Who Could Benefit From A Reverse Mortgage?

What is a "Reverse Mortgage?"

Also known as a Home Equity Conversion Mortgage (HECM)a reverse mortgage,is a popular way older homeowners (62+) can convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payments.

Before explaining a reverse mortgage, let's review the features of a Standard Mortgage:

With a standard loan or mortgage, your income stream is used to 'qualify' for the mortgage or loan. The lender will want to see that you have enough cash flow from your job and other sources of income in order to make the payments.

By securing this loan or mortgage against your house, the bank has extra security. After all, if you stop paying, they can take away your house.

As the years go by and you continue to make the payments, you will build up 'equity', which is the difference between what your house is worth, and how much you owe on the loan or mortgage What you owe will be continually reducing as you pay off the principal.

A Reverse Mortgage ... Reverses The Process:

A reverse mortgage, in contrast, requires no proof of income, no credit checks etc.. You simply have to own the home you are borrowing against.

The reason for this is that interest payments are 'rolled up' on the reverse mortgage - i.e they are added to the loan, and not repaid monthly.

Over time, of course, this starts to eat up your equity, because as each interest payment is added to the loan, interest starts being charged on the previous interest too!

Who Would Benefit From A Reverse Mortgage?

Older homeowners (62+), who struggle on limited pensions are usually living in properties that have soared in value in recent years. With reverse mortgages they can unlock some of the value in their homes and remain in the property at the same time, thus enhancing their retirement years.

These reverse mortgages are becoming more popular with seniors.

Paying Back The Loan

There are NO monthly payments due on a reverse mortgage while it is outstanding. The mortgage/loan is repaid when the homeowners cease to occupy the home as a principal residence, whether the homeowner (the last remaining spouse, in cases of couples) passes away, sells the home, or permanently moves out.

Depending on the size of the loan and the current real estate market conditions, there may actually be no equity left when the loan is finally repaid. If the debt comes to exceed the value of the property, the FHA or the lender takes the loss.

As well, loans under these programs are without recourse. This means that lenders can not attach other assets of borrowers or their heirs in the event that the reverse mortgage debt exceeds the property value.

On a another note, if the home is sold and the sales proceeds exceed the amount owed on the reverse mortgage, the excess money goes to you or your estate.

There will always be some concern with homeowners who would like to leave an inheritance for their children and the home is to be that cash inheritance.

Note:

As with all loans, be careful not to default on regular or common charges, such as property tax, insurance, utilities etc, as these could all lead to the loan/mortgage being reclaimed early (foreclosed).

Typically, the lender will have an option built in to the contract to increase your debt by paying these charges on your behalf, should you default, and this is not an option you want them to exercise, as you will then start paying interest on those charges too!

Reverse mortgages can be very useful, but treat carefully as they can also have a sting in their tail.

Keep an eye on the outstanding balance every month, versus the value of your home for peace of mind.

And as with most major decisions, speak to an expert who knows your situation and long term plans before applying for a reverse mortgage. As a matter of fact, in the U.S., mandatory counselling is required prior to applying for a reverse mortgage. An approved counsellor will educate you about reverse mortgages and determine whether this is your best option. Then, given your particular situation assist you in determining which reverse mortgage product best suits your needs. The U.S. Department of Housing and Urban Development has a list of approved counselling agencies posted online at Home Equity Conversion Mortgages Resources.

AARP has also entered the picture as a major information source for reverse mortgages (www.aarp.org/revmort). They have a guide (including a nifty calculator) that can help you figure out if a reverse mortgage is right for you.

For Canadians: - Shop Carefully!

Although home equity conversion products (reverse mortgages) are widely available in the US, Canadian homeowners have a more limited selection. You can check out the Canadian Home Income Plan. Canadian Home Income Plan.

Helen March offers simple House And Home Sense solutions for buying or selling real estate as well as informative articles for home improvement and lifestyle alternatives. Visit House And Home Sense.com

---

Google News Updated : Wed, 09 Jul 2008 13:08:20 GMT German shares up midday as financials rebound - Forbes ABC News German shares up midday as financials rebound Forbes - 1 hour ago FRANKFURT (Thomson Financial) - German shares were higher midday, led by financials, which rebounded from Tuesday's strong losses, and helped by soothing words from US Federal Reserve Chairman Ben Bernanke and easing oil prices. Fed ready to aid investment banks BBC News Fed Sees Turmoil Persisting Deep Into Next Year New York Times International Herald Tribune - Reuters - Financial Times - CNNMoney.com all 1,484 news articles Publ.Date : Wed, 09 Jul 2008 11:46:08 GMT Polygamist sect leader swaps jail for hospital - MSNBC KVAL Polygamist sect leader swaps jail for hospital MSNBC - 2 hours ago Warren Jeffs, the head of the Fundamentalist Church of Jesus Christ of Latter Day Saints, has been hospitalized. Douglas C. Pizac / Pool via Getty Images FILE July 2: Michael Sean Winters, author of "Left at the Altar," joins the "Morning Joe" crew to ... Jeffs was taken to the Sunrise Hospital and Medical Center in Las ... CNN Warren Jeffs Remains In Local Hospital KXNT Salt Lake Tribune - The Associated Press - Deseret News - Las Vegas Review - Journal all 309 news articles Publ.Date : Wed, 09 Jul 2008 10:48:40 GMT US MBA's Mortgage Applications Index Increased 7.5% Last Week - Bloomberg 100 Mortgages US MBA's Mortgage Applications Index Increased 7.5% Last Week Bloomberg - 1 hour ago By Shobhana Chandra July 9 (Bloomberg) -- Mortgage applications in the US rose for a second straight week, a sign that falling home prices are attracting some buyers. Mortgage applications up 7.5% last week: MBA MarketWatch US mortgage applications increased last week-MBA Reuters CNN - Forbes - RTT News - 100 Mortgages all 15 news articles Publ.Date : Wed, 09 Jul 2008 11:38:08 GMT Google adds third dimension to online social relationships - NetworkWorld.com Siliconrepublic.com Google adds third dimension to online social relationships NetworkWorld.com - 2 hours ago By Mikael Ricknäs , IDG News Service , 07/09/2008 Google has entered yet another space with the launch of Lively, a tool for creating 3D social spaces on Web sites, which is now available in a public beta test. Virtual world tipping point: Is there an enterprise use? ZDNet Google Introduces a Cartoonlike Method for Talking in Chat Rooms New York Times Reuters - The Tech Herald - eFluxMedia - Wall Street Journal all 263 news articles Publ.Date : Wed, 09 Jul 2008 11:04:08 GMT Iraq Wants Withdrawal Timetable In US Pact - Washington Post ABC News Iraq Wants Withdrawal Timetable In US Pact Washington Post - 8 hours ago By Ernesto Londoño and Dan Eggen BAGHDAD, July 8 -- Iraq's national security adviser said Tuesday that his government would not sign an agreement governing the future role of US troops in Iraq unless it includes a timetable for their withdrawal. Maliki's Withdrawal Card Wall Street Journal Iraqi Officials Still Insisting on Timetable to Withdraw New York Times istockAnalyst.com - AFP - CNN - Xinhua all 1,578 news articles Publ.Date : Wed, 09 Jul 2008 04:41:08 GMT G-8 Conference Tackles Global Warming Treaty - Washington Post BBC News G-8 Conference Tackles Global Warming Treaty Washington Post - 1 hour ago By Michael Abramowitz RUSUTSU, Japan, July 9-- The leaders of the countries most responsible for greenhouse gas emissions pledged Wednesday a shared effort to combat global warming, but developing countries like China and India continued to balk at the ... Bush: 'Significant progress' on climate change The Associated Press Emerging Nations Join G-8 on Climate New York Times Aljazeera.net - CNN International - Bloomberg - Telegraph.co.uk all 2,035 news articles Publ.Date : Wed, 09 Jul 2008 11:20:59 GMT Coalition to lobby for US health-care reform - Reuters KULR-TV Coalition to lobby for US health-care reform Reuters - 17 hours ago WASHINGTON, July 8 (Reuters) - A coalition of unions, think tanks and other groups launched an advertising campaign on Tuesday saying they want to ensure that health-care reform tops the US political agenda after the November elections. Coalition begins universal health care campaign Great Falls Tribune Coalition launches push for health care reform Milwaukee Journal Sentinel Rapid City Journal - Tampa Tribune - Beyond Chron - Washington Post all 291 news articles Publ.Date : Tue, 08 Jul 2008 19:09:32 GMT RSS feeds Increase Website Traffic

PARLOT::Ebooks, Scripts, Websites, and more...

Adsense websites

Buying a Home? Dont Get Saddled with Two Mortgage Payments

I have a lot of friends and family who are... Read More

Uk House Price Increases Take A Summer Holiday

Property website Rightmove has released its latest house price index... Read More

Home Equity Increases $1 Trillion in Five Years ? Is the Market Peaking?

A new survey reveals that in the last five years,... Read More

Home Mortgages: How About Those 1.75% Loans?

You've undoubtedly heard or seen ads for mortgages with very... Read More

Buying a House or a Home?

A house is just that, a house, until someone lives... Read More

Homeowner Loans - Whats Available?

It isn't difficult to get a homeowner loan if you... Read More

Mortgage Sales Hit Problems

The housing market has been buoyant over the past few... Read More

FHA Home Mortgage Purchase or Refinance Loan - Why You Might Consider Getting an FHA Loan

Most borrowers have heard of FHA home loans. They are... Read More

Home Equity Loans - 5 Useful Application Tips

Obtaining a home equity loan does not have to be... Read More

Look For a Great Mortgage Online

People who are looking for a mortgage today have many... Read More

Adverse Credit Mortgage Loan - Persistence is the Key to Getting Approved

People with bad credit that are looking to get a... Read More

Home Loans -- The Hot New Product? The 30-year, Fixed-rate Mortgage

In recent years, the mortgage industry has introduced dozens of... Read More

Understanding Fixed-rate Mortgages

A fixed-rate mortgage is a mortgage on which the interest... Read More

Why a Mortgage Professional Beats a Banker Every Time -- The Story Tells It All

The best way to explain why a mortgage professional is... Read More

Home Equity Lines of Credit - the Basics

A Home equity line of credit is a loan which... Read More

What is a Self-Employed Mortgage?

Self-employed mortgages, as the term implies are mortgages designed for... Read More

How To Turn Disadvantages Of A Reverse Mortgage To Your Advantage

When it comes to a reverse mortgage, wise consumers weigh... Read More

Short-Term Interest Rates on the Rise; Adjustable Rate Mortgage Holders Prepare for Increase in Rate

Interest rates are on the rise and many home owners... Read More

Home Equity Loans ? A Big Benefit Or A Big Mistake?

When the bills are piling up and there doesn't seem... Read More

The Debt Test: Are You Making Out a Mountain Out of Your Mortgage?

According to the Council of Mortgage Lenders, first-time buyers are... Read More

Secrets Your Banker Wont Tell You - Which Loan is Best for You?

Recently I was driving in my Car and I heard... Read More

Financing the Purchase of Foreclosed Homes

Homes that have been foreclosed can be one of the... Read More

Real Estate Mortgage Loans Online

Online real estate mortgage loans enable borrowers to be sure... Read More

Understanding Mortgage Points

When a mortgage broker asks a borrower to pay points,... Read More

Using a Calculator to Assess Your Loan

Buying a house is a very important step in your... Read More