Why Get a Reverse Mortgage?

02/14/2012

Reverse Mortgages Before you can understand what reverse mortgages are you should know what they are not. They are not designed for the desperate, or for trading your property for money. They are merely mortgage loans secured by homes with deferred mortgage interest.

You still own your home. You make the payments on your insurance and property taxes just like before. As with any mortgage you get a monthly statement for this that includes all the interest charges and your balance information. The only difference will be the absence of return coupons for paying your monthly payment.

You must live in the U.S. and be a citizen. You must be a permanent resident age 62 or more with a substantial amount of equity in your home. Your maximum loan amount will be based on the youngest homeowners age, and the asset values and current rates. There is no required credit score or income amount because you have no monthly payments. You have to live in your home and it has to be your main residence. You also have to keep paying your property insurance and your taxes

This puts you in control. You can opt for making voluntary repayments of your mortgage interest either in whole or if you want, in part, and without penalty. You can deduct the mortgage interest just like with a traditional mortgage, and then pay the loan off in full anytime in cash, or by refinancing, or by sale. Many people believe that what you get from your bank with eat all your home equity and leave your heirs with nothing. Wrong. Nobody can predict you home appreciation, but you can rest assured that your heirs don’t have to do without.

Who benefits from these reverse mortgages? And who can get one? Anybody who has the desire and the need. These are great tools for helping you stay in your home and improve your retirement years.

Unless you voluntarily pay on the loan it’s not expected until the last living borrower dies or no longer occupies the property as a main residence. The heirs all have enough time to sell the home or refinance it. If they don’t act, then the lender has no choice and will have to foreclose on the home. If the sale of the home doesn’t sufficiently cover the balance of the laon, then the government says it will take the balance from your assets. The lender will is reimbursed for any shortages from the mortgage insurance fund.

Money received from a mortgage isn’t considered as income and therefore is not taxed. The FHA want everyone to fully understand about these loans and offers loan counseling for those who need help with it.

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