August 2010 Archives
If you are like most retired adults, you own a home but have very little else for retirement. However, if you sell your house, you won’t have a place to live! So here’s your problem: you need money to live on, but the only thing that you own of value is the place you live.
A reverse mortgage can give you the answer to a common retirement dilemma. This option sells your house piece by piece, instead of all at once but you will get to live in your home. You can use a mortgage calculator to determine the monthly cost of home equity loans or refinancing. Also, you can use this mortgage calculator to figure out how much your loan would cost you in total.
First, get in touch with a real estate agent. They will be more than happy to tell you how much your home would sell for, and how to increase its home equity. Depending on your level of knowledge and the time you can spare, this could pay off handsomely. Reverse mortgage will pay you is based on your home’s value. So, if there is an opportunity to increase the value of your home by doing some home improvements, get it done before applying for a reverse mortgage.
Use a mortgage calculator to find out if you should get a home equity loan or a reverse mortgage. The mortgage calculator will tell you how much a home equity loan would cost you between the time of your repairs and the reverse mortgage. But be careful. Don’t spend more than it is necessarry to renovate your home. Also, if you fancy something about your house, do not alter it. After all, you still get to live in it.
Now that you are aware of how much your house is worth, it is time to look into a reverse mortgage loan. You can use a special mortgage calculator to find out how much each different loan would give you. This mortgage calculator bases its results on four things: your age, your house’s value, your house’s location and your lender. More than one company offers a mortgage calculator, so it is best to check with AARP to see if it is a valid program. The mortgage calculator on their website is very easy to use and is a good place to start.
Once research is completed, it is time to contact a professional. The real estate agent that you spoke to before should be glad to give you a list of good lenders and mortgage brokers and walk you through the process. Read every document. Ask questions about anything that you don’t understand. And you will be able to receive a check instead of paying a mortgage every month
Reverse mortgages can be a great solution for seniors who wish to remain in their home but are having difficulty making their monthly payments and meeting other financial obligations. If you own your own home and is 62 years of age, the bank will actually pay you money so you can stay in your home, rather than the other way around. It is crucial to collect and understand as much reverse mortgage information as possible before deciding on whether to take out the loan.
Your home must be a single family residence in a one to four unit dwelling, a condominium or some type of manufactured home. While ccoperatives and most mobile homes are not eligible for this type of loan. The home must be at least one year old and you have to first meet with an authorized counselor.
The loan can be obtained as a lump sum payment, a fixed monthly amount or as a line of credit and the money can be used for just about any purpose such as paying property taxes or medical bills, home repairs and improvements, paying off credit cards or just daily living expenses.
The approval of loan amount depends upon your age, the amount of equity in the home, its appreciated value and current interest rates indications.
The reverse mortgage loan does not require you to pay anything until you sell the home, permanently move out, or pass away. Your loan could also become due if you do not maintain as agreed or you fail to pay property taxes/ hazard insurance and if if the last surviving borrower does not occupy the home for 12 months in a row due to illness.
The fees involved in a reverse mortgage loan are quite similar to those you would incur with a regular mortgage. These include origination fees which cover the lenders operating expenses and are currently capped at the greater of $2,000 or 2% of the maximum FHA loan limit. Apart from that you will be required to take out a mortgage insurance and pay an appraisal fee. Other costs include fees for credit reports (usually under $20), flood certification, closing and title search, document preparation, recording, courier, pest inspection and a land survey. In addition, a monthly service of $30-35 per month will be charged.
Your counselor will be your principal guide to getting correct information on reverse mortgages and should be consulted for advise before making final decisions.
Reverse mortgages are increasing in popularity as a way to turn home equity into a liquid asset. Before you jump on a reverse mortgage, you need to understand the impact it can have on government benefits.
The beauty of home ownership is found in the value of time. The longer you own a home, the more valuable it become. On one hand, you are paying off the mortgage over time, which is increasing the equity you have in your property. The other finds your real estate appreciate over time. This double whammy is what makes home ownership so attractive.
Retirement and old age will become an issue when you need to convert your home equity into usable cash. Reverse mortgages are touted as a solution. A reverse mortgage is a loan against your equity that does not need to be repaid until an event happens, usually the sale of the home or your death.. Essentially, you have reversed the process of a traditional mortgage. The lender is now giving you money in exchange for a piece of your home equity. Payments are expedited in lump sums, monthly or through credit lines depending upon the particular package you go with. As the clock ticks, the equity in your home is reduced, but you will have a reliable and predictable monthly revenue source.
Over the years, the fed has tried to find ways to reduce the amount of benefits they pay out to citizens. One of the factors they like to use is the asset value you hold. If you have a certain amount of assets, your benefits are reduced or terminated because they government takes the position you do not need them. An analysis of government benefits is beyond the scope of this article, but reverse mortgages have an impact.
Basically, be assured that taking a reverse mortgage on your home will not affect Medicare or social security benefits. This is true, however, only so long as you spend the full amount you receive each month. The government is always playing with benefit issues, so make sure you get up to date information on the situation. You will want to understand what you are getting into, particularly if you rely heavily on Medicare for the payment of medical bills.
In general, reverse mortgages do not impact most government benefits. That being said, make sure to get an informed opinion on exactly what will happen before you agree to a reverse mortgage.
Reverse mortgages are loans against your home that require no repayment for as long as you live there. As opposed to traditional mortgage loans, reverse mortgages does not require proof of income and are based solely on the equity of your home. There are no monthly payments to make as the mortgage will only due when the borrower moved out from the property or in the event of death.
US seniors over the age of sixty two are eligible for reverse mortgages provided they have their own single family dwelling. No health requirement is needed, and you get to keep your Social Security and Medicare benefits if your reverse mortgage is approved. Some benefits, however, such as Supplemental Security Income (SSI) and Medicaid can be reduced under specific circumstances. Tax liability for monies received through a reverse mortgage are a non-issue, as loan advancements are not taxed, although interest on the loan is consequently not tax deductible.
There are no income requirements to be eligible for a reverse mortgage loan. You may be eligible for a reverse mortgage even if you still owe money on an existing mortgage. The reverse mortgage loan must be substantial enough to pay off the existing loan completely, however.
The benefits of a reverse mortgage include increased cash flow almost immediately while many other options are on a fixed monthly income. This way it will fully utilize the equity value in your home. Several options exist to help seniors to plan for their advances so that they can fit into their budgetary concerns and cash flow needs.
Most may feel that borrowing against their home is a risky action to take, especially when they are in their twilight years.
Since they are not borrowing against future income, reverse mortgage does indeed hold minimal risk and many who choose this type of mortgage are able to enjoy what they have worked all their lives for in their post retirement years.
A reverse mortgage is a special type of loan that home owners can sometimes get to convert the equity in their homes to cash. Basically, a reverse mortgage is a type of loan that provides you with a monthly income, a lump sum of cash, or a line of credit.
This reverse mortgage concept was for retirees keen in keeping their homes but whose incomes aren’t sufficient to support their lifestyle, and is used to help people on low incomes to pay for daily expenses, huge medical bills or the odd house maintenance and repair costs. Reverse mortgage also pays off your existing loan, if you have any.
Reverse mortgages appeal to older adults because of the lump sum loan advances, which are not taxable. It does not generally affect your Social Security or Medicare benefits. Another advantage of reverse mortgages is the different withdrawal options that you can choose from. These options include lump sum pay outs, line of credit, monthly payments, or any combination of these three. So if you were eligible to borrow $250,000 on a reverse mortgage you could select to receive $75,000 up front to cover current expenses, and hold the rest as a line of credit that you can use whenever you need it. This flexibility of reverse mortgages can significantly improve you financial independence during retirement
The disadvantage is the relative cost of a reverse mortgage. Reverse mortgages tend to be very expensive when compared with a traditional mortgage. This is due to the rising-debt nature of the reverse mortgage concept. Another disadvantage is the payments from a reverse mortgage loan can can affect the eligibility for old age pensions, or supplemental Social Security income.
Considering these facts, reverse mortgage are definitely an option to look up to if you are looking for ways to supplement your current income. As with any financial decision, sought advice from trained and licensed financial professional to analyze and determine if a reverse mortgage is right for in your unique circumstances.
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