Reverse Mortgage a good idea for seniors
By: Jay Buerck | Posted: 10th May 2007
I will submit this to one of the article places after you let me know what to change. I kind of just ended it so if you could think of something to put at the end that could be good. Every time I finish one of these things it sounds like a really bad infomercial lately.
So you have reached the age of 62 and your retirement funds went a lot quicker than you thought. There are some great options and some not so great options that you can take to remedy your situation. You could always go back and get a job, but at the age of 62 that probably doesn't seem too appealing. However, you may qualify for another option - a reverse mortgage.
A reverse mortgage is an excellent choice for a financially-strapped senior who has long since paid off their home or will be staying in their home for many years. There are three main types of reverse mortgages with each one having its positive and negative attributes.
The three types of reverse mortgages include the single-purpose reverse mortgage, the federally insured reverse mortgage, and the proprietary reverse mortgage.
The single-purpose mortgage has the benefit of possessing very low costs but are not available everywhere. These loans are also good for one purpose which can include a home repair, home improvement, or for property taxes. There are also strict qualifications and guidelines for a single-purpose mortgage which stipulate that you be in the low-to-moderate income bracket.
A federally insured reverse mortgage and proprietary reverse mortgage are more costly in terms of time spent and costs up front. These programs also become more expensive if you only stay in your home for a short time. You can use these mortgages on anything you want and there are also no medical or income qualifications to meet.
As for your time, in order to obtain a federally insured reverse mortgage (including a Home Equity Conversion Mortgages or proprietary reverse mortgage), you must first meet with a federally qualified and approved counselor to go over many points about the process. The counselor goes over loan costs, financial implications, the alternatives and other programs you may qualify for as well.
The amount of the loan that you will receive depends on your age, which type of loan you receive, the value of the home, current interest rates, and where you are located in the country. A general rule of thumb is the older you are the more valuable your home will be. Also, the less you owe on your home the more money you will be eligible to receive.
Ironically, there are also three ways you can receive payments from your reverse mortgage. You can receive the payment as a fixed monthly rate for a specific period of time or however long you live there. You may also get payment in the form of a credit line. You would draw proceeds from your home at any time and at any value. The third way is to receive payment in the form of a combination of the two previous options.
Home Equity Conversion Mortgages have a larger loan advance at a lower total cost when compared to a proprietary reverse mortgage. The higher valued homes will actual receive more money over all with a proprietary reverse mortgage as compared to a Home Equity Conversion Mortgages. If your home has a higher appraised value with a smaller mortgage then you would be able to qualify for larger funds with a proprietary reverse mortgage.
A reverse mortgage is a great option for financially strapped seniors or for any senior looking to free themselves of any financial burdens. Check out more information on reverse mortgages by visiting the Mortgage Loan Place.
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Tags: job, benefit, short time, retirement funds, loans, home improvement, property taxes, income bracket, reverse mortgage, home equity conversion, reverse mortgages, moderate income