Reverse Mortgages Keep Giving and Giving and Giving
- Date: 2006-11-22 - Word Count: 874
Share This!
Reverse mortgages remind me of the old commercial with the
Energizer Bunny. Like Energizer batteries that just keep
going and going and going, reverse mortgages just keep
giving and giving and giving.
In case you are not familiar with what a reverse mortgage
is, here is a short definition: A reverse mortgage is a
unique type of loan or financial planning tool that allows
senior homeowners that are 62 years or older to access the
equity that they have built up in their homes. A reverse
mortgage is unlike any other type of mortgage, because a
reverse mortgage requires no monthly payments to be paid to
the lender. It also does not require the senior homeowner to
qualify for the loan based on credit or income.
The equity that is paid to the homeowner can be taken as a
lump sum, a set monthly amount or a combination of the two.
The money is non-taxable and does not adversely affect the
senior's social security or medicare benefits. The amount of
money that a senior can qualify for is determined by the age
of the youngest owner on title, the value of the property
and it's location, the interest rate at the time of
application, and the amount of equity the senior has built
up in the property.
Now, back to the energizer bunny analogy.
The reason that I say that a reverse mortgage keeps
giving and giving and giving is because if you were to opt
for the monthly "tenure" payments to be made to you, you are
guaranteed by the Federal Government, that you will continue
to receive that same monthly amount every month for as long
as you live in your home. That's right! You collect until
you die or permanently leave your home. Even if you were to
live to be 112 and you all ready received far more income
from the reverse mortgage than your home is worth, you still
get that money every month no matter what, as long as you
remain in your home. You, your estate and your heirs are NOT
obligated to pay back the reverse mortgage lender any more
money than your house can be sold for at the time of your
death or when you permanently move out of your home. So, if
you outlive your life expectancy and end up receiving more
money than the value of your home, the U.S. Department of
Housing and Urban Development (HUD) will pay the lender for
any shortfall on a HECM (FHA) reverse mortgage.
Additionally, there are similar protections in place for
non-FHA reverse mortgages as well.
One of the biggest criticisms you will hear when you first
look into the pros and cons of getting a reverse mortgage is
that the closing costs are expensive. Well at face value,
that seems like a true statement. If you compare the
closing costs of a reverse mortgage to the closing costs of
a traditional forward mortgage, you will find that a reverse
mortgage can cost more than twice as much in fees than a
forward mortgage. But lets take a moment and analyze why
this is the case. Remember that GREAT benefit that we
started out talking about; the perpetual monthly income that
is guaranteed for as long as you remain in your home? The
reason that the government can stand behind such a huge
guarantee like that, is because they have essentially
required every reverse mortgage borrower to contribute to
the insurance fund that will payoff the lenders in case of a
shortfall. So instead of your estate or your heirs having to
make up the shortfall, the insurance fund is tapped to make
the lender whole. If this insurance fund was not there, you
can bet there would be few, if any, lenders making reverse
mortgages with the safeguards that are in place today. Each
FHA reverse mortgage that is initiated today carries a 2%
fee for this insurance fund which is a part of the overall
closing costs associated with a reverse mortgage. So, yes
the costs are higher for a reverse mortgage, but they are
justified in order to make the reverse mortgage the valuable
financial planning tool that it is for many seniors today.
Many seniors would be strapped for money if they did not
have the ability to tap into one of their biggest assets,
their home equity.
Reverse mortgages are becoming more and more popular by the
day, as more seniors are becoming educated about how they
really work. There have been a lot of myths perpetuated over
the years about reverse mortgages as well as a lot of
improvements made to the reverse mortgage products that are
currently offered. The number of federally insured reverse
mortgages made in the United States increased by 77% in the
fiscal year 2006 compared to 2005. More reverse mortgage
products are being developed and will be introduced to the
market place in upcoming months.
For more in depth information regarding reverse mortgages,
locating a lender in your area and finding out how much
money you can qualify for, please visit
http://www.letyourhomepayyou.com
N.Sioris is a senior reverse mortgage specialist and the administrator of the reverse mortgage informational website called, Let Your Home Pay You.com
1-888-269-1098
Energizer Bunny. Like Energizer batteries that just keep
going and going and going, reverse mortgages just keep
giving and giving and giving.
In case you are not familiar with what a reverse mortgage
is, here is a short definition: A reverse mortgage is a
unique type of loan or financial planning tool that allows
senior homeowners that are 62 years or older to access the
equity that they have built up in their homes. A reverse
mortgage is unlike any other type of mortgage, because a
reverse mortgage requires no monthly payments to be paid to
the lender. It also does not require the senior homeowner to
qualify for the loan based on credit or income.
The equity that is paid to the homeowner can be taken as a
lump sum, a set monthly amount or a combination of the two.
The money is non-taxable and does not adversely affect the
senior's social security or medicare benefits. The amount of
money that a senior can qualify for is determined by the age
of the youngest owner on title, the value of the property
and it's location, the interest rate at the time of
application, and the amount of equity the senior has built
up in the property.
Now, back to the energizer bunny analogy.
The reason that I say that a reverse mortgage keeps
giving and giving and giving is because if you were to opt
for the monthly "tenure" payments to be made to you, you are
guaranteed by the Federal Government, that you will continue
to receive that same monthly amount every month for as long
as you live in your home. That's right! You collect until
you die or permanently leave your home. Even if you were to
live to be 112 and you all ready received far more income
from the reverse mortgage than your home is worth, you still
get that money every month no matter what, as long as you
remain in your home. You, your estate and your heirs are NOT
obligated to pay back the reverse mortgage lender any more
money than your house can be sold for at the time of your
death or when you permanently move out of your home. So, if
you outlive your life expectancy and end up receiving more
money than the value of your home, the U.S. Department of
Housing and Urban Development (HUD) will pay the lender for
any shortfall on a HECM (FHA) reverse mortgage.
Additionally, there are similar protections in place for
non-FHA reverse mortgages as well.
One of the biggest criticisms you will hear when you first
look into the pros and cons of getting a reverse mortgage is
that the closing costs are expensive. Well at face value,
that seems like a true statement. If you compare the
closing costs of a reverse mortgage to the closing costs of
a traditional forward mortgage, you will find that a reverse
mortgage can cost more than twice as much in fees than a
forward mortgage. But lets take a moment and analyze why
this is the case. Remember that GREAT benefit that we
started out talking about; the perpetual monthly income that
is guaranteed for as long as you remain in your home? The
reason that the government can stand behind such a huge
guarantee like that, is because they have essentially
required every reverse mortgage borrower to contribute to
the insurance fund that will payoff the lenders in case of a
shortfall. So instead of your estate or your heirs having to
make up the shortfall, the insurance fund is tapped to make
the lender whole. If this insurance fund was not there, you
can bet there would be few, if any, lenders making reverse
mortgages with the safeguards that are in place today. Each
FHA reverse mortgage that is initiated today carries a 2%
fee for this insurance fund which is a part of the overall
closing costs associated with a reverse mortgage. So, yes
the costs are higher for a reverse mortgage, but they are
justified in order to make the reverse mortgage the valuable
financial planning tool that it is for many seniors today.
Many seniors would be strapped for money if they did not
have the ability to tap into one of their biggest assets,
their home equity.
Reverse mortgages are becoming more and more popular by the
day, as more seniors are becoming educated about how they
really work. There have been a lot of myths perpetuated over
the years about reverse mortgages as well as a lot of
improvements made to the reverse mortgage products that are
currently offered. The number of federally insured reverse
mortgages made in the United States increased by 77% in the
fiscal year 2006 compared to 2005. More reverse mortgage
products are being developed and will be introduced to the
market place in upcoming months.
For more in depth information regarding reverse mortgages,
locating a lender in your area and finding out how much
money you can qualify for, please visit
http://www.letyourhomepayyou.com
N.Sioris is a senior reverse mortgage specialist and the administrator of the reverse mortgage informational website called, Let Your Home Pay You.com
1-888-269-1098
Related Tags: reverse mortgages, fha, reverse mortgage information, reverse mortgage loans, reverse mortgage lenders, reverse mortgage calculators, hecm, reverse mortgage myths, reverse mortgage income
Your Article Search Directory : Find in Articles
Recent articles in this category:
- The Secrets to Getting Low Down Payment Car Insurance
Upon purchase of a new car, there is almost always a requirement to buy an auto insurance policy as - The Wisdom Behind Auto Insurance Comparison Quotes
No one in his right mind would not go for a good deal. In fact, everyone is out on their feet and ru - The Benefits of Auto Insurance Comparisons Florida
Insurance can be expensive. This is something everyone knows about especially in the sunny state of - Auto Insurance Florida: The No-Fault Policy
There are different kinds of car insurance offered by a wide range of providers today. Different sta - Finding the Cheapest Auto Insurance Companies
Everyone is asking and searching for the cheapest auto insurance companies available today. Consider - How do You Compare Private Health Insurance Cover in Australia?
Deciding what is the best and most affordable private health insurance cover can be easy if you take - How Payment Protection Insurance Was Mis-Sold
For over six years the issue of Payment Protection Insurance (PPI) and how it was mis-sold to custom - Finding Quotes For Auto Insurance Online
One of the many concerns when you are shopping for auto insurance is being able to get access to quo - How You Can Find the Best Auto Insurance Online
When it comes to renewing your car insurance you are going to quickly discover that there are a numb - Guidelines For Searching For Auto Insurance Online
The internet can be a great source of discounts and values related to auto insurance. However, many
Most viewed articles in this category:
- Trading Forex With Pivot Points
Forex Pivot Point Trading are used today by Forex Traders and are calculated on the previous days mo - Where To Search For Free Grants
Where do you look for free grants? The search must be thorough or it could be an exercise in futilit - The Connection Between High Blood Pressure and Salt
We are a society of Salt Addicts. It cannot be denied. When you look at the things we do and the pla - Tips For Avoiding HYIP Scams
Before knowing about HYIP Scams, refer to the functioning of HYIP or "High Yield Investment Programs - Getting Credit After Bankruptcy
Consumers do not have to live sans credit following a bankruptcy. By following certain steps consume - Tips For Choosing A Credit Card
Are you looking for that perfect credit card? If so, you may be confused about what exactly to look - Cheap Car Insurance For Teens Online
Many elements determine a car insurance policy. Car insurance companies look at the person's age, hi - What Exactly Is Free Grant Money?
You can apply for free grant money from various government agencies. But where exactly does this mon - Small Business Owners Marketing and Customer Service
Marketing can be time-consuming, but it doesn't have to be hugely expensive now, thanks to the Inter - Apply Online For A Credit Card - How To Choose A Card?
The best type of credit card for you will be dependant on how you intend to use the credit card. Are