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 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.
California Reverse Mortgage is a loan where the lender either pays you a lump sum at one go, makes regular monthly payments, extends a line of credit, or a combination of the three. You continue to own your home and pay property taxes, operating expenses and maintenance. But because you make no regular pay outs on the loan, the balance owed rises each month with the interest applied to it. In the event of your death, your heirs would be responsible for paying the total debt, which is often done by selling or refinancing the house. There are a number of pros and cons for the various California Reverse Mortgage Payment Options.
A.Line of Credit: This is when the access funds are at your discretion. The Pros and Cons of this type of California Reverse Mortgage payment are as follows
Pros: Flexibility – One of the Pros of this Reverse Mortgage Payment is that you can access funds anytime, whenever you need them.
Potential – Another Pro of this Reverse Mortgage Payment is its growth feature. The unused balance grows. This does not mean you are earning interest. The growth factor takes into consideration that your home has appreciated in value over the past 12 months and that you are one year older.
Extra Income – You can use your equity to supplement your retirement income. You can take a lump sum of cash and a monthly check. You can also take a monthly payment and have a line of credit you can write checks on as you need.
Cons: Spending lure – One of the Cons of this Reverse Mortgage Payment is that is that the funds can be easily exhausted.
Red tape – To access your funds, you must submit a written request to the loan servicer managing your account. It includes several rounds of official documents and meetings to get the amount approved.
B. Term: here you receive fixed monthly payments for a set period of time. The Pros and Cons of this type of California Reverse Mortgage payment are as follows:
Pros Instant transfer – Funds are instantly and automatically deposited to your bank account meeting your instant finance or emergency needs.
Regular money generated – You can receive large monthly advances helping in planning out your regular expenses.
Cons Fixed amount – The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change which is a time consuming process.
A major disadvantage of this Reverse Mortgage Payment is that monthly advances are not indexed for inflation.
C. Tenure: here you receive fixed monthly payments for as long as you live in your home. The Pros and Cons of this California Reverse Mortgage Payment are as follows:
Pros
Worth it – The monthly advances continue for as long as you live in your home, even if the total amount you receive exceeds the value of your home. Despite this, you will never owe more than what your home is worth.
No money worry – You can keep receiving payments for as long as you live. Your spouse will keep receiving the payments if he or she is still alive. You never have to sell your home even if you outlive the equity. The income you receive is tax-free.
Cons The amount of funds you receive each month is fixed, so if you need additional funds, you will have to request a payment plan change.
You leave less equity for your children if you choose the wrong program.