What is a reverse mortgage and how does a reverse mortgage work?

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Designed for seniors, a reverse mortgage is a loan that allows the homeowner to convert some of the equity in their home into cash or monthly income, while retaining home ownership. A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM) is a relatively new product. A reverse mortgage provides unique benefits for its target market eg: someone over 62 who lives in his/her primary residence, who has substantial equity in his/her home, and who has little or no income. A reverse mortgage is a loan against the equity in your home that you don't need to pay back for as long as you live in the home. Eligibility for a reverse mortgage is set by the Federal Government; The Federal Housing Authority FHA tells HECM lenders how much they can lend you, based on your age and your home's value.


The mortgagor is not required to make any payments, the home is owned by the bank upon the death of the mortgagor and the transaction is structured so that the loan amount will not exceed the value of the home at that time. That feature should raise a red flag. That means the homeowner isn't given the fair market value of the property initially because the bank must figure in the interest over the possible life of the loan.

Good credit is not relevant because the home provides the security for the loan. In some cases the heirs have the option to pay off the mortgage when the owner dies but the cost can be extremely high. This type of mortgage has higher up front fees than conventional mortgages and those costs become part of the original mortgage which accrues interest at a rapid rate. This is an important factor to consider because the mortgage must be paid in full if the owner decides to sell the property or if their heirs desire to keep it after their death. Especially troublesome is the fact that many reverse mortgage lenders will send a loan officer to the senior's home to sign the loan documents and the senior has no benefit of having another pair of eyes and ears present at the transaction.
To be eligible for a reverse mortgage, you need to be at least 62 years old, occupy the home as a primary residence, and either own your own home outright or only owe a small amount on your existing mortgage loan that can be paid off at closing with the proceeds from the reverse mortgage.

In general, a reverse mortgage is tax free and has no income restrictions. Additionally, most payments from a reverse mortgage won't affect Social Security or Medicare benefits. In fact, many seniors use a reverse mortgage to supplement their Social Security and Medicare, allowing for more financial security.

Reverse mortgages also work in a purchase transaction. You can purchase a home without making a single monthly mortgage payment. This option allows seniors to move close to family when the need arises. There are various ways seniors can benefit with a reverse mortgage including receiving additional tax-free monthly income or a lump sum payment, cancelling a current mortgage payment, funding long term care insurance and in-home care, renovations and repair work to their homes.

In many states, the Reverse Mortgage, or Senior Reverse Mortgage, allows for a new home purchase with the use of reverse mortgage funds, this rule does not apply nationwide. Although HUD and the FHA recently passed the HECM Reverse Mortgage home purchase program, allowing you to purchase a new home with reverse mortgage proceeds, borrowers in Texas are not yet eligible. Rules in individual states may vary. Please see a specialist in your own state for more details.
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What is reverse mortgage and how does it work?

A reverse mortgage, also known as a Home Equity Conversion Mortgage(HECM) is a relatively new product. A reverse mortgage providesunique benefits for its target market: someone over 62 who lives inhis/her primary residence, who has substantial equity in his/herhome, and who has little or no income. A reverse mortgage is a loanagainst the equity in your home that you don't need to pay back foras long as you live in the home. If an individual is a seniorcitizen and does not intend on moving out of his or her home forsome time, a reverse mortgage may be an option worth considering.Eligibility is set by the Federal Government; The Federal HousingAuthority FHA tells HECM lenders how much they can lend you, basedon your age and your home's value. However, the up front costsand bank fees can be very high. The homeowner is responsiblefor maintenance, repairs, municipal fees, insurance and taxes. You qualify for a reverse mortgage if: You are over the age of 62. You live in the house as your primary residence. You own your house in full or are able to pay the balance on yourhome with the proceeds of the reverse mortgage In many states, the Reverse Mortgage, or Senior Reverse Mortgage,allows for a new home purchase with the use of reverse mortgagefunds, this rule does not apply nationwide. Although HUD and theFHA recently passed the HECM Reverse Mortgage home purchaseprogram, allowing you to purchase a new home with reverse mortgageproceeds, borrowers in Texas are not yet eligible. Rules inindividual states may vary. Please see a specialist in your ownstate for more details.

Are reverse mortgages risky?

Reverse mortgages do not carry the same risks as conventional mortgages. Since repayment of the loan is not made until the borrower is no longer living in the home, there are no worries about fees associated with late payments, or possibly losing the house due to foreclosure. However, the interest on a reverse mortgage is compounded, which means that each month the interest is calculated against both the principle and the interest that has already accrued. This can cause the amount owed to grow at an incredible rate. Care should be taken not to borrow more than is necessary, in order to lessen this effect. For FHA insured reverse mortgages, the home owner must undergo mandatory counseling before receiving the loan, in order to ensure that they are fully aware of all of the factors that go along with the reverse mortgage, as well as to educate them of the alternatives that may be available.

How do you do a reverse mortgage purchase?

A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM) is a relatively new product. A reverse mortgage provides unique benefits for its target market: someone over 62 who lives in his/her primary residence, who has substantial equity in his/her home, and who has little or no income. A reverse mortgage is a loan against the equity in your home that you don't need to pay back for as long as you live in the home. Eligibility for a reverse mortgage is set by the Federal Government; The Federal Housing Authority FHA tells HECM lenders how much they can lend you, based on your age and your home's value. One very important facet of the reverse mortgage process is the consumer counseling that is required for borrowers contemplating a reverse mortgage. Your lender can help you find counseling agencies and most programs are approved and monitored by HUD and/ or AARP. The counseling is required to make sure that the terms and risks of the program are clear to you. Counselors are obligated by law to review with you all of the implications of the new mortgage, and what your potential options are. Answer In many states, the Reverse Mortgage, or Senior Reverse Mortgage, allows for a new home purchase with the use of reverse mortgage funds, this rule does not apply nationwide. Although HUD and the FHA recently passed the HECM Reverse Mortgage home purchase program, allowing you to purchase a new home with reverse mortgage proceeds, borrowers in Texas are not yet eligible. Rules in individual states may vary. Please see a specialist in your own state for more details.

How does a reverse mortgage purchase work?

Similar to a purchase with a regular mortgage. The difference is that you need a large enough down payment to qualify, and you won't ever have to make a mortgage payment on the new home.

What is reversed mortgage?

Reverse Mortgage is a type of mortgage here in Canada where aninstitution can loan you the money on your paid off house upto acertain amount (usually 50%)of the price of your house and pay youa set amount per month or lump sum depending on what you choose.This type is usually available to people who are seniors. The mainadvantage of this is that you do not have to qualify for thismortgage as long as you have equity in the house. The disadvantageis that you pay high interest cost and it is eating up the equityin your home.

Do you have to pay on reverse mortgage loans?

You will not have to repay the loan for the entire time that you live in that home. You retain complete ownership of your home and after you're gone, your heirs can refinance the loan into a traditional mortgage, sell the home, or walk away from the home altogether. Simply put, a reverse mortgage lets you convert a portion of the equity in your home into cash. No repayment is required until you can no longer use the home as your principal residence.

How small of a mortgage do you need for reverse mortgage?

This is the WRONG place to get this kind of info. You need to speak with a trusted mortgage specialist because reverse mortgages makes you initial payment a lot higher and it has lots of risk along with that. Be careful, good luck, God Bless. To my knowledge, there is is not a minimum amount. The amount of your loan proceeds depend on the value of your home (an appraisal must be done) and your county of residence. Loan amounts are broken down by county of residence. You DO have to have a certain amount of equity in your home, as you can only borrow a percentage of the home's value. In addition, in many states, the Reverse Mortgage, or Senior Reverse Mortgage, allows for a new home purchase with the use of reverse mortgage funds, this rule does not apply nationwide. Although HUD and the FHA recently passed the HECM Reverse Mortgage home purchase program, allowing you to purchase a new home with reverse mortgage proceeds, borrowers in Texas are not yet eligible. Rules in individual states may vary. Please see a specialist in your own state for more details. This type of loan is not right for every individual or every situation, so, do consult a professional. ***** Reverse mortgages are based on two factors, the age of the youngest occupant and the value of the property. The older you are, the more you can borrow and the higher the value of the property, the more you can borrow. Different lenders have different age entry levels, and the percentage of equity or amount of money you can leverage depends upon your age.

Can a reverse mortgage be reversed?

From Talk Refinance: You do not have to repay this loan in your lifetime. Once your home is sold should you pass away the repayment will be taken from the proceeds of your home. Repayment also occurs if you decide to sell your home, or move out of your home. . http://www.talkrefinance.com HUD says: When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. . http://www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm

Can you get mortgage insurance on a reverse mortgage?

Insurance is already part of the reverse mortgage program paid to the FHA to insure your loan. The HECM standard products require 2% of the loan amount / lending limit financed where the new "saver" program requires just 0.1%. Both standard and saver programs have an additional 1.250% insurance which is charged as an ongoing interest charge to the outstanding loan balance to continue insuring your loan. Sources: http://www.allrmc.com/blog/reverse-mortgage-insurance http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/insured

How does the mortgage balance get paid when you get a reverse mortgage?

Senior homeowners in US who have a lot of equity in their homes can qualify for these loans. Rather than making monthly mortgage payments to the lender, the homeowners can use the equity in their home to receive monthly payments from the lender. The borrower does not have the responsibility of paying off the loan till the time he lives in his home or expires.

How can you get out of a reverse mortgage?

You can refinance out of a reverse mortgage at any time, there is no prepayment penalty. you can also sell whenever you want and move. Any equity remaining will be yours to keep. If there is negative equity in the home you can turn it over to the lender and will not face personal recourse against you or your assets provided the reverse mortgage is a HECM reverse mortgage insured by FHA- most are.

How does a reverse mortgage work when you die?

The lender gets the property when you die. If your heirs want tokeep the property then they must pay off the reverse mortgagewithin a certain time period after your death. However, the costsare often very high. The lender should be notified of the death ofthe owner. If the heirs cannot pay the lender will take possessionof the property.

You want to get out of reverse mortgage and into conventional mortgage?

You can always get out of a reverse mortgage by refinancing it to a conventional mortgage, but before you do make sure its what you really want. A reverse mortgage is far better than most people realize. Not only do they not require payments and allow you to stay in the home as long as you live there, but they also have no personal recourse against you or your assets. A conventional loan does. As a result, if home values continue to drop and you get a negative equity situation, with a reverse mortgage you can walk away and the lender takes the full loss. With a conventional mortgage the lender can pursue you personally for any losses taken by filing for a default judgment against you. paying money to refinance out of a no payment no personal obligation loan to a forced payment loan with a personal guarantee may be a bad move depending on your situation. Finally if you want to you can always make a payment with a reverse mortgage. There is no prepayment penalty so pay whatever you want whenever you want. its just nice to know you don't have to pay if you can't. The only downside is you can't rent the home out.

Why are there 2 notes and mortgages in a reverse mortgage?

The first note belongs to the mortgage lender and the second to HUD. By doing this, other loan companies are prevented from attaching a 2nd lien to the home, because the secondary lien position is occupied by HUD. Visit the related link for more reverse mortgage information.

What happens to a reverse mortgage in bankruptcy?

A reverse mortgage is typically unaffected by bankruptcy. Only in a case where you want to surrender the home would the bankruptcy court be involved on any mortgage product other than to dictate terms of repayment of defaulted payments. with a reverse mortgage there are no payments so that would not be an issue.

Who offers reverse mortgages?

You can get a reverse mortgage from several places. There are both brokers and bankers in the business. Financial Freedom and Bank of America has exited the reverse mortgage market, however others are still going strong. a simple Google search will pull several up. Just make sure to shop it as you would any other mortgage to get the best terms and the right style of reverse mortgage for you. you can always check out my website as well, here are some specific lenders, but there are many more: Met Life Bank Reverse My Mortgage Wells Fargo Generations

How is a reverse mortgage paid off?

A reverse mortgage can be paid off either by selling the home and using sales proceeds, refinancing the home, or doing a streamline reverse mortgage to a new reverse mortgage program. If the homeowner wishes to move, they can sell and use a reverse mortgage to purchase a new home. If the homeowner has passed away, the heirs have 6 months to refinance the home, sell it, or decide to turn over the home to the lender. If there is negative equity in the home the homeowner or the heirs may turn the property over to the lender and walk away without personal recourse. Reverse mortgages are non recourse loans, meaning the only recourse the lender has for collecting lost funds is against the property itself.

Should reverse mortgages have mortgage insuranc?

In the perfect world no mortgage insurance would be necessary, however nearly all reverse mortgages today are backed by FHA's HECM reverse mortgage program which requires mortgage insurance. I key difference however with reverse mortgages is that there is no personal guarantee or recourse against the borrower or their heirs when doing a HECM reverse mortgage. as a result if there is ever a negative equity position in the home the lender takes the loss and receives protection from FHA accordingly. As a result the mortgage insurance on a reverse mortgage has a very direct benefit to the borrowers. The mortgage insurance is collected both upfront and monthly, however the HECM Saver program lends less money but does not have an upfront insurance premium

What does mean mortgage payment reversal?

this site is bogus. its adds all lead to the same bank abusing your mortgage. they want your thoughts so they know how to scam . take a look around it promotes banks and they same banks causing the problem signed fed up

What is a reverse mortgage and how does it work?

In short, a reverse mortgage is a mortgage that does not require any mortgage payments to be made, and the funds received from the loan can be received via a lump sum of money, an equity line of credit, or monthly payments made to you from the lender. Most of these mortgages are backed by FHA's HECM program. There are many good detailed articles on what they are, as well as videos. Wikipedia has a good section on this, i have a full guide on my site as well. The short version of how it works is that you must be at least 62 years old to qualify, and the loan size is based on the current interest rates, the location of the home, and its value. Your age is factored in as well as the loan is based on life expectancy. A reverse mortgage can only be done on a primary residence. Its a non-recourse loan meaning that only the property is offered as collateral, the lender cannot pursue you or your estate for any shortage to the payoff if the loan size ever exceeds the value of the home. You can never be forced to move as long as you live there.

Can you do a reverse mortgage on a townhome?

You can, if the town home is in an approved FHA complex it makes it much easier. If it is not then you have to apply for a spot approval which is asking for an exception to the requirement that the HOA or complex be FHA approved based on the merits of your particular property.

Does a reverse mortgage work for a government loan?

To get a reverse mortgage, ALL of the following must be true: * The borrower is 62 years old or older * The borrower owns their home outright - No mortgages associated with the property - No home equity loans associated with the property - No home equity lines of credit associated with the property * There are no liens associated with the property All reverse mortgages are government approved as they are defined as a government mortgage product.

Is reverse mortgage taxable?

lots of info on my site on this one, but in short the money you get from the reverse mortgage is not subject to income tax because it is borrowed money, not earned money. this is similar to a home equity line of credit taken out against a home, no income tax is paid on the loan. On the flip side, the interest you pay on a mortgage is tax deductible in the year you pay the interest, not necessarily in the year it accrues. Because a reverse mortgage does not require mortgage payments, you typically will not have a mortgage interest deduction on your income taxes. However, if you need a deduction on a particular year you can pay interest payments whenever you want, thus receiving a 1098 interest statement making that money tax deductible.

What are pros and cons of reverse mortgage?

I know that it is a way for people who have built equity in their home when it is paid off to get money for living expenses etc. Like for elderly people with medical bills etc. If they have no other income and need the money. It is like taking out another mortgage again, because then the home isn't really paid off any more. When they decide to sell the home, money will be owed on it again.

Why are there two mortgages in a reverse?

It's only one mortgage loan but because they are Federally-Insured HUD has a 2nd trust deed on the property to insure that in the event the loan servicer or bank should fail the Federal Housing Administration can continue guaranteeing the borrowers payments on the loan and transfer the servicing to another company.

Is a reverse mortgage a wise move?

It's like so many other things - it is a truly wise and sensible move for some people under certain circumstances. It would be a very bad move for others. Talk to an official at your local bank - they will have all the information you want on Reverse Mortgages.

How do you apply for a reverse mortgage extension?

some clarification would be helpful on what you are asking, however a reverse mortgage is never due as long as you live in the home. Once the borrower passes away the heirs will have 6 months to refinance or sell the home. if this time passes and the home is not sold or refinanced then an extension would be granted on a case by case bases from the lender. The best way to apply for this extension would be to contact the lender and ask for it. While they are not obligated to give the extension they will often work with the heirs as they are not interested in forcing a foreclosure if they can avoid it.

Do you have a mortgage from AARP Reverse Mortgage?

No I do not have a mortgage from AARP Reverse Mortgage because I am not 100 years old. That is for old people who need money and do not need their house any longer because they will be dieing soon.

What is the difference between mortgage and reverse mortgage?

In a regular mortgage the person is making payments o the mortgage holder in order to build equity in their home. In the case of a reverse mortgage, the bank is making payments to the person against the equity that is in the home. A reverse mortgage allows you to draw on the equity of your home with out having to sell it. Reverse mortgages were created by the U.S. Department of Housing and Urban Development and are federally insured private loans. A reverse mortgage loan is repaid only when you sell your home or no longer live there as your principle residence.

Where can you find a reverse mortgage calculator?

Reverse mortgage calculators can be found on line on most mortgage websites.There are hundreds of mortgage loan sites.& This calculator makes it easier to understand the reverse mortgage math and to let you see if this type of mortgage is best for you.

What reverse mortgage calculator is best?

A reverse mortgage is a nice financial instrument for the senior citizens in the country who do not have adequate retirement fund at their disposal and whose age is 62 or more. If you are curious about how much money you could qualify in a reverse mortgage feel free to check out our Reverse Mortgage Calculator in the related link. To know more information about reverse mortgage, see the related link.

What do you do if you inherit a reverse mortgage?

If you inherit property that is subject to a reverse mortgage you must make arrangements with the bank to pay off the mortgage if you want to keep the property. If not then the bank will take possession of the property under the terms of the reverse mortgage. If you inherit property that is subject to a reverse mortgage you must make arrangements with the bank to pay off the mortgage if you want to keep the property. If not then the bank will take possession of the property under the terms of the reverse mortgage. If you inherit property that is subject to a reverse mortgage you must make arrangements with the bank to pay off the mortgage if you want to keep the property. If not then the bank will take possession of the property under the terms of the reverse mortgage. If you inherit property that is subject to a reverse mortgage you must make arrangements with the bank to pay off the mortgage if you want to keep the property. If not then the bank will take possession of the property under the terms of the reverse mortgage.

What is a reverse mortgage lead?

A reverse mortgage lead is where you can get names of people that are interested in getting a reverse mortgage. These leads should already have been screened to meet the criteria for a reverse mortgage.

What exactly are reverse mortgage leads?

"Reverse mortgage leads are people who need to refinance their mortgages. Companies get this information, and then sell these peoples numbers to banks that do mortgages."

What do you think about a reverse mortgage?

A reverse mortgage is an arrangement whereby an elderly homeowner can borrow money against the value of their home if the home is free of any other liens. The mortgagor is not required to make any payments, the home is owned by the bank upon the death of the mortgagor and the transaction is structured so that the loan amount will not exceed the value of the home at that time. That feature should raise a red flag. That means the homeowner isn't given the fair market value of the property initially because the bank must figure in the interest over the possible life of the loan. Good credit is not relevant because the home provides the security for the loan. In some cases the heirs have the option to pay off the mortgage when the owner dies but the cost can be extremely high. This type of mortgage has higher up front costs than conventional mortgages and those costs become part of the original mortgage which accrues interest at a rapid rate. Especially troublesome is the fact that many reverse mortgage lenders will send a loan officer to the senior's home to sign the loan documents and the senior has no benefit of having another pair of eyes and ears present at the transaction. That makes seniors vulnerable to predators. Another negative aspect of reverse mortgages is quickly becoming a problem. Seniors who have heeded the misleading advertising have granted reverse mortgages only to discover a couple of years later that they cannot afford the taxes and upkeep even with the reverse mortgage payments. They are losing their homes. I think that they should be avoided unless they are absolutely necessary. Reverse mortgages can be quite expensive in up front fees (as high as $15,000) and a rapidly growing balance as the mortgage matures. I was recently made aware of a reverse mortgage that was inadvertently granted to a senior with only a life estate. She was given $60,000 and less than five years later, when the mortgage was discovered on record by the owner of the property, the amount owed was $105,000. She answered one of those "let your home pay you" ads and a loan officer visited with all the documents ready for signing. Unfortunately for the bank she had conveyed the property to her son some five or six years earlier and he had no idea she needed money or he would have gladly given it to his mother. An overzealous mortgage officer failed to have the title examined and hopefully, the mortgage cannot be enforced. The rate of growth of the amount owed was exorbitant. If a senior has no other source of income except their real estate and has no adult children who may want to buy the property and grant a life estate, a reverse mortgage may help provide a living income. However, the senior should shop around for the best rate and lowest up front costs. Other traditional types of mortgages should be explored and the senior should ask someone to accompany them when they speak with lenders. See related links for informative discussions about Reverse Mortgages. A reverse mortgage is an arrangement whereby an elderly homeowner can borrow money against the value of their home if the home is free of any other liens. The mortgagor is not required to make any payments, the home is owned by the bank upon the death of the mortgagor and the transaction is structured so that the loan amount will not exceed the value of the home at that time. That feature should raise a red flag. That means the homeowner isn't given the fair market value of the property initially because the bank must figure in the interest over the possible life of the loan. Good credit is not relevant because the home provides the security for the loan. In some cases the heirs have the option to pay off the mortgage when the owner dies but the cost can be extremely high. This type of mortgage has higher up front costs than conventional mortgages and those costs become part of the original mortgage which accrues interest at a rapid rate. Especially troublesome is the fact that many reverse mortgage lenders will send a loan officer to the senior's home to sign the loan documents and the senior has no benefit of having another pair of eyes and ears present at the transaction. That makes seniors vulnerable to predators. Another negative aspect of reverse mortgages is quickly becoming a problem. Seniors who have heeded the misleading advertising have granted reverse mortgages only to discover a couple of years later that they cannot afford the taxes and upkeep even with the reverse mortgage payments. They are losing their homes. I think that they should be avoided unless they are absolutely necessary. Reverse mortgages can be quite expensive in up front fees (as high as $15,000) and a rapidly growing balance as the mortgage matures. I was recently made aware of a reverse mortgage that was inadvertently granted to a senior with only a life estate. She was given $60,000 and less than five years later, when the mortgage was discovered on record by the owner of the property, the amount owed was $105,000. She answered one of those "let your home pay you" ads and a loan officer visited with all the documents ready for signing. Unfortunately for the bank she had conveyed the property to her son some five or six years earlier and he had no idea she needed money or he would have gladly given it to his mother. An overzealous mortgage officer failed to have the title examined and hopefully, the mortgage cannot be enforced. The rate of growth of the amount owed was exorbitant. If a senior has no other source of income except their real estate and has no adult children who may want to buy the property and grant a life estate, a reverse mortgage may help provide a living income. However, the senior should shop around for the best rate and lowest up front costs. Other traditional types of mortgages should be explored and the senior should ask someone to accompany them when they speak with lenders. See related links for informative discussions about Reverse Mortgages. A reverse mortgage is an arrangement whereby an elderly homeowner can borrow money against the value of their home if the home is free of any other liens. The mortgagor is not required to make any payments, the home is owned by the bank upon the death of the mortgagor and the transaction is structured so that the loan amount will not exceed the value of the home at that time. That feature should raise a red flag. That means the homeowner isn't given the fair market value of the property initially because the bank must figure in the interest over the possible life of the loan. Good credit is not relevant because the home provides the security for the loan. In some cases the heirs have the option to pay off the mortgage when the owner dies but the cost can be extremely high. This type of mortgage has higher up front costs than conventional mortgages and those costs become part of the original mortgage which accrues interest at a rapid rate. Especially troublesome is the fact that many reverse mortgage lenders will send a loan officer to the senior's home to sign the loan documents and the senior has no benefit of having another pair of eyes and ears present at the transaction. That makes seniors vulnerable to predators. Another negative aspect of reverse mortgages is quickly becoming a problem. Seniors who have heeded the misleading advertising have granted reverse mortgages only to discover a couple of years later that they cannot afford the taxes and upkeep even with the reverse mortgage payments. They are losing their homes. I think that they should be avoided unless they are absolutely necessary. Reverse mortgages can be quite expensive in up front fees (as high as $15,000) and a rapidly growing balance as the mortgage matures. I was recently made aware of a reverse mortgage that was inadvertently granted to a senior with only a life estate. She was given $60,000 and less than five years later, when the mortgage was discovered on record by the owner of the property, the amount owed was $105,000. She answered one of those "let your home pay you" ads and a loan officer visited with all the documents ready for signing. Unfortunately for the bank she had conveyed the property to her son some five or six years earlier and he had no idea she needed money or he would have gladly given it to his mother. An overzealous mortgage officer failed to have the title examined and hopefully, the mortgage cannot be enforced. The rate of growth of the amount owed was exorbitant. If a senior has no other source of income except their real estate and has no adult children who may want to buy the property and grant a life estate, a reverse mortgage may help provide a living income. However, the senior should shop around for the best rate and lowest up front costs. Other traditional types of mortgages should be explored and the senior should ask someone to accompany them when they speak with lenders. See related links for informative discussions about Reverse Mortgages. A reverse mortgage is an arrangement whereby an elderly homeowner can borrow money against the value of their home if the home is free of any other liens. The mortgagor is not required to make any payments, the home is owned by the bank upon the death of the mortgagor and the transaction is structured so that the loan amount will not exceed the value of the home at that time. That feature should raise a red flag. That means the homeowner isn't given the fair market value of the property initially because the bank must figure in the interest over the possible life of the loan. Good credit is not relevant because the home provides the security for the loan. In some cases the heirs have the option to pay off the mortgage when the owner dies but the cost can be extremely high. This type of mortgage has higher up front costs than conventional mortgages and those costs become part of the original mortgage which accrues interest at a rapid rate. Especially troublesome is the fact that many reverse mortgage lenders will send a loan officer to the senior's home to sign the loan documents and the senior has no benefit of having another pair of eyes and ears present at the transaction. That makes seniors vulnerable to predators. Another negative aspect of reverse mortgages is quickly becoming a problem. Seniors who have heeded the misleading advertising have granted reverse mortgages only to discover a couple of years later that they cannot afford the taxes and upkeep even with the reverse mortgage payments. They are losing their homes. I think that they should be avoided unless they are absolutely necessary. Reverse mortgages can be quite expensive in up front fees (as high as $15,000) and a rapidly growing balance as the mortgage matures. I was recently made aware of a reverse mortgage that was inadvertently granted to a senior with only a life estate. She was given $60,000 and less than five years later, when the mortgage was discovered on record by the owner of the property, the amount owed was $105,000. She answered one of those "let your home pay you" ads and a loan officer visited with all the documents ready for signing. Unfortunately for the bank she had conveyed the property to her son some five or six years earlier and he had no idea she needed money or he would have gladly given it to his mother. An overzealous mortgage officer failed to have the title examined and hopefully, the mortgage cannot be enforced. The rate of growth of the amount owed was exorbitant. If a senior has no other source of income except their real estate and has no adult children who may want to buy the property and grant a life estate, a reverse mortgage may help provide a living income. However, the senior should shop around for the best rate and lowest up front costs. Other traditional types of mortgages should be explored and the senior should ask someone to accompany them when they speak with lenders. See related links for informative discussions about Reverse Mortgages.

Is a reverse mortgage a good thing?

Reverse mortgages can definitely be a 'good thing' however it really depends on your personal situation. Many seniors find it beneficial to explore reverse mortgages if they are having trouble keeping up with bills or heath care expenses. A Reverse mortgage can help but allowing you to draw from the equity your home has built up over the years with out having to sell it. This can help many people retire more comfortably. In order to obtain an NJ reverse mortgage (or in other states I believe), you must be at least 62 years of age, live in your home as a primary residence, and own the home in full (or at least be able to pay the balance of your home with the proceeds of the reverse mortgage).

Does a spouse have to sign for a reverse mortgage?

At the moment there are very few investors willing to purchase reverse mortgage loans with a non-borrowing spouse due to the AARP / HUD lawsuit. It's advised that both you and your spouse go on the loan together as the reverse mortgage becomes a balloon payment when the last surviving borrower passes. Some helpful reading on this topic here: Reverse Mortgage with Spouse Under 62 Leaves Vulnerability http://www.allrmc.com/blog/reverse-mortgage-with-spouse-under-62-leaves-vulnerability

How do you qualify for a reverse mortgage?

To qualify for a reverse mortgage, the borrower must be at least 62 years old, own their home in full (or be able to pay the balance on their home with the proceeds of the reverse mortgage), and live in that home as their primary residence.

How does a reverse mortgage calculator work?

A reverse mortgage is a program for seniors backed by the Federal Housing Administration that enables them to access the equity of their home without repayment. The mortgage calculator works by comparing loans. This program provides seniors with added security by acting as financial supplement for social security, unexpected medical expenses, and home repairs.

Who can qualify for a reverse mortgage?

Applicants for a reverse mortgage must be 62 years of age and a home owner. The home cannot be a trailer or cooperative house, and it must meet the U.S. Department of Housing and Urban Development standards.

What is a reverse mortgage for?

A reverse mortgage is for helping older people who might need money. A reverse mortgage is a type of loan for people over the age of 62 who are home owners and they can use this loan to pay for unexpected expenses.

What is the definition of a reverse mortgage?

The meaning of reverse mortgage (lifetime mortgage) is when a senior citizen who owns a home wants to convert the equity in their home to monthly income or some sort of line or credit.