A Step by Step Guide
If you’re 62 or older - and looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses - you may be considering a reverse mortgage. It’s a product that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.
This book will reveal to you everything you need to know before applying for a Reverse Mortgage. It is must-know must-do information; ignore it at your own perils.
This is a complete guide to Reverse Mortgages. Once you read this book you'll know exactly how to locate the most cost effective Reverse Mortgage and how to get a quick approval.
Here's what you'll discover:
* The single most critical factor in obtaining a good Reverse Mortgage
* A revealing look at the pros and cons of Reverse Mortgage
* Before taking out a payday loan checklist
* How to get your loan applications accepted, traps and mistakes to avoid
* All these and much much more
You owe it to yourself and to your family to acquire this essential Reverse Mortgage information. Get this guide today!
Table of Contents
2. Is a Reverse Mortgage Right For You?
3. Do You Qualify for a Reverse Mortgage?
4. Advantages and Disadvantages of a Reverse Mortgage
5. Important Questions You Should be Asking Before Choosing a Reverse Mortgage
6. How Much Money Can You Receive?
7. What is “Reverse” About a Reverse Mortgage?
8. How Much Will a Reverse Mortgage Cost You?
9. When Will the Reverse Mortgage Loan Term End and How Much Will You Owe When the Loan Matures?
10. How Would You Pay Off the Reverse Mortgage?
11. Reverse Mortgage Frequently Asked Questions
Perhaps you have heard the term “Reverse Mortgage”; someone may have suggested one to you. If you’re 62 or older - and looking for money to finance a home improvement, pay off your current mortgage, supplement your retirement income, or pay for healthcare expenses - you may be considering a reverse mortgage. It’s a product that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills.
In a “regular” mortgage, you make monthly payments to the lender. In a “reverse” mortgage, you receive money from the lender, and generally don’t have to pay it back for as long as you live in your home. The loan is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage generally are tax-free, and many reverse mortgages have no income restrictions.
Reverse mortgages may be more expensive than traditional home loans, and the upfront costs can be high. That’s important to consider, especially if you plan to stay in your home for just a short time or borrow a small amount. Reverse mortgages loans are widely available, have no income or medical requirements, and can be used for any purpose.
How much you can borrow with a reverse mortgage depends on several factors, including your age, the type of reverse mortgage you select, the appraised value of your home, and current interest rates. In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get.
You can choose among several payment options. You can select:
* a “term” option - fixed monthly cash advances for a specific time.
* a “tenure” option - fixed monthly cash advances for as long as you live in your home.
* a line of credit that lets you draw down the loan proceeds at any time in amounts you choose until you have used up the line of credit.
* a combination of monthly payments and a line of credit.
You can change your payment option any time for about $20.
What are the features of the loan
Reverse mortgage loan advances are not taxable, and generally don’t affect your Social Security or Medicare benefits. You retain the title to your home, and you don’t have to make monthly repayments. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence.
In the reverse mortgage program, a borrower can live in a nursing home or other medical facility for up to 12 consecutive months before the loan must be repaid.
If you’re considering a reverse mortgage, be aware that:
* Lenders generally charge an origination fee, a mortgage insurance premium (for federally-insured), and other closing costs for a reverse mortgage. Lenders also may charge servicing fees during the term of the mortgage. The lender sometimes sets these fees and costs, although origination fees for most reverse mortgages currently are dictated by law.
* The amount you owe on a reverse mortgage grows over time. Interest is charged on the outstanding balance and added to the amount you owe each month. That means your total debt increases as the loan funds are advanced to you and interest on the loan accrues.
* Although some reverse mortgages have fixed rates, most have variable rates that are tied to a financial index: they are likely to change with market conditions.
* Reverse mortgages can use up all or some of the equity in your home, and leave fewer assets for you and your heirs. Most reverse mortgages have a “nonrecourse” clause, which prevents you or your estate from owning more than the value of your home when the loan becomes due and the home is sold. However, if you or your heirs want to retain ownership of the home, you usually must repay the loan in full - even if the loan balance is greater than the value of the home.
* Because you retain title to your home, you are responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. If you don’t pay property taxes, carry homeowner’s insurance, or maintain the condition of your home, your loan may become due and payable.
* Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.
* All reverse mortgage lenders must follow HUD rules. And while the mortgage insurance premium is the same from lender to lender, most loan costs, including the origination fee, interest rate, closing costs, and servicing fees vary among lenders.
How is the principle limit of the loan calculated?
Lenders have three methods they may use to calculate the Principal Limit:
A U. S. Housing and Urban Development (“HUD”) origination software that includes calculation of the Principal Limit is available to lenders.
If the software is not used, lenders are to follow the calculation instructions in the HUD HECM Handbook.
The Federal National Mortgage Association (“Fannie Mae”) has developed software entitled, “MORNET Housing Impact Delivery System”, that incorporates HUD approved calculations to determine the Principal Limit.
Can you cancel after closing?
With most reverse mortgages, you have at least three business days after closing to cancel the deal for any reason, without penalty. To cancel, you must notify the lender in writing. Send your letter by certified mail, and ask for a return receipt. That will allow you to document what the lender received and when. Keep copies of your correspondence and any enclosures. After you cancel, the lender has 20 days to return any money you’ve paid up to then for the financing.
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