Reverse Mortgages

January 8, 2009
Matt Isleib

 

A reverse mortgage is a loan that enables older homeowners (62 or older) 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.  It must be an owner occupied primary residence and you must have equity in your home.   How much money you can get depends on a few factors, including your age, the value of your home, the amount of built-up home equity, and interest rates at the time of origination.    You can typically estimate the amount of equity you can take would come close to your age.  So, typically (depending on interest rate) a 70 year old person would be able to borrow up to approximately 70% of the appraised value of your home.   You can borrow the money several ways – a Lump Sum cash distribution, predetermined monthly payments, a line of credit to draw on based on need or a combination of monthly payments and a line of credit.    As of January you can now use a Reverse Mortgage to Purchase your retirement home.   You can never owe more than the value of your home and your responsibility is to keep the taxes and insurance paid and maintain the upkeep.    The reverse mortgage becomes due when the borrower dies, permanently moves out or sells the home.  

 The reverse mortgage is a lien on the property same as a regular mortgage. The difference being the lender pays you, not the other way around.    All reverse mortgage borrowers are required to obtain a certificate they have attended an approved counseling class prior to starting the process.  Understanding what you are getting into is important.  The greatest misconception is that the bank will own your home.  

 

 

 

Newsletter Registration

1. First Name(required)
2. Last Name(required)
3. Your Email(valid email required)

 

cforms contact form by delicious:days