Whats a reverse mortgage?

Question

How does a reverse mortgage works?

Answer 1

When a "lender" gives a home owner an agreed on amount of money per month against the value of the home, and then gets the property at the end of the contract. In most cases the overall price is low, and they are only a good deal if an older person needs cash, and doesn't have a family to leave the property too.

Answer 2

What a reverse mortgage is: a good tool for financial planning and flexibility in the golden years. The borrower must own and live in the home as a primary residence and be 62 years of age or older. If husband and wife are both on the title, both must be over the age of 62.

In addition, the home itself must be of a type that qualifies for the reverse mortgage program. The vast majority of single family homes qualify, as do most condominiums, townhomes, 2-4 unit owner-occupied dwellings and manufactured homes. Your income and credit levels, however, do NOT matter.

To go through the process of getting a reverse mortgage you will need to speak with a reverse mortgage originator or provider. This person will guide you through the preliminary steps, including counseling, home appraisals, inspections, and choice of loan specifics. It is very important to feel comfortable with your lender.

There are a number of options for how to “structure” the money received.

1. Receive a one time lump sum.

2. Receive the money monthly.

3. Receive a credit line that provides flexibility. (Not in TX)

4. Use a combination of the above methods.

Once you receive the money, there are virtually no restrictions on the way in which it can be used.

You MUST:
Repay existing debt, including the existing mortgage

You Can:
Make Home Improvements
Finance Regular Living Expenses
Ease Healthcare Costs
Take a Trip to Somewhere You’ve Always Wanted to Go
Give Gifts to Your Family and Friends

There is an origination fee, closing costs, a servicing fee, mortgage insurance, and interest. These costs come from the proceeds of the loan. You pay very little directly out of your pocket.

You should also know that you cannot lose your home at any time during the life of the loan for failure to make payments. There are no payments to make. The loan does not come due until you permanently leave the home or the last borrower dies. The home must be kept up to reasonable standards, it must be insured, and the property taxes must be paid.

Default risk is one of the ways in which a reverse mortgage differs from a traditional mortgage or home equity loan. With those traditional products there is a risk of default and therefore a chance you could lose your home. On the other hand, there are no payments to make with a reverse mortgage.

In addition, you can never owe more than the value of your home. Even if you have been paid more than your home is worth, you can only owe the value of your home. When the loan comes due, you or your heirs can either pay off the loan with existing funds or sell the house in order to satisfy the loan. Excess proceeds from the sale go to your or your estate.

Answer 3

There is just not enough space in here to tell you all the intricacies of a reverse mortgage but what I can do is give you the links that explain in detail what it is, who qualifies and how they work. Here:
The four types of Reverse Mortgage programs information: http://www.reversemortgage.org/Default.aspx?tabid=231
HUD required form application for reverse mortgage application including Fannie Mae http://www.hudclips.org/sub_nonhud/cgi/nph-brs.cgi?d=MLET&s1=04-$%5Bno%5D&op1=AND&SECT1=TXTHLB&SECT5=MLET&u=./hudclips.cgi&p=1&r=37&f=G
And some of the best articles on how it works can be found in the organization that represents the majority of people who use reverse mortgages AARP at:
AARP: Age 55 and over: http://www.aarp.org/
Buena Suerte

Answer 4

A reverse mortgage enables older homeowners (62+) to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.

for more information please visit the source i cited

Answer 5

It is for mainly retirees. The house is allready paid off, the owners then agree to sell the house to the bank. The bank will pay the owners until they die, giving them an income. The bank is hopeing that the owners die off pretty quickly as then the can make more money by selling the house on the market.

Answer 6

You receive monthly payments based on the amount of equity in your home. You must be 62.
Details of program can be found here, http://www.choicefinance.net/reverse-mortgage.htm

Answer 7

u must be careful with a opposite mortgage and be sure u comprehend the words and prerequisites - relatively they the financial corporation or financial insitution loans u money - while u die they take the assest we could say the domicile and sell it to cover the non-public loan - u must be careful with regard to the reimbursement s- if u pay off them or they only take the asset and sell it to cover the non-public loan - u can get right into a heap of problaems with loans get self sufficient criminal suggestion and economic suggestion and remeber theres no such element as a unfastened lunch - goodluck

Answer 8

You get paid the equity in your home from the government/lender and when you pass, your home goes directly to that lender and your family cannot inherit it or you can not give it to anyone
although you get more money now, no house payment, you loose all equity and rights to it.