Reverse Mortgage

Stuart Simpson

Simply stated, a reverse mortgage is a loan that enables homeowners (age 62 and older) to convert part of the equity in their home into a tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment. More and more homeowners are using this to supplement their retirement income, pay for health care, modify their home, or just get some cash for emergencies. Since this is a new product, some people have misconceptions of what a reverse mortgage is. The bank doesn≠t give you money and take your house. Let≠s look at some of the most common questions.

Are reverse mortgages for desperate people? No. It is an excellent financial planning tool used from people of all walks of life.

How do I qualify? You must be 62 or if both parties are on the mortgage, then you both must be at least 62. And, you must have equity in your home.

What if I still owe on my home? You may still qualify even if you have a balance on your first mortgage. The proceeds must be used to pay off the mortgage, first.

How much can I get? This depends on several factors such as, the age of your home, the value, your age at the time of closing, and interest rates.

Is it just monthly payments? No. You can get a lump sum, line of credit, monthly payments or a combination of monthly income and a line of credit.

But, won≠t I have to pay taxes on these monthly payments to the government? No. The funds are tax-free. Its your money, not additional income.

Should I seek a lawyer or receive some counseling before I get a reverse mortgage. Yes. You must be counseled before receiving a reverse mortgage. You don≠t have to talk to a lawyer or accountant, but it would be advised.

Who owns the title to my house? You still own the title.

What happens when I die? Once your home is passed on to your heirs, the mortgage becomes due. Your heirs may pay the mortgage and keep the home or sell the home and pay off the home. They may keep any excess sales proceeds.

What if I owe more than the house is worth? You can≠t. Your repayment amount will never exceed the value of the home at the time the loan comes due. Also, there are no prepayment penalties.

What if I move? If you move, then the mortgage becomes due and must be repaid.

Where can I learn more? The National Reverse Mortgage Lenders Association at http://www.reversemortgage.org

About The Author

Stuart Simpson has a neat mortgage calculator FREE to use. Try it out at:
http://www.mortgage-refinance-review.com/calculator.php


Reverse Mortgages Explained
 by: Robert Hutchinson

A 'Reverse Mortgage', also known as 'Equity Release', is a popular way to use your main asset (your home) to free up some cash for other purposes. In a standard loan, your income stream is used to 'qualify' for the loan. The bank will want to see that you have enough cash-flow from your job or other source of income in order to make the payments on the loan. By securing this forward loan on your house, the bank has extra security. After all, if you stop paying, they can take away your house. As the years go buy, you will build up 'equity', which is the difference between what your house is worth, and how much you owe on the loan, which will be reducing as you pay off principal.

A reverse loan, in contrast, requires no proof of income, no credit checks etc, you simply have to own the home you are borrowing against. The reason for this is that interest payments are 'rolled up' on the reverse loan - i.e they are added to the loan, and not repaid. Over time, of course, this starts to eat up your equity, because as each interest payment is added to the loan, interest starts being charged on the previous interest too!

Popular with older citizens, the reverse mortgage is often structured in such a way that the loan only becomes repayable on the death of the home-owner. Depending on the size of the loan and current market conditions, there may actually be no equity left when the loan is finally repaid, a matter only of interest to home-owners who prefer to leave something for their children. As with all loans, be careful not to default on ancillary charges, such as property tax, insurance, rates etc, as these could all lead to the loan being reclaimed early (foreclosed). Typically, the bank will have an option built in to the contract to increase your debt by paying these charges on your behalf, should you default, and this is not an option you want exercised, as you will then start paying interest on those charges too!

To sum up - reverse mortgages can be useful, but treat carefully - they can have a sting in the tail. Keep an eye on the outstanding balance every month, versus the value of your home for peace of mind.

About The Author

Robert Hutchinson writes for www.mortgagedown.com the site for free mortgage advice fast!





 

Our Sponsors:

First Southern Bank
Locally owned and operated
With Personal Service from
Kevin Klaine or Steve Schauwecker



The Bank of Marion
A Full Service Community Bank
(618) 997-4341
Judy Batchelor - Mike Rice



Banterra Bank
Banking With
Local Sytle


your bank here
get qualified leads from
targeted traffic, real home buyers.
Click to contact


South Pointe Bank
Branches in Five
Southern IL cities


First National Bank of Jonesboro
The Best Bank Your
Money Can Buy!


Anna National Bank
Services You
Can Rely On!


Anna State Bank
It is Not Too Late
to Start Saving!


First State Bank of Eldorado
A Community Bank
That Cares About You!


First National Bank in Pinckneyville
A Real Community Bank
With Extra-Caring People!


Du Quoin State Bank
Your Bank
For a LifeTime


Carterville State & Savings
Come Live
with Us!


Bank of Herrin
Where Banking is
Still a People Business!


Murphy-Wall
State Bank and Trust Company

From Start to Finish!


your bank here
get qualified leads from
targeted traffic, real home buyers.
Click to contact






SouthernIllinoisMortgage.com
Helping You Compare Local Lenders

Legal Mumbo Jumbo:
Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, SouthernIllinoisMortgage.com cannot guarantee that inaccuracies will not occur. SouthernIllinoisMortgage.com and the author(s) will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site. Always seek professional financial advice!



Copyright 2017