Reverse Home Mortgages
A Home Buying Article Contributed by Mark Vanner
What is a Reverse Home Mortgage?
Reverse home Mortgages are a growing trend amongst senior homeowners in the United States. First introduced in 1999 by the U.S Department Of Housing And Urban Development, commonly known as HUD, the new mortgage program was designed to give senior citizens a sounder financial future during their later years.
A reverse mortgage allows home owners to receive a lump sum or monthly payments whilst keeping the ownership rights to the property until the owner is deceased or decides to move, at which time the ownership of the home becomes the property of the mortgage lender. The amount of money to which you will be entitled to on a monthly basis depends heavily on the value of your property, current interest rates, loan fee's and age of the home owner.
It should also be noted that if the home owner decides to move properties it is possible to repay the mortgage lender with the proceeds from the sale of the house. Essentially a reverse mortgage is a home equity loan, that utilizes the equity of your home and turns it into a cash sum.
Reverse Home Mortgages - What are the Risks Involved?
For many home owners the value of their property can make up a substantial proportion of the inheritance they plan to leave behind for loved ones after death. By agreeing to a reverse home mortgage, the equity value of the property will be claimed by the mortgage lender at the time of death.
Another disadvantage for reverse mortgage owners is the rate of monthly or in some cases lump sum payments, depending on the home owners age, you may only be entitled to thirty percent of the value of your house. The main rule to reverse mortgages is that the older you are, the higher your monthly or lump some entitlement will be. The younger you are, the less money you can expect to receive. Reverse Home Mortgages do not cover taxes, maintenance or insurance, these are still the responsibility of the home owner.
Reverse Home Mortgages - What are the Benefits?
A reverse home mortgage will allow you an extra tax free income during your retirement years. This money is yours and you are able to spend it in which ever way you want. So whether its that fishing vacation you've been promising yourself for the last ten years or just a new television for the living room you can spend it anyway you please.
Will I Qualify for a Reverse Home Mortgage?
To Qualify for a reverse mortgage you must be 62yrs or older and be a home owner who has paid off their current mortgage or has a low mortgage repayment balance that can be easily paid off from the proceeds received from your reverse mortgage. There are three main mortgage lenders in the united states who specialize in reverse home mortgages. Those companies are The Federal Housing Authority(FHA) who also offer insurance on your mortgage from the federal government, Fannie Mae's and the Financial Freedom Senior Funding Corp.
