REVERSE MORTGAGES

Accounting for more than 35 percent of the reverse mortgage loan market, Bank of America, Wells Fargo and Financial Freedom have recently decided to exit. The decision has many seniors wondering if a reverse mortgage is really a reputable product.

How Reverse Mortgages Work

For decades, home ownership has been touted as one of the main ways individuals and families could build their wealth. When a person makes regular and timely mortgage payments they are taking the essential steps towards building home equity. As the equity builds, the homeowner will end up owning more of their property than their mortgage lender. When that happens, new lines of credit will become available to the homeowner and that is where both reverse mortgages and home equity loans come into play.

Both reverse mortgages and home equity loans will allow you to use your home as collateral when borrowing money, but there are some start differences between the two.

Every type of home loan brings advantages and disadvantages, and reverse mortgages are no different. As baby boomers are entering retirement age, many of them are opting to supplement their incomes by tapping into the equity they have built into their homes. Reverse mortgage loans are one tool that allows those over the age of 62 to borrow against their largest asset, but they aren’t a good choice for everyone.

If you are approaching the milestone of retirement and are contemplating visiting a reverse mortgage lender to tap into your home equity, you need to know both sides of  reverse mortgages.

A reverse mortgage loan can be a valuable tool for retirement planning. For most people, Social Security won’t be enough and it’s important to have as many sources of income as possible when you stop working. Reverse mortgages can accomplish this, but there are several requirements that must be met before obtaining one.

Both the Federal Housing Administration and non-government financial institutions can be qualified reverse mortgages lenders. However, those who want to take advantage of a reverse mortgage opportunity must meet certain qualifications for a reverse mortgage loan, including:

Everyone has their own individual goals for retirement, but no matter what vision you have for your future, money will be required to make it all happen. A reverse mortgage may be the loan you need to materialize your dream.

Reverse mortgages are a specialized type of loan that uses the equity in your home as collateral to provide you with a reliable cash flow when it is time to officially retire. Reverse mortgage loans are not for everyone as there are some specific qualifications that need to be met in order to obtain one. They include:

Americans are currently in the process of revising their concept of retirement.  People now accept responsibility for planning for their own future by setting up their own retirement accounts, putting off their golden years because of limited cash resources and tapping into alternative sources to finance their dreams. That is why reverse mortgage loans are growing in popularity.

So, what is a reverse mortgage? Reverse mortgages are simply a type of home loan that allows those over the age of 62 to borrow against the equity in their home. The borrowers must continue to live in their home, but in return, they can get either get a lump sum payment, decide to use the reverse mortgage buffer as a line of credit or opt for monthly installments.

U.S. senior advocacy group, AARP, sued the Department of Housing and Urban Development (HUD) on Tuesday over policy changes it believes make it easier for older Americans to lose their home to foreclosure. The group said the policy changes resulted in senior homeowners having to pay far more for FHA reverse mortgages than they were originally promised by the government agency.

Changes in 2008 Affecting Current Senior Homeowners

Federal Housing Administration (FHA) reverse mortgages allow homeowners to access cash from the equity they’ve built up in their property over the years. Those over the age of 62 with either a fully paid-off mortgage or very few payments left on the loan may qualify for an FHA Reverse loan. In essence, this program works like a traditional reverse mortgage, but exists through the U.S. Department of Housing and Urban Development (HUD) and is insured by the FHA.

The Federal Housing Administration (FHA) runs several programs to promote home ownership, including providing potential homeowners with opportunities to secure an FHA loan. An FHA loan is a mortgage insured against default by the Federal Housing Administration. The FHA backs the loan so a lender won’t have to write off the loss if the borrower defaults–the FHA will pay.

Qualifications for an FHA Loan

Responsible homeowners who have never even been a day late on mortgage payments and have decades of payments behind them can tap into the equity in their homes as a source of income. A reverse mortgage is a type of home loan which uses that equity and provides you with a portion of the value in cash. The great thing about a reverse mortgage is that you will not have to pay the money back until you no longer use the home as your primary residence.

Reverse Mortgage Rules