With the economy in decline, more seniors like you are viewing their homes as a source of retirement funds. You’ve spent decades paying for your home, and now it’s time to let your home see you through the coming years. However, many people are concerned about reverse mortgages. Here are answers to a few of the most common questions about these powerful retirement tools:
Where Does the Money Come From?
A reverse mortgage is similar to a home equity loan. In order to qualify, you must have equity in them home, although you’re not required to own the home outright. The loan amount depends on several factors including your age and amount of equity. You cannot borrow more than the home is worth because the loan is guaranteed by the home, as with any other mortgage.
Can the Lender Take My Home?
You retain title to the home and are responsible for insurance and upkeep. As long as you maintain the home, the lender cannot take it from you. The loan isn’t due until you permanently leave your home, at which point you or your heirs can sell the home to repay the loan, or find an alternative source of funds and keep the home.
How Will I Receive the Money?
You can choose to receive a lump sum or monthly payments. The amount for each monthly payment is determined by the loan amount and the loan term.
Are There Limits to How I Can Use the Money?
Reverse mortgage funds are your money. Just like any other home equity loan, you can use it for anything you want. Many seniors use the funds to pay off any remaining balance on their traditional mortgage. Funds are also used for dream vacations, healthcare, gifts to children and grandchildren, or to simply make daily life more affordable.
Can I Owe More than the Home is Worth?
Unlike a traditional mortgage, you can’t be “upside down” in a reverse mortgage. If your home is worth less than the loan amount when you permanently leave your home, the lender will receive the current value of the home. You or your heirs will not be required to repay the difference.
As with any mortgage, you should carefully consider all of your options before agreeing to a loan. Contact a reputable lender like Financial Freedom to discuss your concerns. You should also discuss your intentions with your children, to alleviate any fears they may have about your plans. Once they understand how the loans work, many children are happy their parents have found a new source of retirement income. It’s your house. Isn’t it time you put it to work for you?
Reverse Mortgages Are Strong in a Declining Economy
Amidst recent news that people are having trouble finding mortgages, many seniors have become concerned about the market for reverse mortgages. Unlike the forward mortgage market, the reverse mortgage market is still strong and funds are still available.
Answers to Common Reverse Mortgage Questions
If you are considering getting a reverse mortgage, you may be finding the information you see a bit confusing. As with any other big decision, it’s important that all your questions are answered thoroughly before you choose to take out this type of loan. Below are answers to some of the questions consumers often ask about these mortgages.
The Updated Reverse Mortgage Loan Limit and Purchase Scheme
The article provides an overview of the significant increase in the reverse mortgage loan limit announced by the Department of Housing and Urban Development (HUD) in October 2008. This change is particularly beneficial for senior citizens seeking additional retirement income, especially those whose retirement investment portfolios have seen a substantial decrease in value. Unlike a conventional home equity mortgage, a reverse mortgage is not repaid until the homeowner permanently leaves the home, sells it, or passes away.
