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Reverse Mortgage Article
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Is A Reverse Mortgage Right For You?
from:A reverse mortgage is the exact opposite of a traditional mortgage. Instead of you paying the bank to live in the house, the bank pays you to live in it. This may seem a bad deal for the bank, but there are a lot of reasons why a bank will allow a reverse mortgage. Typically a reverse mortgage is only approved for someone 62 or more years of age that has paid off his or her original mortgage. With all that equity in the home, the senior sitting in it might want to stay in the home but face additional expenses in medical or living costs that they can’t cover. Instead of selling the home and downsizing, they may choose to do a reverse mortgage with a bank instead thus allowing them to remain in the home.
How It Works
The reverse mortgage is a little more complex to close than a traditional mortgage. There are a number of different rules surrounding this type of mortgage loan. The age limit is one barrier and also the condition of the home may be another. The home has to be in good condition, free of major faults, before the bank considers doing this type of mortgage. Closing costs are significantly higher than the traditional loans and fees can also eat into equity. However, the upside is that you can get a disbursement of cash to help you pay immediate expenses while not having to vacate your home. This cash can come as a lump sum, a monthly payment, or even a credit line. The terms of the loan may differ with the bank involved and you should check to see what happens if you eventually sell the home instead of staying in it until you die.
The Potential Negatives
Seniors are targeted by unscrupulous lenders with predatory lending practices that can include a high fee reverse mortgage. Most lenders will be asked to undergo counseling before they take out a reverse mortgage, but that might not be enough to assess whether the mortgage is what you need at this point in your life. As always, if you aren’t certain of what you are signing, don’t sign. Instead, try to review the documents with someone who is knowledgeable and can answer any questions you might have about this type of mortgage. There are some downsides to a reverse mortgage. They can impact your ability to receive Medicaid benefits and government financial assistance. So, be sure to not only look at the terms of the mortgage but also check with your local government offices to see if the mortgage product might actually reduce your income instead of increasing it, due to the offset of benefits.
Reverse Mortgage Specific links
Reverse Mortgage News
What you should know about reverse mortgages
The most popular type of reverse mortgage is the federally insured reverse mortgage backed by the U.S. Department of Housing and Urban Development, known as a Home Equity Conversion Mortgage, or HECM.
Read more...MetLife exits reverse mortgage business
MetLife Inc, the largest U.S. life insurer and reverse mortgage lender, made a surprise shift on Thursday with the sale its reverse mortgage business as part of its exit from banking-related activities. ...
Read more...Does a reverse mortgage work?
Opinion divided on if senior’s income source helps or hurts You may have heard that a reverse mortgage will give you a “lifetime income” or you will “never lose your home.” But the jury is out on how effective of an option this is for seniors. Reverse mortgages, or Home Equity Conversion Mortgages (HECM), are available to homeowners who are at least 62-years-old. The loan taps the home’s equity ...
Read more...Another Big Name Exits Reverse-Mortgage Lending
MetLife, another big reverse-mortgage lender, is getting out of the business.
Read more...REVERSE MORTGAGES BOOST BANK’S ASSETS
Silvergate Bank of San Diego has posted first-quarter net income of $1 million, up from $773,000 for the same quarter last year.
Read more...