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. Feel free to speak with as many people as you need in order to gain information and feel comfortable. Click here for reverse mortgage lenders.
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.
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.
Repay existing debt, including the existing mortgage
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
It almost seems too good to be true. There are, however, as with everything these days, costs involved. 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. Therefore, as long as the property is kept to a reasonable standard, you will always have somewhere to live.
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.
This article courtesy of www.reversemortgagepage.com
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