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Reverse Mortgage Loans > Reverse Mortgage Loans: Help For Senior Citizens
Reverse Mortgage Loans: Help For Senior Citizens |
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The popularity of reverse mortgage loans is on the rise in America. Among the first is the one by US Department of Housing and Urban Development (HUD). A federally insured private loan, the safe plan offers greater financial security to older Americans. Many use it to supplement social security, unexpected medical expenses, home improvements, etc. With your home likely to be your largest single investment, it's to your advantage to learn more about reverse mortgage loans to decide if it's right for you. Reverse mortgage loans are a special type of home loan enabling a homeowner to convert the equity on the home into cash. Over the years the equity accumulated from home mortgage payments can be yours. The difference from a traditional home equity loan or second mortgage loan is that the repayment is not required until discontinuation of using the home as one's principal residence. Reverse mortgage loans from HUD are also federally insured. Eligibility for HUD reverse mortgage loans by HUD's Federal Housing Administration (FHA) requires the borrower to be a homeowner, over 62 years of age, outright home ownership or with a mortgage balance low enough to paid off at closing with the reverse loan proceeds and living in the home. Consumer information needs to be received from HUD-approved counseling sources before obtaining the loan. Your home should be a single-family dwelling or a two-to-four unit property owned and occupied by you. Also eligible are townhouses, detached homes, condominium units and certain manufactured homes. Condominiums require FHA-approval and they can qualify for under the spot program. Reasonable condition of the home and minimum HUD property standards are necessary. Sometimes, home repairs are allowed after closing of reverse mortgage loans. Traditional second mortgage loans or a home equity line of credit require adequate income versus debt ratio to qualify for the loan and monthly mortgage payments. The difference in reverse mortgage loans is that it pays you, and availability is not based on your current income. The amount to be borrowed depends on age, current interest rate, loan fees, and appraised value of your home or FHA's mortgage limits whichever is lower. Typically, the higher the value of your home and your age and lower the interest, the more the amount. Payments are not required as the loan is not due while the house is your principal residence. As with all homeowners, real estate taxes and other conventional payments like utilities need to be paid but with FHA-insured HUD reverse mortgage loans, foreclosure or forced evacuation is not a possibility owing to missed payment. Reverse mortgage loans can be arranged to provide monthly income to supplement Social Security and retirement income. The biggest plus is no monthly payments. Your home equity can supplement your income, eliminate house payment, make home repairs and maintenance payments or pay off credit cards, household and medical bills. As in a standard mortgage loan, reverse mortgage loans costs cover appraisal, credit report, title insurance, legal fees, loan origination and recording fees. All normal loan costs apart from appraisal can be included in your loan balance. You can get a good-faith estimate of costs involved from financial experts. With reverse mortgage loans, older people can get the much-needed cash from the equity in their homes. Reverse mortgage as a term is the opposite of conventional mortgage loans. Instead of monthly mortgage payments to a lender, the lender makes monthly payments to you. The maximum loan amount and monthly amounts are determined by the value of your home at the time of the reverse mortgage agreement and the term of the loan. Reverse mortgage loans are not made for the full amount that the house could be sold at due to the cost to the lender and risk of declining value. Not only safe, reverse mortgage loans offer financial security to seniors. Regulated and insured by the US government, reverse mortgage loans were created and designed by them for helping qualified seniors maintain independence. |
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