Reverse Mortgages and the Work of a Lifetime,
“Mortgage Paid in Full"
As homeowner seniors, so many of us have worked toward that goal of having a residence "paid off" (or almost) for our later years. We are the same people who cheered when FHA gave us the 30 year fixed mortgage to get into those homes.
Now FHA and some independent lenders recognize we have come to the end of that 30 year mortgage and are essentially "house poor" in our highly appreciated property for which our lives and finances cannot support a new loan payment to use the equity.
Seeing the bubble of seniors in this circumstance FHA, followed by other lenders, have given us the loan for our new situation, a Reverse Mortgage.
The Reverse Mortgage is a wonderful tool for so many seniors seeking money for possible repairs, a trip, extra cash month to month or a lump sum for some single need.
Most reverse mortgages currently available are Federally insured and even if the value of your house should go down, you will never owe more than the loan you were allowed to borrow.
Just like with the original mortgage that helped acquire the property, title to the house stays in your name until such time as you dispose of the property. That means that as long as either spouse lives in the house the loan stays with the house. Heirs can sell or refinance and keep the property for as long as they choose.
A Reverse Mortgage comes in Vanilla, Chocolate and Strawberry. You may receive monthly payments, a credit line or combinations of both to the maximum your equity and age allow for a loan and you can revise the terms if needed.
Borrowers must be 62 years or older, own and reside in the property.
The best part is that you make no payments. You may, if you win the Lottery, repay all or part of the amount borrowed with no prepay penalty or you may let it sit "forever" unpaid with no penalties.
There are "costs" as with any loan and if both spouses depart to full time nursing facilities, it constitutes "departure" that would require repayment through refinance or sale. Your heirs or administrator would have to deal with that issue but after your departure(s). If you occupy the property for a 24 hour period during a year, you have not left.
Article provided by Dee Klein, Alta Financial