With money being rather tight these days, other sources of income may need to be considered when it comes time to retire. Social security does not provide enough and this means that many seniors will be more financially strapped, and may even face the risk of losing their home. A reverse mortgage may be just what is needed to provide a good cash flow during those years.
A reverse mortgage, or a Home Equity Conversion Mortgage (HECM), allows you to tap into your home's equity and draw money from it. It also lets you live in your home as long as you need it. In this type of situation, the reverse mortgage lender starts making payments to you, in exchange for the right to expect full repayment once you leave the home, sell it or pass away.
You Choose the Type of Payments You Want
Once a reverse mortgage has been closed, your existing mortgage will be completely paid off. This can be done right at closing. Out of the balance of the money, you will be able to select to receive your money in several ways. You can get it in the form of a lump sum, a payment each month, or as a line of credit. Most people take their money in some combination of these methods.
The Qualifications Are Easy to Meet
Unlike a standard home loan, a reverse mortgage is not at all difficult to qualify for. The youngest person on the mortgage must be at least 62 years old. You need to have more equity in your home than the money that you still owe on it. The property must meet standard FHA guidelines.
Since you are not making any kind of payment, your own financial condition does not matter. In order to keep your home, however, you will need to keep mortgage insurance, pay the utilities and taxes, and maintain it.
One more qualification that you need to be aware of is that there is a lending limit on how much can be given for any HECM. The limit is currently $625,500. This figure is good through the end of 2009, but it may be changed going into the next year.
The Costs of a Reverse Mortgage
There are no payments that you will have to make while you still live in your home. However, there are costs based on various fees, maintenance costs, as well as the possibility that reverse mortgage rates may increase. A recent declaration made by HUD demands that reverse mortgages be reduced by 10%, which means even less money for you.
Who Should Get a Reverse Mortgage?
Whether or not you get a FHA reverse mortgage, or any other kind, is really a decision you will have to make. To help you make the right decision, there are third party agencies available that will provide you with plenty of reverse mortgage information and answer your questions. They can also help you decide whether or not a reverse mortgage will be in your best interest.
A thirteen-year veteran of the mortgage industry, Robert Griffin specializes in reverse mortgages and has helped over 3000 Americans find financial security with a reverse mortgage. The owner of Griffin Financial Mortgage LLC, based in Fort Worth, Texas, his memberships include the National Association of Mortgage Brokers (NAMB), the Mortgage Bankers Association (MBA), the National Reverse Mortgage Lenders Association (NMRLA) and the Better Business Bureau (BBB). Robert Griffin is also co-author of “62 Senior Moments.” If you would like more information, please call (866) 683-3690 or complete our Reverse Mortgage Information.
Written by Robert Griffin - www.ReverseMortgage360.com
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