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Reverse Mortgage Information
Reverse Mortgages are programs designed to enable senior homeowners 62 years and above to convert part of their home equity into cash. They can do this without having to sell the home or give up its title. Seniors do not have to take on any new mortgage payments either. Instead of making monthly payments to a lender, the reverse mortgage lender makes payments to the senior homeowner.
Amount of the Loan
Estimated proceeds from reverse mortgages can be calculated on a reverse mortgage loan calculator using several factors including; age, interest rates, value of the home and location of the property in question. Reverse mortgage loan proceeds are completely tax-free and most of the time will not effect social security or Medicare benefits which seniors may already be receiving. Reverse mortgage borrowers have the option to collect their moneys as a lump sum, as a line of credit or receive the money through monthly payments for as long as the home remains occupied as the primary residence of the senior citizen.
Lending Limits
Reverse Mortgages do not allow you to release the full equity from your home. HUD and the FHA have imposed lending limits on the amount of the loan that lenders can give, depending on the location of the property. This means that the amount of the loan will be less then the value of the home, depending on the percent approved by the FHA for your area. Recently the HUD and FHA lending limits have been greatly increased with the passing of the American Recovery and Reinvestment Act of 2009. You can use our reverse mortgage calculator to get an estimate of how much money you are eligible to receive or you can call 1-800-407-6365 for a more detailed quote and information.
Myths and Misconceptions
Like any other great product, reverse mortgages have their share of myths and misconceptions. While most of the myths and misconceptions are untrue, reverse mortgages are not for everyone. Seniors looking to take out this loan should talk to a knowledgeable friend, specialist or counselor to get information about how reverse mortgages work without the false myths and misconceptions.
Pros vs. Cons, Advantages vs. Disadvantages, Benefits vs. Pitfalls
There are both pros and cons, benefits and disadvantages to reverse mortgages. Pros or benefits are that the reverse mortgage loans do not need to be repaid during the life time of the borrower. Further, the FHA's (Federal Housing Authority) HUD (Housing and Urban Development) division insure the reverse mortgages under their HECM program (Home Equity Conversion Mortgages). Seniors get to live in the home until they pass away. Lets also not forget about the handy HECM loan monthly payment checks that the seniors receive.
Disadvantages or pitfalls include the loan limits set by the FHA that prevent reverse mortgage lenders from giving you the full value of the loan. There are also interest rates applicable for the loan and the closing costs are higher then that of regular mortgages. Additionally like all other loans, it eats up the equity of the home which leaves less inheritance. Further reverse mortgage information can be obtained from a loan counseling specialist.
Counseling and Seminars
As mentioned above, reverse mortgages are a great savior for many seniors yet they are not for everyone. For this reason HUD makes counseling mandatory for all seniors looking to take out an HECM loan. By talking over the pros, cons, advantages, disadvantages, benefits, and pitfalls with an approved HUD counselor and specialist, a senior can decide if a reverse mortgage loan is good for him. Going through the counseling session is also a good way to get more information about interest rates, lending limits, closing costs, fees, programs, prices and lenders of the HECM loan. A HUD approved counselor should be able to give you all this info, facts and rules, kind of like an education guide. Before taking a counseling session from an expert specialist, seniors can attend a reverse mortgage seminar. These seminars can provide the basic facts, faq and information about the HECM loan.
Conclusion
Many thousands of home owning senior citizens across America have been able to improve their quality of life using reverse mortgage loans taken from industry lenders. The money received as loan payments from the lender need not be repaid up front and are also completely tax-free.
News and Updates
Fixed Rate Reverse Mortgages are very popular these days and have been gaining popularity ever since the program was launched. A Reverse Mortgage can now also be taken for the purpose of home purchase. These purchase loans are great for seniors looking to downsize on their residential dwellings and cut costs. They are able to purchase a new home without making a down payment or taking another mortgage. Thus the benefits of reverse mortgages are many, and this website can be used as an education guide to explore its many facets before contacting one of the listed reverse mortgage lenders for further info and counseling.
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