5 Killer Tips To Take Reverse Mortgage At The Right Time

The reverse mortgages are not the easiest financial products to fully understand

. Therefore a senior makes it wise, if he or she just define his own financial needs and let the professionals to guide him to make them happen. The Government has developed a counselor system, which offers professional reverse mortgage counselor guidance to American seniors.

1. In Brief, What Is A Reverse Mortgage Loan?

A reverse morgage loan is a system with which a senior can use the equity of his home without any backpayments during the running time. When the running time is full, the borrower moves away or pass away, the home will be sold and all the costs, interests and the capital will be deducted from the selling price. The rest goes to the owner or to the heirs. If there is a usual mortgage left, it must be paid away with the reverse loan. This reduces the monthly payments, which will enlighten the financial burden.

2. Three Types Of Reverse Loans.

Home Equity Reverse Mortgage, or HECM, is adminisered by HUD and is the most popular in the market. HECM fees are regulated, which makes it safer. Every HECM applicant must go to the reverse mortgage counselor meeting, where a pro can give useful recommendations. It is important that a senior makes his homework for the meeting to get the best results.

The single purpose reverse mortgage is for low income seniors and can give money for the home maintenance or property taxes. Available from local governments or from charitable groups.

The private lenders sell proprietary reverse mortgages with their own fees. A borrower can usually borrow more, but the costs are not regulated.

3. A Borrower Can Pick The Payment Method.

The lender will pay as the monthly payments, lump sum, as a credit line or as the combination of some of these. It is the senior needs, which will determine the method. No income nor credit score is needed and there is no reporting, how the money is used. The home equity is the only guarantee for the loan. It is important to check whether the SSI and Medicaid will be in danger, before signing anything.

4. How Much Loan Is Available?

The maximum varies state from state, but the absolute maximum is $ 625.500. A senior must be at least 62 years old and own a home, which is his or her permanent home. Altogether 3 borrowers are allowed, but all must fulfil the qualification requirements. A senior can get the more the older he is, the lower is the interest rate and the higher the appraised value of the home.

5. But What Is The Best Timing To Take The Loan?

There are two important factors. The needs of a senior and the height of the interest rate. If a senior has an urgent need, then that will dictate the timing, but if he has a chance to wait, then he can pick the time, when the interest rates are low and to take a reverse mortgage with a fixed interest rate to keep the costs down during the whole running time.

by: Juhani Tontti

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