One of the Most Frequent Questions When Assisting with Reverse Mortgages is
One of the most frequent questions that we receive when assisting with Reverse Mortgages is, "If I already have a mortgage, can I still do a Reverse Mortgage?" The consensus seems to be that most people believe the answer to this questions is no. In reality, however, the Reverse Mortgage is a system that allows the borrower to reverse their mortgage payment. Instead of paying from out of their pockets every month, the borrower uses a Reverse Mortgage to end their mortgage payments forever.
The Reverse Mortgage is a product that is useful to remove monthly payments on credit card debts, medicine, and medical bills. The idea behind the Reverse Mortgage originated in Europe, and has been the most popular senior financial vehicle in England, Germany, France, and the Scandinavian nations for the last 35 years. Although the United States has only perfected the safety and administration of the Reverse Mortgage in the last 15 years, its popularity has exploded in the last decade. It is at a point now that we are experiencing a 200% growth from each year to the next in the number of seniors around the country joining the Reverse Mortgage program.
As stated earlier, this form of mortgage offers you the ability to make the equity which you have invested in your property work for you. By taking a step back and analyzing the home reverse mortgage, you will get a better view of the plan hence you can judge whether it will be of any value to you.
There is no credit check, no income qualifications, and no pre-payment penalties on most reverse mortgages. What does that mean for you? It means that most everyone 62 and older can get a reverse mortgage, as long as they meet the criteria for the loan.
After asking what is a reverse mortgage, many seniors also want to know how much they are allowed to borrow. The amount seniors can borrow will depend on their age, interest rate, value of their home, and amount of equity in the home. The loan product seniors choose will also affect their payout. The Federal Housing Administration (FHA) currently offers three different HECMs: the HECM Standard, HECM Saver, and HECM for Purchase. Of these options, the HECM Standard provides the highest payouts. Borrowers who choose the HECM Saver will typically receive between 10 to 18% less than those who choose the Standard. However, these borrowers will get to take advantage of reduced costs.
The target is to transform a part of the home equity into cash money according to the payment schedule, which a senior has set. With the normal mortgage a borrower can lose his home, if he cannot follow the payment plan, but there is no such danger with the HECM reverse mortgage. The guarantees are the equity of the home and the obligatory insurance. The borrower will never lose assets other than the value of the home.
A Reverse Mortgage (RM) is a special kind of loan which can be obtained if you are at least 62 years of age (if married, the youngest must be at least 6 and own your own home, condo, or co-op. A Reverse Mortgage (RM ) converts a portion of the value (equity) of a home into instant cash. The main feature of this program is that you need not qualify for credit to obtain this loan.
The reverse mortgage age requirements are perhaps the most stringent qualification. All parties listed as owners of the home in question must be at least 62 years old. Most lenders allow two owners of a reverse mortgage, and some, like Wells Fargo, allow up to three owners. No matter how many owners of the home are listed, each must satisfy the reverse mortgage age requirements.
Other Assets - Home equity should be viewed as a financial asset on par with CDs, stocks, bonds, cash-value insurance policies or other investments you may own. Before deciding to "cash out" home equity with a reverse mortgage, compare this strategy to other possibilities like selling other financial assets you may own. Stocks and bonds can be turned into cash much more efficiently than home equity can.
Next, the money that you will receive from a Reverse Mortgage MUST go towards paying off your mortgage. Any money that is left over will be available to you with no restrictions, but only after your current mortgage is paid off in full. This should be a goal for Reverse Mortgage applicants who have a large first mortgage or home-equity loan. An obvious benefit of using the Reverse Mortgage to remove the current mortgage is the added income you will receive from removing your monthly mortgage payments. Reverse Mortgages never require you to make a monthly payment for the rest of your life, while you are a resident of the home.