Are Reverse mortgages the right choice for you?

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Although reverse mortgages are not for everyone, many people find them to be a great choice. Are they the right choice for you? Let's explore them in more detail. reverse mortgages

What's a Reverse Mortgage?

A reverse mortgage is a government-sponsored program that is only available to homeowners over the age 62. Unlike a traditional mortgage, there are no monthly payments to make. The mortgage is also not subject to any credit, asset, or income requirements. This can be an important factor for seniors with less than sterling credit or for those living on reduced retirement incomes.

There are many programs that offer different benefits and rates. There are fixed and variable rate programs, each having different features. Some programs are still Government Programs. However, there have been some private programs that were developed with specific banks. You should only use the bank or broker you are most comfortable with. However, they must be able to offer the best programs.

o Under a traditional mortgage the monthly payments pay for the interest, and usually pay off principal on the loan, thereby reducing the amount of the mortgage. The Reverse Mortgage increases the loan balance by increasing the cash amount you receive and the interest and other fees. The loan balance is not due to be repaid until you sell your home. As you do now, you must keep your taxes current and your insurance current. chip reverse mortgage rates

A reverse mortgage is a non-recourse loan. This means that no assets other than your home can be attached to pay off the mortgage. If the mortgage amount becomes due and exceeds the property's value, the homeowner/estate will be responsible only for the fair value of their home unless the house is taken over by a relative, in which case the full mortgage amount could be due. The sale must take place at "arms length" to avoid the full mortgage amount.

Should the value of the mortgage be less than that of your home, either you or your estate receive the remaining equity in the home when you leave or pass away. These features can be viewed as a win-win situation.

Your mortgage balance becomes due when you sell the home, when you vacate it for more than 12 months, or when the last surviving borrower passes away. It is paid off at closing just like any other mortgage. Your heirs have the option of either paying the amount due and keeping your home or selling it and receiving any equity.