Reverse Mortgage
September 20, 2009 by admin
Filed under Mortgage Loans
Budgeting can be a challenge for those 62 and over. Additional health expenses or maxed credit can make a Reverse Mortgage, also called a Lifetime Mortgage an attractive option. Credit issues do not pose an impediment. Reverse Mortgage qualifications differ from standard mortgages in that they are not based on debt to availability ration, or DTI. No payments will be due while you are still living in the property.
In order to decide whether a Reverse Mortgage is the best choice, you need to know what they are. Reverse Mortgages are endorsed by HUD-the U.S. Department of Housing and Urban Development. Often, this provides less risk for seniors who already own, or who have nearly paid off their homes.
The extra funds can be used to supplement retirement income, or SSI. For many older Americans, a home often is the single largest investment they have. It can represent their entire life savings. How does a Reverse Mortgage differ?
Reverse Mortgages are mortgages endorsed by the Federal Housing Administration that are geared specifically to seniors who own their homes and can be used to turn their home equity into income. Home equity accrues with every mortgage payment you make during the life of the loan. Unlike standard mortgage contracts, a Reverse Mortgage does not require a monthly payment while you are still living in the home. What is required to obtain a Reverse Mortgage?
An individual must be 62 years of age or older in order to qualify for a Reverse Mortgage. The mortgage must be taken on your principle residence; you must own the home, or be able to settle the debt after you receive the funds. Many banks require a one-time consultation about the contract before the loan can be finalized. An standard Equity Line of Credit is different from a Reverse Mortgage.
Also known as Second Mortgages, Equity Lines of Credit are awarded based on the more traditional income to debt ratio used by other types of loans and the borrower must start making regular payments 30 days after the loan is utilized. Qualification for a Reverse Mortgage is available does not take income or debt into consideration. All that is needed is that the borrower fulfill the basic requirements already mentioned. You will not be required to remit funds while you reside in the home.
You will remain responsible for your other obligations, like insurance and taxes. Unfortunately, you will still have more than just your utilities to be concerned with. The amount of a Reverse Mortgage will vary.
At this time, loan amounts are capped at approximately $300,000. Congress is presently considering a bill, written by HUD, which would double that amount. You must have equity in your home, or your home must be valued at an amount that is, equal to, or greater than the loan.
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