Reverse Mortgage
The Complete Guide to Reverse Mortgages: Turn Your Home Equity into Instant Income!
by Tyler Kraemer

This book was so helpful in informing myself and my parents as to the options available for them. It was easy to read and easy to understand. It gave many helpful hints and helped us figure out if a reverse mortgage was approriate for them.

It is essential if you or someone in your family is considering, or wants to learn more about, a reverse mortgage loan. It walks you through the process from borrowing to repayment in a conversational, easy-to-read format. You can read about real life situations that are very helpful for you to see how a reverse mortgage can work for you.

The book provides precise information on each of the types of reverse mortgages that are available. You will find information about the ways in which you can receive your payments, and all of the incumbent fees and costs that may come with this kind of loan are revealed. It outlines how to protect yourself and how you are already protected. Checklists are provided covering all the points to consider before making each decision, such as how to choose a lender.

     

Reverse Mortgage - How A Reverse Mortgage Works

Reverse Mortgage * How A Reverse Mortgage Works

How A Reverse Mortgage Works   
Brad Stroh

Ever wonder how a reverse mortgage works? For folks that have lived in their home for a long time, they may very well be sitting on a gold mine.

Home prices have increased greatly over the last thirty years, and nationally have nearly doubled in value over the last ten years. This has left a great many homeowners with valuable equity in their homes and many different options to access that equity, home equity loans and mortgage refinances being the most common. For older Americans, there is another, less common option that is growing in popularity as home prices have increased and baby boomers have moved closer to retirement age: the reverse mortgage. But do you know what it is, and do you know how a reverse mortgage works?

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More People Skipping Mortgage To Pay Credit Cards (Market Watch)
U.S. consumers are starting to look like a frugal, debt-fearing lot as they pay down billions of dollars in credit-card obligations. But an alarming trend is emerging: A small but growing number of people...

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So what exactly is a reverse mortgage? A reverse mortgage is a loan product that allows homeowners 62 years of age and older to use their equity to generate tax-free income, without having to sell the home or take on a new mortgage payment. In fact the reverse mortgage is exactly what the title states, the reverse of a standard mortgage. With a standard mortgage, the borrower (or homeowner) makes monthly payments to the lender (or bank or mortgage company), in order to pay back the loan that the lender originally lent to for the purchase or refinance of the house. This payment includes interest that the lender charges the borrower for the loan. In a reverse mortgage, the situation is reversed; the lender makes monthly payments to the borrower. However, in both a standard and reverse mortgage, the lender secures their loan amount by using the house as collateral.


There are a few factors that determine how much money a borrower will receive from a reverse mortgage, such as the value of the home, borrower's (and co-borrower's) age, current interest rates and any lending limits that may be standard for your geographic area. As a rule of thumb, the older the borrower and the more valuable the home, the larger the available loan amount. Homeowners can choose how they want to receive their payments, either as a lump sum, monthly payments or as a line of credit. The line of credit is the most popular option, with nearly 60% of reverse mortgage borrowers choosing to the option to draw income or a lump sum off the line at the time of their choosing. And the proceeds from the reverse mortgage can be used for anything, completely at the discretion of the borrower, though most borrowers use the funds for home repairs or modifications, health care expenses, to settle other debts, or for their long-planned vacation! Reverse mortgages are available for nearly all property types with the exception of co-ops, though co-op owners in some metropolitan areas, specifically New York, should have local options. If you are in retirement, or nearing retirement, and think this may be the product for you, I will go into more detail about exactly how a reverse mortgage works.

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Social Security Topic Of Chester Library Program (The Progress)
CHESTER – “Social Security: Know the Facts” is the topic at a Senior Lunch n Learn” at noon on Monday, March 8, at the Chester Library.

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For reverse mortgage borrowers with an existing mortgage, that mortgage will need to be paid off completely, so that the new reverse mortgage will be the only lien on the house. If the proceeds from the reverse mortgage are not ample to pay off the existing mortgage, the borrower will need to access savings or other sources to pay off the rest of existing mortgage amount. In this scenario, the borrower won't have access to any additional funds from the reverse mortgage; however, they will no longer have a mortgage payment! The more common scenario is one in which there is a small or no mortgage on the home and then the borrower is able to access nearly the full amount of the reverse mortgage to use at their discretion. No monthly payments are due on the loan and the loan is repaid when the moves or sells the home, passes away, or ownership otherwise changes hands. If the home is sold and the proceeds of the sale exceed the mortgage amount, the balance belongs to the borrower or their heirs.


One very important facet of the reverse mortgage process is the consumer counseling that is required for borrowers contemplating a reverse mortgage. Your lender can help you find counseling agencies and most programs are approved and monitored by HUD and/ or AARP. The counseling is required to make sure that the terms and risks of the program are clear to you. Counselors are obligated by law to review with you all of the implications of the new mortgage, and what your potential options are.


Overall, for older Americans contemplating a stress-free retirement, the reverse mortgage may be just the option! Just make sure that you know your options and goals... and how a reverse mortgage works.


Brad Stroh is currently co-CEO of Freedom Financial Network and Bills.com. If you would like more of Brad's articles, please visit the Bills.com information on Money.

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Index of Articles about Reverse Mortgage

What Other Authors say about Reverse Mortgage

Reverse Mortgage: A Dignified Way For Retirees To Supplement Income And Take Care Of Expenses by Vishy Dadsetan

For many Americans reaching the retirement age, the equity build up in their home is their only real asset. Reverse mortgage is a way to tap into this asset and create a stream of income needed for retirement...

Mortgage vs. Reverse Mortgage- How do You Put Your Mortgage in Reverse? by John R. Blakefield

Many people look at the process of a mortgage and wonder how exactly do you put your mortgage in reverse?In order to understand a reverse mortgage, let's first investigate at a normal mortgage for a first...

Reverse Mortgages are a Good Option for Seniors in North Hollywood, California by Philip Lipp

Reverse mortgages are becoming popular in America. HUD's Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which...

Access your home equity with reverse mortgage by Antonio Redford

With the passage of time, contribution of financial institution is increasing in improving living standard of human beings. To offer exclusive financial services globally these institutions are launching...

Reverse Mortgages For Seniors, Extract Equity From Your Property by Larry "The Realtor Guy"

A reverse mortgage is a loan against the equity in the home that provides tax-free cash advances, but requires no payments during the term of the loan. Moreover, it doest not require an income or credit...

Reverse Mortgage Information - Who Qualifies For Reverse Mortgages by Charles & Susan Truett

Reverse mortgages can be a great solution for seniors who wish to remain in their home but are having difficulty making their monthly payments and meeting other financial obligations. If you are over age...

How to Know if a Reverse Mortgage Is Your Best Option by Charley Hwang

Along with aging comes the fear that your funds might not last as long as you do. A reverse mortgage is perfect for this scenario. Instead of living on your social security payments from week to week or...