What is a Reverse Mortgage and how does it work?

What is a Reverse Mortgage and how does it work?

The reverse mortgage loan is for a senior, who wants to get money out from the equity of his home, while he can still keep the ownership. When you think, what is reverse mortgage, you will find out that it offers both an immediate help, but also a long term investment feature.

Even if a senior wants to get cash money with the reverse mortgage loan, this loan is always a long term decision. When a senior thinks, what is reverse mortgage, he has to think issues like the interest rates, especially if his loan will have a variable rate.

1. A Senior Will Use The Equity, But The Equity Continues To Grow.

This is a very important feature, when you think what is reverse mortgage. Despite of the fact, that the reverse mortgage will be taken against the equity of your home, you will remain the owner. And what is even more important is, that the price of your home will increase during a long period of time. It is a good investment.

There has never been a long period of time, that the home prices had not increased, with the only exception of areas, which has lost inhabitants. The price increase means a double benefit for a senior. He will not only use the equity but the equity will at the same time grow.

2. A Senior Can Deduct The Loan Interests In The Taxation.

The nature of the reverse loan is, that the borrower will not pay back anything monthly. All costs and the capital will be paid back, when the loan will be closed. So will the interests. After all interests have been collected and summed together, they will be paid using the sales price of the home. At this phase the borrower can deduct the interests in the taxation.

3. The Repairs Done Increase The Value Of The Home.

Seniors use reverse loans for many purposes. One usual purpose is to make the repairs of their homes. When the homes will be kept in good conditions, their values remain on good levels. In this way, the reverse mortgage loans are used as investment tools and seniors can pick the benefits, when the homes will be sold.

4. The Monthly Cash Lifts Your Standard Of Living.

If someone will ask, what is reverse mortgage, we can say, that it is a way to give a senior more cash money for whatever need he has. He can take the money as a lump sum, as monthly payments, as a credit line or as a combination of all these. How he takes, depends on the needs he has.

When we think in which life situation a typical senior lives, these reverse loans offer a very human way to improve the standard of living and to give aid to people, who have really earned it. It would be very wise, if more seniors would get information about these loans. This would help to distribute the information to more and more seniors.

It would also be useful to distribute more information to make seniors to discuss about these possibilities. The more information is among them, the better they could help each other and to solve those many personal questions, which most seniors have.

Want to know about Reverse Mortgage Rates?

Reverse Mortgage Lenders Direct have daily reverse mortgage rates, which can help you determine your borrowing costs, how much money you will receive, and whether it is a good time to even consider getting a reverse mortgage. When considering a reverse mortgage, the interest rate you receive is very important as it determines the cost for you to borrow this loan.

While you don’t have to make any payments with a reverse mortgage, the interest is accruing and building up making you equity lesser with time. This is how the bank makes their money with a reverse mortgage, so the lower the interest you receive the better off you are.

Interest Rates and How They Affect Reverse Mortgages

As mentioned above this is a crucial factor in lending costs for a reverse mortgage, and even a .5% can make a big difference in borrowing costs. Reverse Mortgage Lenders Direct have an specialist who are trained in reverse mortgage rates comparison, and by you contacting us we are able to then tell you your real cost of borrowing, or taking out a reverse mortgage.

You are able to either borrow a reverse mortgage loan with fixed interest rates or variable interest rates. Variable interest rates track an underlying index like the libor and fluctuate, while the fixed rate is always the same. Fixed rate mortgages are easier to plan for since your loan amount would be given by lender provides for more security, more transparent, and overall safer for consumers.

Reverse mortgage interest rates are at all-time lows, there is currently plans for both a restrictions on reverse mortgages or tougher qualification standards. We recommend seniors (Reverse Mortgage for seniors) to consider reverse mortgages now as the rates are low and home prices are still stable.

You can use a Reverse Mortgage Calculator to find you how much you can qualify for and if you need more information visit Reverse Mortgage Information

Reverse Mortgages and how it works

Reverse mortgages, how they work?

Introduction to Reverse Mortgages

What is a reverse mortgage - a government insured home mortgage loan specifically designed for seniors who want/need to release equity from their home.

Who Can Qualify For a Reverse Mortgage

• must be at least 62 or older
• own a home ( primary residence )
• have equity in the home
• never have defaulted on government debt

What are the Benefits of a reverse mortgage loan ?

• keep ownership of the property
• never have another mortgage payment
• income is tax free ( proceeds/funds you receive are tax free)
• select how you want to receive your income ( monthly, lump sum, both)
• you can sell home at any time
• you can leave home for heirs
• you are not at risk for foreclosures ( you have to pay for maintenance, taxes, and home insurance as this could lead to a technical foreclosure)

“Now that you have been introduced to the HECM reverse mortgage definition, qualification process, we can cover how does a reverse mortgage work!”

Reverse Mortgage Disadvantages

This is a loan, therefore when both borrowers pass away or move homes they will pay the loan back, also there are closing costs associated with this mortgage, but by using our free service to compare multiple lenders this wont be a disadvantage.

How reverse mortgages work?

Rhe reverse mortgage allows you to tap into your homes equity, this money is tax free and you can spend it as you wish. This is the only mortgage which is senior friendly as it does not require you to have income or credit scores.

To find out how much you can receive visit: Reverse Mortgage Calculator

To find out more visit Reverse Mortgage Information

Do you know how Reverse Mortgage works?

Reverse mortgages, how they work?

A) Introduction to Reverse Mortgages

What is a reverse mortgage - a government insured home mortgage loan specifically designed for seniors who want/need to release equity from their home.

Who Can Qualify For a Reverse Mortgage

• must be at least 62 or older
• own a home ( primary residence )
• have equity in the home
• never have defaulted on government debt

What are the Benefits of a reverse mortgage loan ?

• keep ownership of the property
• never have another mortgage payment
• income is tax free ( proceeds/funds you receive are tax free)
• select how you want to receive your income ( monthly, lump sum, both)
• you can sell home at any time
• you can leave home for heirs
• you are not at risk for foreclosures ( you have to pay for maintenance, taxes, and home insurance as this could lead to a technical foreclosure)

“Now that you have been introduced to the HECM reverse mortgage definition, qualification process, we can cover how does a reverse mortgage work!”

Reverse Mortgage Disadvantages

This is a loan, therefore when both borrowers pass away or move homes they will pay the loan back, also there are closing costs associated with this mortgage, but by using our free service to compare multiple lenders this wont be a disadvantage.

How reverse mortgages work?

Rhe reverse mortgage allows you to tap into your homes equity, this money is tax free and you can spend it as you wish. This is the only mortgage which is senior friendly as it does not require you to have income or credit scores.

To find out how much you can receive visit: Reverse Mortgage Calculator

To find out more visit Reverse Mortgage Information

Pros & Cons

Reverse Mortgage Pros and Cons

The upsides of reverse mortgages

• You can choose how to receive the money: fixed monthly payment, lump sum, line of credit or some combination of these options.
• Income from reverse mortgage generally does not affect Social Security or Medicare benefits.
• If you “outlive the loan,” meaning you receive more in payments than your home is worth, you will never owe more than the value of the home, according to the Federal Trade Commission, or FTC.
• Loan advances are generally not taxable.
• Most loans do not have income requirements.
• Homeowner retains title to home.
• No payments are due until last surviving borrower dies, sells home or no longer lives in home as primary residence.
• HECM Reverse Mortgage programs allow borrower to live in nursing home or other medical facility for up to 12 months before loan becomes due.
• After the home is sold and the loan and fees are paid to the lender, any remaining equity in the home belongs to you or your heirs.

The downsides of reverse mortgages

• Reverse mortgage proceeds could impact Medicaid eligibility.
• Borrowers must be at least 62 years old to qualify.
• Lenders generally charge origination fees and other closing costs.
• Lenders require free debt counseling prior to loan application.
• Lenders may charge servicing fees during term of the mortgage.
• Debt increases over time as interest is charged to outstanding balance of loan.
• Most loans have variable interest rates tied to short-term indexes, such as the one-year Treasury bill or LIBOR. Fixed Rate Loans are available.
• As home equity is used up, fewer assets are available to leave to heirs.
• Interest is not tax deductible until the loan is paid off.
• Borrowers are responsible for paying taxes, homeowners insurance, maintenance costs and other expenses. If they don’t, the loan may become due.

What is a Reverse Mortgage?

First, what a reverse mortgage is NOT:

• It is not a decision to be taken lightly
• It is not available to homeowners under the age of 62
• It is not free money
• It is not a cure-all
• A reverse mortgage is not “a way for the bank to get your house”
• It is not based on income or credit levels
• It is not a traditional home equity loan

What a reverse mortgage is: a good tool for financial planning and flexibility. There are only a very few requirements for eligibility:

•           Must be at least 62 or older

•           Own a home (primary residence)

•           Have equity in the home

•           Never have defaulted on government debt

What are the Benefits of a reverse mortgage loan ?

• keep ownership of the property
• never have another mortgage payment
• income is tax free (proceeds/funds you receive are tax free)
• select how you want to receive your income (monthly, lump sum, both)
• you can sell home at any time
• you can leave home for heirs
• you are not at risk for foreclosures ( you have to pay for maintenance, taxes, and home insurance as this could lead to a technical foreclosure)

In addition, the home itself must be of a type that qualifies for the reverse mortgage program. The vast majority of single family homes qualify, as do most condominiums, townhomes, 2-4 unit owner-occupied dwellings and manufactured homes. Your income and credit levels, however, do NOT matter.

To go through the process of getting a reverse mortgage you will need to speak with a reverse mortgage originator or provider. This person will guide you through the preliminary steps, including counseling, home appraisals, inspections, and choice of loan specifics. It is very important to feel comfortable with your lender. Feel free to speak with as many people as you need in order to gain information and feel comfortable. Click here for Reverse Mortgage Rates.

Once you receive the money, there are virtually no restrictions on the way in which it can be used.

You MUST:

• Repay existing debt, including the existing mortgage

You Can:

• Make Home Improvements
• Finance Regular Living Expenses
• Ease Healthcare Costs
• Take a Trip to Somewhere You’ve Always Wanted to Go
• Give Gifts to Your Family and Friends

It almost seems too good to be true. There are, however, as with everything these days, costs involved. There is an origination fee, closing costs, a servicing fee, mortgage insurance, and interest. These costs come from the proceeds of the loan. You pay very little directly out of your pocket.

You should also know that you cannot lose your home at any time during the life of the loan for failure to make payments. THERE ARE NO PAYMENTS TO MAKE. The loan does not come due until you permanently leave the home or the last borrower dies. The home must be kept up to reasonable standards, it must be insured, and the property taxes must be paid.

Default risk is one of the ways in which a reverse mortgage differs from a traditional mortgage or home equity loan. With those traditional products there is a risk of default and therefore a chance you could lose your home. On the other hand, there are no payments to make with a reverse mortgage. Therefore, as long as the property is kept to a reasonable standard, you will always have somewhere to live.

In addition, you can never owe more than the value of your home. Even if you have been paid more than your home is worth, you can only owe the value of your home. When the loan comes due, you or your heirs can either pay off the loan with existing funds or sell the house in order to satisfy the loan. Excess proceeds from the sale go to your or your estate. If you still have doubts, check this: Reverse Mortgage Lenders Direct

Check http://reversemortgagelendersdirect.com for more information!