Why is it called a "Reverse Mortgage"?
In a regular mortgage, you make regular monthly payments until your balance goes down or until you have paid it all off. Therefore regular mortgages are "falling debt, rising equity" loans - just the opposite of Reverse Mortgages.
In a regular mortgage, you use debt to turn your income into equity. In a Reverse Mortgage, you turn your equity into income. You are effectively reversing your regular mortgage. Before, you had income and wanted equity. Now, you have equity and want income. In both cases you used a mortgage, initially to generate equity and later to generate income.
How is a Reverse Mortgage different than a normal
mortgage?
To qualify for most mortgage loans the lender checks your credit and income to make sure you qualify and can afford to pay the loan home loan. With a Reverse Mortgage, you don't have to make monthly payments. Your income has nothing to do with qualifying for a Reverse Mortgage, it is strictly based on your equity and your age. With a regular mortgage if you fail to make your payments you could lose your home. With a Reverse Mortgage, you don't have any monthly payments to make so you can't lose your home for not making payments.
Who is eligible for a Reverse Mortgage? How
do you qualify?
You must own your home and be at least 62 years old. Your home
must be your principal residence and you must live there more than half
the year. If you still owe on your mortgage you must pay
off your balance before getting a Reverse Mortgage. Most folks
use an immediate cash advance from the Reverse Mortgage to pay off any
balance. If your home is paid off you will receive the most
benefit although not having a mortgage later on in life is also a great
benefit.
How much cash can I get?
The amount of cash you can get from a Reverse Mortgage depends on the program you select and on your age, where your home is located and the interest rates. It can vary depending you the program but a typical consumer might get significantly more from one program than from another. No single program works best for everyone. One of our mortgage planners can help you select a plan that's right for you. Click here to request our information packet.
How is my money paid to me?
That is up to you. There are several ways you can take your money: 1. As a Lump sum 2. As a credit line that lets you take cash advances whenever you need the money 3. As monthly payments to you for the number of years you choose 4. Or payments for as long as you live in your home 5. Or as a combination of cash, credit line and monthly payments. Click here to find out find how much cash you could receive from a reverse mortgage.
What happens when I die?
When you pass away your home goes to your heirs, they pay off the balance on the house and do what they wish with it. The amount owed would be all the cash advances you received, any loan fees and interest. You should know that if even if you lived to 110 and received payments during that time, you would never owe more than the value of your home.
What if I decide to move after I take out a reverse mortgage?
Not a problem, you sell your home, pay off the loan balance you have accumulated and keep the rest. You always have this option available. Also you can always change the terms of your Reverse Mortgage if your situation changes such as the death of a spouse.
What is the out of pocket cost of a Reverse Mortgage?
Very minimal. The out of pocket cost to you is often limited to an application fee that covers a property appraisal and a credit check to find out if you are delinquent on any federally insured loans. The rest of the costs are financed with the loan.
Is a Reverse Mortgage right for me?
The answer is more than likely, yes. If you are
reading this it's because you have an interest and if you have an
interest you have a need. The question you have to ask
yourself is this: "Will it make my life better?" If
your answer is yes, please get in touch with a Reverse Mortgage Lender
to show you
your options and pros and cons. Time goes by fast, don't wait
your life will be
much better with a Reverse Mortgage.