About the author:
Randy Taylor was first licensed as a registered representive, and insurance agent in 1983. He was first published in 1998. He has also spoken to financial advisor groups since 1995. California insurance Lic. # 0643596
Author: Randy Taylor Copyright 1/17/2014 , All rights reserved.
What is a Reverse Mortgage?
A reverse mortgage is a loan vehicle that unlocks or makes available part of the equity in a home to provide
seniors with cash flow to supplement their retirement.
Like any other financial decision you would need to consult with an attorney, tax person, or financial consultant before making any decisions.
How do they work? When you qualify, the equity you have built up can be paid to you and then used for any purpose while the home owner gets to continue living in the home without the need to make their monthly mortgage payments.
What are some of the Advantages?
The borrowers do not have to repay the loan until the borrower no longer uses the home as a primary residence; or until they do not meet the obligations of the loan.
The loan can be used to purchase a primary residence if you are financially able to pay the difference between the loan and the home purchase price,closing costs etc.
The borrower does not have to qualify for the new loan based on income guidelines.
Unlike a line of credit; you do not have to make payments..Instead the loan pays you.
You still own the home and must live in it.
What are some of the requirements?
The key issue is you have to own the home outright or have a high equity position.
You must be 62 years old or older
You are still liable for taxes and insurance on your own.
Are there downsides?
Of course there are.. The most obvious is that you are getting a loan and there will be costs involved.
Your remaining estate that would be passed on to your heirs will be reduced as you spend the equity.
You should contact HUD at 1-(800) 569-4287 and also your financial consultants before making any decisions. A counselor will also help when you apply with required training. This article is meant to be offered for informational purposes only and not to be interpreted as financial advice of any kind.