Posts tagged with 'Home Equity Conversion'

Types Of Reverse Mortgage Options

  • Posted on December 27, 2010 at 9:17 am

There are many different reverse mortgage options: single purpose reverse mortgages, federally insured reverse mortgages, and proprietary (private sector) reverse mortgages. Every option has its fair share of pros and cons that need to be considered.

Single-Purpose Reverse Mortgages

A single purpose reverse mortgage is the lowest-cost type of reverse mortgages to obtain, but as the name indicates it can only be used for one specified purpose. These type of mortgages are expedited by state or local government agencies. These loans a great for individuals who need cash for a purposes like paying property taxes or fixing up their own residence. Here are descriptions for several different types of single purpose reverse mortgages:

Property tax deferral (PTD) mortgages are reverse mortgages that provide loan advances for paying property taxes.

Deferred payment loans (DPLs) home improvement reverse mortgages provided in a lump sum disbursement method.

Federally Insured Reverse Mortgages

This type of reverse mortgage is only iinsured by the Federal Housing Administration (FHA). These reverse mortgage are perhaps one of the cheaper multi-purpose reverse mortgages currently available. Overall they typically provide the largest total cash benefits of all the reverse mortgage options.These loans are also known as HECM or Home Equity Conversion Mortgages.

Proprietary Reverse Mortgages

A proprietary reverse mortgage is a mortgage product owned by a private company. These type of loans are more costlier then the other reverse mortgage types and you are advised to approach with caution. Those interested in these type loans should get a comparison with a similiar HECM. The benefit of proprietary reverse mortgages are of its ability to offer higher home value within its limitation.

the higher home value limits. So, if you live in a home that is worth a lot more than the average home value in your county, a proprietary loan may give you greater loan advances than a Home Equity Conversion Mortgage (HECM).

Just like any other financial decision, you should get professional help to decide which option is best for your current situation. Reverse mortgage counselors can help you evaluate each of your options and help you make an informed decision.

Reverse Mortgages Can Benefit Elderly

  • Posted on October 25, 2010 at 9:17 am

Reverse mortgages are available through lenders insured by the federal government and can be of great benefit to those who are eligible to apply. There are three types of reverse mortgages currently available in the United States, including Home Equity Conversion Mortgages (HECM), Fannie Mae (FNMA) Home Keeper and Financial Freedom Cash Accounts. The basic premise of a reverse mortgage is that it allows homeowners over the age of sixty-two to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title to the home, or take on a new monthly mortgage payment. The reverse mortgage is titled as such because lenders pay the borrower fixed payments or a lump sum over time as opposed to a traditional mortgage arrangement. Eligible property includes single-family dwellings, manufactured homes built after June 1976, condominiums and town houses.

The process for applying for a reverse mortgage is more involved than with a traditional mortgage. Aside from meeting the age and property type restrictions, applicants must discuss the loan with a counselor employed by the U.S. Department of Housing and Urban Development prior to signing. There are five different types of payment methods for each United States government insured loan available, allowing for flexibility to meet the needs of the applicants. These include monthly, quarterly, semi-annual and annual payments to the borrower for a fixed number of periods or a lump sum that can be invested.

Repayment terms also vary by the interest rate, as with traditional mortgages. Those who choose variable rate mortgages will pay over one percent less since the risk assumed by the borrower for agreeing to monthly adjustable rate calculations can greatly increase their risk over the life of the mortgage. The total of the mortgage is due when the house is no longer occupied by the borrower and can be paid by the borrower or by his or her heirs in the event of death.

While many consider borrowing to be a bad idea later in life, reverse mortgages simply allow seniors to enjoy the equity they have already established without carrying the risk of having to meet monthly payments while on a reduced or fixed income. This can substantially increase the quality of life for many older Americans and allow them to enjoy the fruits of their life long labor.

Reverse Mortgage Lenders

  • Posted on September 27, 2010 at 9:17 am

You’ve made the decision that you need some extra assistance in meeting your monthly financial obligations. One of the best options for those over sixty-two years of age who own their own home is a reverse mortgage. Instead of you paying the bank each month, the bank will actually pay you. The loan can be taken out as a lump sum, a fixed monthly payment or as a line of credit. You do not have to pay back the loan until you sell your home or move out permanently. There are many reverse mortgage lenders such as banks and credit unions that you can contact to obtain details about these loans. Rates may vary so you will want to check around with various banks before deciding. There are several types of reverse mortgage loans and they include the following:

Home Equity Conversion Mortgage – HECMs are the oldest types of reverse mortgage loans and the most popular. They are insured by the federal government through the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development. The amount of money you can take out as a reverse mortgage loan depends upon your age, the appraised value of your home, current interest rates and the location of your home. The older you are and the higher the equity (what it would sell for less what you still owe), the higher the loan amount can be. For 2006, the loan limit for a home in a rural area is 200,160 while the limit for high cost areas is 362,790.

Another reverse home mortgage product that you can obtain from a lender is the Fannie Mae Home Keeper. Fannie Mae is the largest investor of home mortgages in the country and a major investor in reverse mortgages. Fannie Mae developed its own reverse mortgage product as an alternative to the HECM to address the needs of customers who had a higher property value on their home. Home Keeper loans can be larger than HECMs because their mortgage limit is higher. Another Fannie Mae reverse mortgage product is the Home Keeper for Home Purchase program. This is for seniors who wish to use the reverse mortgage loan to buy a new home. For example, let’s say someone sold his home for a 60,000 profit and wants to buy a new house for 100,000. He could get a reverse mortgage using money from a Home Keeper loan so he would not have to use his savings to purchase the more expensive home.

The opportunities are endless for borrowing against the equity in your home from reverse mortgage lenders you can depend upon.

Reverse Mortgage Benefits To Seniors

  • Posted on July 5, 2010 at 9:17 am

Reverse mortgages are available through lenders insured by the federal government and can be of great benefit to those who are eligible to apply. There are three types of reverse mortgages currently available in the United States, including Home Equity Conversion Mortgages (HECM), Fannie Mae (FNMA) Home Keeper and Financial Freedom Cash Accounts. The basic premise of a reverse mortgage is that it allows homeowners over the age of sixty-two to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title to the home, or take on a new monthly mortgage payment. The reverse mortgage is titled as such because lenders pay the borrower fixed payments or a lump sum over time as opposed to a traditional mortgage arrangement. Properties that are eligible include single-family dwellings, manufactured homes built after June 1976, town houses and condominiums.

The process for applying for a reverse mortgage is more involved than with a traditional mortgage. Aside from meeting the age and property type restrictions, applicants must discuss the loan with a counselor employed by the U.S. Department of Housing and Urban Development before the signing of the terms agreement. There are 5 different types of payment methods for each fed government insured loans, allowing for flexibility to meet the needs of the applicants. These include monthly, quarterly, semi-annual and annual payments to the borrower for a fixed number of periods or a lump sum that can be invested.

Like traditional mortgage, the interest rates can vary accordingly. Those who choose variable rate mortgages will pay over one percent less since the risk assumed by the borrower for agreeing to monthly adjustable rate calculations can greatly increase their risk over the life of the mortgage. The mortgage is due when the house is no longer occupied by the borrower and will be paid by the borrower or heirs in the event of death.

While many consider borrowing to be a bad idea later in life, reverse mortgages simply allow seniors to enjoy the equity they have already established without carrying the risk of having to meet monthly payments while on a reduced or fixed income. This can substantially increase the quality of life for many older Americans and allow them to enjoy the fruits of their life long labor.

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