How does a reverse mortgage work?

Reverse mortgage is a loan made by a lender to a homeowner using the home as security or collateral. With a traditional mortgage, the homeowner uses their income to pay down the debt over time.
However, with a reverse mortgage the loan balance grows over time because the homeowner is not making monthly mortgage payments.
A reverse mortgage loan typically does not require repayment for as long as the borrower(s) continues to live in the home as the primary residence, pays property taxes and insurance, and maintains the home according to the Federal Housing Administration (FHA) requirements or until the last homeowner has passed away or has moved out of the property.
The amount of equity you can access with a reverse mortgage is determined by the age of the youngest borrower, current interest rates, and the value of the home.
Please note that you may need to set aside additional funds from loan proceeds to pay for taxes and insurance.

Location: United States

Comments

Post a Comment

Popular posts from this blog

Despite Concerns, Reverse Mortgage Impact in Puerto Rico Minimal

Image
Some advocates and lenders have warned of a coming foreclosure crisis in Puerto Rico, but one top lender on the island says reverse mortgage borrowers rode out the recent storm much more easily than their forward counterparts. Puerto Ricans are still cleaning up in the wake of Hurricane Maria, which made landfall on the U.S. territory as a Category 4 storm last fall. In response to the devastation, the Department of Housing and Urban Development instituted a moratorium on foreclosures through March 19 for all forward and reverse loans — and as the deadline approaches, some have sounded the alarm about the potential impact on homeowners. “When I speak with my family in Puerto Rico, I hear the desperation in their voices,” New Jersey resident Maribel Soto told NJ.com last week. ”They don’t know when they will find employment again and when they will have stability in their lives. It’s unjust that companies are taking advantage of people at such a moment.” While forward mortgage borrow
Read more

Shopping for a Reverse Mortgage

Image
If you’re considering a reverse mortgage, shop around. Decide which type of reverse mortgage might be right for you. That might depend on what you want to do with the money. Compare the options, terms, and fees from various lenders. Learn as much as you can about reverse mortgages before you talk to a counselor or lender . And ask lots of questions to make sure a reverse mortgage could work for you – and that you’re getting the right kind for you. Here are some things to consider: Do you want a reverse mortgage to pay for home repairs or property taxes? If so, find out if you qualify for any low-cost single purpose loans in your area. Staff at your local Area Agency on Aging may know about the programs in your area. Find the nearest agency on aging at eldercare.gov, or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and how to apply. Do you live in a higher-valued home?
Read more