Posts tagged with 'Hazard Insurance'

The Mechanism Of A Reverse Mortgage

  • Posted on November 29, 2010 at 9:17 am

Homeowners over the age 62 may find reverse mortgage as a benefitial option and should discuss with a lender or counselor before deciding on taking up one. These types of loans offer a way to borrow against the equity in your home to create a stable, continuous and tax free source of usable income or a substantial source of supplemental income, all without having to change your current living conditions.

The good news is that you arent required to repay any amount on the loan as long as you live in your house and do not breach any of the terms and conditions set forth. However it is important that you are diligent in researching this unique loan product as it may not be right for every situation. This is why we encourage any potential borrower interested in a reverse mortgage to investigate their options first with a HUD certified counselor or lender.

While simple to understand in theory, it is important to know how reverse mortgages work. The reverse mortgage loan product got its name due to the fact that instead of making mortgage payments, the lender actually pays the borrower creating a kind of inverse relationship compared to the traditional mortgage product. The source of funds for the money received is the equity stored in your home. The unique feature of this loan is that unlike conventional mortgages where the loan balance becomes smaller each moth you make a payment, the loan balance of a reverse mortgage grows larger over time.

The principal on the loan increases with each payment received, this includes interest and other charges accrued each month on the total funds advanced to you. You retain ownership of your home in all reverse mortgages, and many do not require repayment for as long as you occupy your home, pay your property taxes and hazard insurance charges, and continue to maintain the property.

When you leave your home permanently your loan balance becomes due. It is also important to note that your legal obligation to repay the loan cannot be more than the market value of your house at the time you leave the property. This means that your lender can never require repayment of the loan from your heirs or from any asset other than the property itself.

Today the two major types of reverse mortgage loan provided by the Fannie Mae (Federal National Mortgage Association) are the HECM and Home Keeper. These loans see to it that the borrower will never owe more than the loan balance or the value of its real estate, whichever is less,and no assets other than the home must be used to repay the debt.

Reverse Mortgage Information – Who Qualifies For Reverse Mortgages

  • Posted on September 20, 2010 at 9:17 am

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 are over age 62 and own your own home, the bank will actually pay you money so you can stay in your home, rather than the other way around. It is important to collect as much reverse mortgage information as possible before deciding whether to take out the loan.

Anyone is eligible for a reverse mortgage loan, even if they have no income. Your home must be a single family residence in a one to four unit dwelling, a condominium or some type of manufactured home. Cooperatives and most mobile homes are not eligible. The home must be at least one year old and you have to first meet with an authorized counselor.

You can obtain the loan as a lump sum payment, a fixed monthly amount or as a line of credit that you use whenever you need it. The money can be used for just about any purpose. This can include paying property taxes or medical bills, home repairs and improvements, paying off credit cards or just daily living expenses. The amount of money you receive depends upon your age, the amount of equity in the home, its appraised value and current interest rates. The reverse mortgage loan does not have to be repaid until you sell the home, permanently move out, or pass away. Your loan could also become due if you allow the property to deteriorate, you fail to pay property taxes or hazard insurance, or if the last surviving borrower does not occupy the home for 12 months in a row due to illness.

There are some fees involved with a reverse mortgage loan, 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. In addition you will be required to take out mortgage insurance and pay an appraisal fee which ranges between 300 – 400. Other closing costs include fees for a credit report (usually under 20), flood certification, closing and title search, document preparation, recording, courier, pest inspection and a land survey. In addition, a monthly service set-aside fee of 30-35 per month will be charged.

When you meet with your counselor, you should be able to obtain all the reverse mortgage information you require before you make your final decision. It will be nice to have the option of staying in your own home if that is what you desire.

Reverse Mortgages Eligibility Information

  • Posted on August 23, 2010 at 9:17 am

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.

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