Aids for Reverse Mortgage
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Reverse Mortgage Tips &
Info
A reverse mortgage is essentially a special
type of loan that seniors can use to convert the equity in their homes to
cash. At one time, the only way to get money from your home was to sell it
and move or borrow money against it.
One of the pros of a reverse mortgage is that you continue to own
your home and the lender instead makes payments to you.
Certain qualification requirements must be meet in order for reverse
mortgage loan to take place.
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All homeowners looking to obtain a reverse
mortgage loan must be at least 62 years old.
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Anyone seeking a reverse mortgage loan
must undergo mandatory counseling from a HUB (the U.S. Department of
Housing and Urban Development) approved counselor prior to actually
applying for a reverse mortgage. This counseling is essentially
an in-person or telephone session that outlines the process and is used
to determine eligibility.
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As with a conventional mortgage there are
certain costs involved in the reverse mortgage process. Costs may
include application fees, closing costs, insurance, appraisal fees,
credit report fees, and quite possibly a monthly service fee.
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A reverse mortgage loan requires no
repayment for as long as you live in your home. When the home is sold
and the borrower moves, or the last living borrower dies, the loan must
then be repaid. In most cases, the home is sold to repay the mortgage.
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The borrower however is still responsible for
property taxes, insurance and repairs. If these payments are not
maintained, the loan could become due in full.
As discussed previously you need to seriously
examine any disadvantages of a reverse mortgage as well as any
advantages.
Disadvantages of reverse mortgages could include tax consequences
but remember a reverse mortgage is not classed as taxable income.
Your perspective and how you want to make your home work for you is the
key to using a reverse mortgage to your benefit..
Please know too that the amount of money you may receive from a reverse
mortgage depends on several factors of which include your age and the
type of reverse mortgage selected as well as your appraised home
value and current interest rates. As a rule, the older you are, the more
valuable your home and the less money you owe on it – the greater your pay
out would be.
That said, you need to determine for yourself if the advantages outweigh
any disadvantages of a reverse mortgage. Remember, it’s a personal
choice. What might be right for one homeowner may not be right for the
other.
The bottom line is a reverse mortgage can be a beneficial loan
product when entered into with a full understanding of the advantages and
disadvantages of a reverse mortgage. For seniors who are in need of
money to cover growing expenses and to enhance the quality of life in
their later years it can be a real blessing.
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.
Related Reverse Mortgage Resources:
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