A mortgage is a long-term loan, generally repaid over a period of 15 to 30 years,that a borrower obtains from a bank, independent mortgage broker, online lender, thrift or the property seller. Essentially, the house and land serve as the collateral for the mortgage loan. At the closing, the borrower signs documents that give the lender a lien against the property. Thus, the lien gives the lender the power to take the home through foreclosure if the borrower cannot make the agreed upon payments. Visit the BankRate.com mortgage basics page for an in depth discussion of mortgage choices.
Mortgage Types:
Reverse Mortgages: A reverse mortgage is loan against the value of your home that will not have to be paid back as long as you live in your home. Reverse mortgages are generally restricted to homeowners over 62 years of age. A guide to reverse mortgages for senior citizens.
Fixed-Rate Mortgages: These mortgages feature fixed rates and monthly payments. Fixed-rate mortgages are more affordable when interest rates are low. More information on fixed-rate mortgages.
Adjustable-Rate Mortgages: Adjustable-rate mortgages have monthly payments and interest rates that move up and down as the market interest rates fluctuate. More information on adjustable-rate mortgages.
Jumbo Mortgages: This mortgage is intended for those who want to take a larger mortgage than that allowed by the Fannie Mae single-family limit. More information on jumbo mortgages.
Assumable Mortgages: An assumable mortgage allows a homeowner to hand off the loan to a buyer rather than paying it off using the proceeds from the home sale. More information on assumable mortgages.
Balloon Mortgages: A balloon mortgage allows borrows to get lower rates and payments for 3 to 10 years. After this time, the principal balance must be paid back in a lump sum. More information of balloon mortgages.
In the early 1980’s, the AARP began lobbying congress for a program that would allow senior homeowners to safely turn some of their home equity into additional cash. The AARP was asking for a safe mortgage program which would insure homeowners they would never be forced out of their homes, and that would also relieve them of the burden of monthly payments normally associated with a home mortgage while safeguarding the equity position of the homeowners or their estates.
In 1989 Congress gave birth to HUD’s Reverse Mortgage Program – a Federally insured, Government sponsored program specifically designed for, and only available to senior homeowners over the age of 62.
What is a Reverse Mortgage?
While a Reverse Mortgage is a lien against your home like any other mortgage, that’s pretty much where the similarities end. A Reverse Mortgage is a special, Government sponsored program designed specifically for, and only for - homeowners over the age of 62. Unlike a traditional mortgage, there are no monthly payments to make. There are also no credit, asset or means requirements to qualify for the mortgage.
Since there are no monthly payments, the mortgage balance increases over time as interest and other nominal costs are assessed to the loan. This growing balance however, never has to be re-paid until the homeowner leaves the home and is often offset by increasing home value. Homeowners continue to own their homes and can never be forced to move out or sell due to a mortgage balance or a payment they can no longer afford.
A Reverse Mortgage is a non-recourse loan. This means that no assets other than the home can be attached to pay off the mortgage. The mortgage balance can never exceed the value of the home regardless of what it could conceivably grow to. Should the value of the mortgage be less than that of the home when the senior leaves, either the homeowner or the estate receive the remaining equity. Taken together, these features offer what is often considered a “Win-Win†situation.
Interest Rates and the costs of the most common Reverse Mortgages are set by the Government. Because of this, “shopping for rates†between different banks or brokers becomes a non-issue. The homeowners are free to use the broker or bank that they feel most comfortable with.
The mortgage balance only becomes due when the homeowner sells the home, vacates it for more than 12 months, or when the last surviving borrower passes away. On sale, it is satisfied at closing, as would be any other mortgage. Heirs have the options of paying off the amount due and keeping the home, or of simply selling the home. A surviving Co-borrower (spouse) may continue to remain in the home.
Who Qualifies for a Reverse Mortgage?
Qualification for a Reverse Mortgage is pretty simple.
The age of the homeowners must be age 62 or greater.
The home must be the primary residence. You have to live there.
There can be no other liens on the home. Current liens or mortgages can and must be satisfied from the proceeds available from the Reverse Mortgage. If current liens are greater than the amount available from the Reverse Mortgage, homeowners will not qualify.
Hw does the homeowner access the cash?
Homeowners access the cash in one of four ways. They are:
Lump Sum – a single payment of cash.
A Line of Credit – You can use or pay back as you like. Unlike a normal Equity Line or Loan, the Reverse Mortgage Line of Credit is available until the homeowner leaves the home with no monthly payments due. The available line unused, also increases.
Monthly payments, either term or tenure.
Any combination of the above.
Monthly Tenure payments continue for as long as the homeowners or surviving homeowner resides in the home, even if the mortgage balance eventually exceeds the value of the home itself.
How much money can the homeowner get?
The amount the homeowner can receive from a Reverse Mortgage is based on three factors. They are: The Age of the youngest homeowner, Current Interest Rates, the location and Appraise Value of the home.
Essay provided by Category Expert: Frank Miller, Senior Funding Group, Long Island, New York. (631) 312-3569.
Disclaimer: All copyright and responsibility of essay information is the responsibility of author.
Reverse Mortgage Explained
In the early 1980’s, the AARP began lobbying congress for a program that would allow senior homeowners to safely turn some of their home equity into additional cash. The AARP was asking for a safe mortgage program which would insure homeowners they would never be forced out of their homes, and that would also relieve them of the burden of monthly payments normally associated with a home mortgage while safeguarding the equity position of the homeowners or their estates.
In 1989 Congress gave birth to HUD’s Reverse Mortgage Program – a Federally insured, Government sponsored program specifically designed for, and only available to senior homeowners over the age of 62.
What is a Reverse Mortgage?
While a Reverse Mortgage is a lien against your home like any other mortgage, that’s pretty much where the similarities end. A Reverse Mortgage is a special, Government sponsored program designed specifically for, and only for - homeowners over the age of 62. Unlike a traditional mortgage, there are no monthly payments to make. There are also no credit, asset or means requirements to qualify for the mortgage.
Since there are no monthly payments, the mortgage balance increases over time as interest and other nominal costs are assessed to the loan. This growing balance however, never has to be re-paid until the homeowner leaves the home and is often offset by increasing home value. Homeowners continue to own their homes and can never be forced to move out or sell due to a mortgage balance or a payment they can no longer afford.
A Reverse Mortgage is a non-recourse loan. This means that no assets other than the home can be attached to pay off the mortgage. The mortgage balance can never exceed the value of the home regardless of what it could conceivably grow to. Should the value of the mortgage be less than that of the home when the senior leaves, either the homeowner or the estate receive the remaining equity. Taken together, these features offer what is often considered a “Win-Win†situation.
Interest Rates and the costs of the most common Reverse Mortgages are set by the Government. Because of this, “shopping for rates†between different banks or brokers becomes a non-issue. The homeowners are free to use the broker or bank that they feel most comfortable with.
The mortgage balance only becomes due when the homeowner sells the home, vacates it for more than 12 months, or when the last surviving borrower passes away. On sale, it is satisfied at closing, as would be any other mortgage. Heirs have the options of paying off the amount due and keeping the home, or of simply selling the home. A surviving Co-borrower (spouse) may continue to remain in the home.
Who Qualifies for a Reverse Mortgage?
Qualification for a Reverse Mortgage is pretty simple.
The age of the homeowners must be age 62 or greater.
The home must be the primary residence. You have to live there.
There can be no other liens on the home. Current liens or mortgages can and must be satisfied from the proceeds available from the Reverse Mortgage. If current liens are greater than the amount available from the Reverse Mortgage, homeowners will not qualify.
Hw does the homeowner access the cash?
Homeowners access the cash in one of four ways. They are:
Lump Sum – a single payment of cash.
A Line of Credit – You can use or pay back as you like. Unlike a normal Equity Line or Loan, the Reverse Mortgage Line of Credit is available until the homeowner leaves the home with no monthly payments due. The available line unused, also increases.
Monthly payments, either term or tenure.
Any combination of the above.
Monthly Tenure payments continue for as long as the homeowners or surviving homeowner resides in the home, even if the mortgage balance eventually exceeds the value of the home itself.
How much money can the homeowner get?
The amount the homeowner can receive from a Reverse Mortgage is based on three factors. They are: The Age of the youngest homeowner, Current Interest Rates, the location and Appraise Value of the home.
Essay provided by Category Expert: Frank Miller, Senior Funding Group, Long Island, New York. (631) 312-3569.
Disclaimer: All copyright and responsibility of essay information is the responsibility of author.
