27 September 2008

What could happen when a Reverse Mortgage Runs Out?

Many people hesistate to get a reverse mortgage because they are not fully aware of the consequences of having a reverse mortgage or lack there of.  Many people believe that their home will be taken by the lender after their mortgage runs out.  The true answer to this problem is:

No! Nor is the loan due. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home’s value.

This type of security is one great reason to take advantage of a reverse home mortgage.

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Posted by Jay McGrath | Leave a comment

27 September 2008

Differences between Reverse Mortgages and Other loans

Even though many reverse home mortgages are similar in appearance to other home equity loans availible, there are differences between the two. 

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, other loan fees, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You don’t make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you cannot be foreclosed or forced to vacate your house because you missed a payment. 

Many homeowners would find reverse mortgage loans very good ways to get additional income.

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Posted by Jay McGrath | Leave a comment