A Senior Reverse Mortgage - Borrowing Against Your Home

The idea of the reverse mortgage loan is to turn a part of the home equity into disposable money every month, but to avoid the monthly back payments

. An additional help comes from the fact, that a senior has to pay away the usual mortgage with the reverse loan, which releases even more money into daily use.

1. Who's Money Shall I Use?

You will use your own money, which you have saved through many years and which is now in the form of your home equity. The terms of every reverse mortgage says, that a borrower has not to pay back anything on a monthly basis.

When the reverse mortgage is a loan, which the bank or other lender will give you, it has an interest and many other fees. These all expenses and the loan capital will be paid back, when the loan will be closed. This will happen, when the borrower will die, sell the home or will move permanently away.

2. Avoid The Scams.

Because the reverse loan market is quite hot, there are also many scams and other marketers, who try to sell too big agreements to the seniors. So before you sign anything, go and meet the federal counselor, who is an independent expert and can recommend some lenders to you. He can also tell about the fair terms for the reverse mortgage.

3. What Are Federally Insured Loans?

These loans are very safe ones, because the lender will require, that before a senior can get one, he has to take a so called mortgage insurance. The idea is, that in all cases the lender will get his money back and the borrower have not to use his other assets to pay the reverse mortgage. If the selling price of the home will not cover the whole sum, the missing part will be paid from the insurance.

4. Prepare To Meet The Counselor.

When a senior will take the federal mortgage, he has to meet the federal counselor. The law says so. The counselor is an independent expert and very familiar with the senior financial problems. But because every senior has his own situation, it is a must that a senior will prepare a list of questions for this meeting. In this way he will get the maximum benefit from the meeting.

5. Alternatives To The Reverse Mortgage.

As said many times, a reverse loan is just one solution to get additional monthly cash. Everything will depend on the need a senior has. If the need is to make repairs in the home, then maybe the usual loan against the home is wise to take. If the idea is to spend a luxury holiday on some cruiser, then the reverse loan is a too serious solution for that.

by: Juhani Tontti

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