Reverse Mortgages
A reverse mortgage loan is similar to a traditional mortgage except that the homeowner is not required to make monthly payments. Reverse mortgages were created
to allow people aged 62 and over to access their home’s equity.
Reverse Mortgage Loan Information
The following is some basic reverse mortgage loan information that you should have while pursuing your reverse mortgage:
- There are a number of strict consumer safeguards in place to protect home owners who are pursuing a federally insured reverse mortgage loan.
- The most common type of reverse mortgage loan is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration.
- You should never pay a fee in order to receive reverse mortgage information from your lender.
- Reverse mortgage information can be obtained from Senior Reverse Mortgage or from the Department of Housing and Urban Development (HUD).
Reverse Mortgage Loan Facts
There are many misconceptions that exist regarding reverse mortgages. Here are a few reverse mortgage loan facts that are commonly misunderstood:
- Reverse Mortgage Fact: You continue to own your home.
- Reverse Mortgage Fact: Reverse mortgages are non-recourse, meaning you are not responsible for any balance that exceeds the value of your home.
- Reverse Mortgage Fact: Reverse mortgages are highly customizable and are used by people from all walks of life.
- Reverse Mortgage Fact: Social Security income and Medicare benefits are not affected by a reverse mortgage loan.
- Reverse Mortgage Fact: You do not have to own your home free and clear to obtain a reverse mortgage loan.
Reverse Mortgage Loan Refinance
Because reverse mortgages have been around for many years, there are current reverse mortgage borrowers who could benefit from refinancing their reverse mortgage
loan.
You can take advantage of a reverse mortgage loan refinance to:
- Switch from an adjustable rate to a fixed rate
- Obtain a lower interest rate
- Take advantage of additional equity
- Take advantage of higher loan limits
- Add or remove a borrower
Reverse Mortgage Home Purchase
In October of 2008, a new program was introduced to allow people to purchase a home using a reverse mortgage loan.
In order to qualify for a reverse mortgage purchase loan, the property must be compliant with FHA’s guidelines and you must have a large enough down payment to cover what the
reverse mortgage will not.
Reverse Mortgage Loan Eligibility Requirements
Reverse mortgage loan eligibility requirements are simple: the youngest home owner must be at least 62 years of age and the home must be your primary residence.
Reverse mortgages can be used to purchase a residential property that falls into one of the following categories:
- 1-4 unit homes
- Manufactured homes on a permanent foundation
- FHA approved condominiums
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