REVERSE MORTGAGES OFFER MANY BENEFITS

2006-01-21T10:56:00.000-08:00

REVERSE MORTGAGES

One of the hottest loan products of the New Year is Reverse Mortgages. Although Reverse Mortgages have been around since 1989, with the sharp increase in home values and the ever-increasing Senior population and their financial needs, Reverse Mortgages have become a very desired commodity. Reverse Mortgage volume doubled from 2003 to 2004 and was expected to nearly double again in 2005.

Reverse Mortgages are a wonderful loan program that so benefits Home Owners 62 years or older by allowing them to convert a good portion of the equity in their homes into tax-free (yes, TAX FREE) income while still being able to own and live in their homes. It is a powerful tool for Seniors to use in addressing their financial needs through retirement

The Reverse Mortgage gets its name from the fact that the payment stream goes the other way. Reverse Mortgage holders do not make monthly payments, but rather a payment is made to them whether it be lump sum, monthly or in the form of a line of credit. Reverse Mortgages can be made on most any home. Homes that qualify are owner-occupied one-to-four unit properties, manufactured homes that were built after 1976 as well as qualified condominiums and townhomes.

The first beauty of Reverse Mortgages is the money received can be used for anything. It is the homeowners well earned equity and there are no restrictions. Most seniors choose to use the money to supplement their monthly incomes or paying for medical expenses; but, the money can also be used to repair or alter a home (install ramps or other necessary modifications) money to visit family or friends and sometimes to stave off foreclosure. The Home Owner makes the decision how to use the money as he sees fit. There are absolutely no income qualifications and a Senior may qualify even if they have current mortgages on their property, although the balance of these loans should be relatively low to the value of the home.

Another beauty of a Reverse Mortgage is the Senior has choices in a time of life when choices may not be all that abundant. The Senior can choose to receive their funds either as one lump sum, as a fixed monthly payment up to life, as a line of credit or any combination of all three. Over 60 percent of Reverse Mortgage borrowers choose to have a line of credit that allows them the flexibility to access their equity as they need and desire.

The amount of equity a Senior can access through a Reverse Mortgage is dependent on age (the youngest age of a couple), appraised home value, interest rates, which are very reasonable, and location. Generally, the older the Senior, the more valuable the home and the less that is owed, the more money that can be accessed. A qualified Mortgage Professional can assist in determining that amount.

Funds received from a Reverse Mortgage are Tax Free no matter what form of disbursement that is chosen. Better yet, a Reverse Mortgage does not affect either Social Security or Medicare benefits. That being said, if a Senior chooses a lump sum Reverse Mortgage disbursement, that may affect Medicaid eligibility. If a Seniors are considering that option, it is highly recommended they consult a Medicaid expert to ensure avoidable problems moving forward

Before Seniors can even apply for a Reverse Mortgage, they must meet with a FHA approved counselor. This allows a independent third party to educate the Senior on Reverse Mortgages, answer questions and be able to offer the Senior alternatives based on their situation so that they may make a well-informed decision.
Once the Senior has completed counseling, applying for a Reverse Mortgage is relatively painless and not costly. Up front fees are approximately $300 for a home appraisal. Processing time, however, is approximately 45 to 60 days.

A third beauty of the Reverse Mortgage is there are no monthly payments; in fact, Reverse Mortgages can be used to eliminate monthly payments to allow Seniors to live a more comfortable financial life. The loan is only payable when the Senior no longer occupies the property (last remaining spouse for couples) whether from passing away, selling the home or simply moving out. Furthermore, if there are any additional funds after the home is sold, the excess goes to the Senior or their estate.

For more information on Reverse Mortgages, please contact Paul Heally:

209-815-7319
paul@paulheally.com
http://www.paulheally.com/loans.asp

Paul Heally on Real Estate and Loans

REVERSE MORTGAGES OFFER MANY BENEFITS