Facts, information, advice and tips about reverse home mortgages, popular with senior citizens as a way to provide "income" from value of a house in whichone lives.
This is a senior citizen introduction to obtaining and committing to reverse mortgages. More information should be pursued from loan and legal experts before making this important decision.
What is a Reverse Mortgage?
A reverse mortgage is a loan against one's home that requires no repayment for as long as one lives in that home. There are no monthly payments, so an upsideis that one cannot lose their home due to non-payment. Opposite of a regular mortgage, payments are made to the home owner from the loan company.
Who Is Eligible for a Reverse Mortgage?
There are no income requirements, as the loan does not need to be repaid as long as the owners stay in the home. Applicants must own their home outright (or have the mortgage paid off by an advance from the reverse mortgage), and generally must all be at least 62 years old. The home under consideration for a reverse mortgage generally must be one's "principal residence" (as opposed to a rental home). One must live in the house more than half the year. Most single-family properties, two to four unit buildings and some other real estate are eligible. Most mobile homes (or trailer park homes) are not eligible, but there are sometimes exceptions when they are manufactured homes on a permanent foundation and have been converted to "real property" (usually on a piece of land one owns).
What the AARP Says about Reverse Mortgages: "The cash you get from a reverse mortgage can be paid to you in several ways:
- all at once, in a single lump sum of cash;
- as a regular monthly cash advance;
- as a "credit line" account that lets you decide when and how much of your available cash is paid to you; or
- as a combination of these payment methods.
No matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home."
The AARP also states on their website, "With a reverse mortgage, the lender sends you cash, and you make no repayments. So the amount you owe (your debt) gets larger as you get more and more cash and more interest is added to your loan balance. As your debt grows, your equity shrinks, unless your home's valueis growing at a high rate. When a reverse mortgage becomes due and payable, you may owe a lot of money and your equity may be very small. If you have the loan for a long time, or ifyour home's value decreases, there may not be any equity left at the end of the loan." The equity in one's home may also rise, as real estate generally rises in value over time.
Facts and Tips About Mortgages that Pay Income to Senior Citizens by Janienne Jennrich.
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