortgages but most of them are similar. You will STILL be the owner of your home just the same as with a normal mortgage. You will be responsible to pay for all the taxes, insurance and repairs for necessary maintenance. However, there are no mortgage payments due for as long as you and your spouse are living in the house.
Just like with any other mortgage, there are fees associated with getting a reverse mortgage. These fees can be paid with the money you receive from the reverse mortgage. Your loan balance has these costs added to it, and they must be repaid with interest at the end of the loan period. However, there are no out of pocket upfront expenses.
Many wonder exactly how much they can receive with a reverse mortgage. The amount you get will be based on your age and what the value of your home is. Here is an example: The Federally insured Home Equity Conversion Mortgage - also known as HECM - is one currently available reverse mortgage. A HECM could bring you $641 a month for the rest of your life if your home is worth $200,000 and you owe nothing on it. Other options are a $107,466 lump sum cash, a home equity line of credit or any combination of the three options.
Remember reverse mortgages are primary mortgages, so you will need to pay off all balances on any existing mortgages. Money from a reverse mortgage can be used to pay off other debt if you don't already have the money to do this.
Your total debt will be the sum of all cash advances plus all of the interest that is added to the balance of the loan. You or your heirs are allowed to keep any excess below what your home is worth. However, your reverse mortgage loan balance will never be more than the appraised value of your home, even if you live to be 130 years old!
Your golden years could be made more golden by taking out a reverse mortgage!
But before you make your decision, be certain to go over all of the loan papers with your mortgage professional carefully to make sure that you understand everything, and ask a lot of questions! You will also have to take HECM counseling before you can do a reverse mortgage, your mortgage professional will also assist you with this process.
For more information you can visit the Department of Housing and Urban Developments website for reverse mortgages at:
http://www.hud.gov/offices/hsg/sfh/hecm/hecmabou.cfm
In these tough economic times, seriously think of how you can use a reverse mortgage to gain extra cash. Please contact me for a no fee assessment of your situation. I stand ready to answer your questions.
Derrick Miller is a Mortgage Banker for Home Savings of America, he specializes in all types of Government loan programs. You can contact him at (973) 743-9263 or via email at [email protected].
