subject: All about Reverse Mortgage [print this page] All about Reverse Mortgage All about Reverse Mortgage
Reverse mortgages are an option geared towards older people who are in need of cash. They use their home equity as collateral for these payments, either lump sum or installments. Once the home is appraised and the details are worked out, the seniors can find themselves with the cash they need to pay bills or take a vacation. Most of these loans come with a variable interest rate, but reverse mortgages with a fixed rate are available.
Requirements
There are a few basic requirements to be eligible for a reverse mortgage. First, the borrower must be at least 62 years old. The existing mortgage on the home must be paid in full before they will be able to access the reverse mortgage funds. HUD requires that anyone considering a reverse mortgage receive counseling from an approved company. There are some pitfalls to a reverse mortgage so the government wants to ensure that unsuspecting seniors are not preyed upon by unscrupulous lenders.
The maximum amount that a person can receive is $625,000 in cash in exchange for home equity. The property is appraised and several factors are considered. Among them are the property's value, payment method, interest rate and the borrower's age. The older the borrower, the easier it is for them to qualify for the loan.
If your home is valued above the $625,000 cutoff, you can still qualify through the use of a Jumbo Loan. The down side of these loans is that they are not approved by the FHA.
Just like when you buy a home, you will have to pay such fees as PMI, title insurance, recording, attorney costs, appraisal, and in some cases a survey. These fees can add up and is one of the main reasons HUD established the counseling requirement.
You've spent your life paying for your home. A reverse mortgage is a good way to take advantage of the money you have invested in the form or liquid cash you can use for anything you need or want.
