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Advice for Buy A Home With A Reverse Mortgage |
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How To Buy A Home With A Reverse Mortgage
A reverse mortgage loan is very much
like a home equity loan. First we’ll look at the similarities between the
two and then let’s discuss how to buy a home with a reverse mortgage. Aside from programs which help you buy a home with a reverse mortgage there are various other types of reverse mortgages. One type is for homeowners who want to tap into their equity but not draw out the entire amount. Here an annuity or lump sum would be paid out. Another reverse mortgage program is a home equity conversion mortgage. Affiliated with FHA (the Federal Housing Administration) this program combines the features of a home equity loan and a line of credit. Here you receive a fixed payment and can also draw on a credit line for additional cash. The buy a home with a reverse mortgage program uses the new home as a source of repayment. You make a down payment and use the reverse mortgage loan for the rest of the home’s purchase price. You repay the loan with interest and other financing costs, when you sell the home, no longer use it as a primary residence, or in the case of your death, your estate would cover the outstanding loan. Most types of homes are eligible. Tremendous growth in the housing market over the last few years has given many homeowners a considerable boast in equity. As a result, some of these homeowners are now looking to buy a home with a reverse mortgage. Take for instance, the homeowners who purchased their homes in the early 1960’s for a modest price and now in their retirement years find their home has doubled or even tripled in value. With this kind of equity to play with many homeowners are looking to buy a home with a reverse mortgage. This could be a country home or a cottage property. Or, the funds could even be used for luxury vacations, recreational vehicles, boats – you name it! If you were to buy a home with a reverse mortgage you would be able to pay cash for the second ‘vacation’ home while continuing to live in your primary residence for as long as you wish or are able. Once you die, your primary residence would be sold to pay back your reverse mortgage loan, while the second home would become part of your estate. To participate in these reverse mortgage programs, you and any co-borrowers must be at least age 62. In order to buy a home with a reverse mortgage you also must have no mortgage debt on your home. Further there are usually no income requirements to participate in the above mentioned programs. According to Fannie Mae, a positive feature of reverse mortgage programs is that you’re never obligated for more than the loan balance or the value of the property, whichever is less; no assets other than the home are used to repay the debt. A reverse mortgage has neither a fixed maturity date nor a fixed mortgage amount.
If you’re seriously looking to buy a home with
a reverse mortgage it’s important that you do your homework. Take the time
to comparison shop between lenders. Seeking the advice of at least three
reverse mortgage lenders is always wise. This article is part of the resources, guides and tools dedicated to your finance successes found on Keith Choy's WealthMountains Site. For re-print rights to this article, do drop Keith a note from his website.
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Advice for Buy A Home With A Reverse Mortgage |
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