How Do Reverse Mortgages Work? – The Ultimate Guide
If you’re getting near retirement age you may have come across this financial product. Just about everyone asks the same question, just how do reverse mortgages work? They continue to grow in popularity and the basics are relatively simple.
A reverse mortgage is designed for senior adults getting near retirement or already retired. Its similar to a conventional mortgage in one respect – it allows you to borrow against the equity that you have in your personal residence.
However, unlike a traditional mortgage where you are required to make monthly payments of principal and interest to repay the loan, with a reverse mortgage, you don’t. As long as you live in the home, none of the mortgages has to be repaid. Not until you sell the home, or it is no longer your personal residence, or the last borrower dies, is the loan repaid.
This program is administered by the FHA and does have certain conditions that must be met.
From a financial perspective, how do reverse mortgages work?
A reverse mortgage does differ from a conventional mortgage or a home equity loan. The latter two View full post…
Posted: September 30, 2018 Under: Mortgages By: Gust Lenglet
If you were to ask the question, what is a reverse mortgage, to the average citizen, you would hear a number of different answers, many of them incorrect. The reverse mortgage program was initially designed to assist senior citizens who primarily were “house rich and cash poor”.
This would be done by providing them funds to meet their living expenses and remain in their homes. They would be able to borrow against the equity in the home and not have to repay it until they either sold the home, moved away, or died.
Practically from the very beginning, the program was rife with problems due primarily from confusion with the borrowers because no one took the time to answer the question, what is a reverse mortgage? View full post…
Posted: November 8, 2014 Under: Mortgages By: Gust Lenglet
Reverse Mortgages – 7 Ways to Clean Up the Industry
Reverse mortgages are legal instruments designed for homeowners 62 years of age and older, that will allow them to borrow money against their home and not pay it pack until they move, sell the home, or die. From day one, this program has had problems, due partly to borrower ignorance, as well as some aggressive and shady promoters.
Several of the large banks have ceased making reverse mortgages, more particularly Bank of America and Wells Fargo. They cited their reason for departure, as not being able to properly determine if the borrowers had the ability to repay the loan, plus declining housing prices. Met Life also has stopped being a lender for reverse mortgages.
With the exit of the large lenders, the market has been flooded with small mortgage brokers, many interested only in the fees they can generate. Many of these brokers sell this type of loan to elderly homeowners who simply can’t afford the high fees, and then on top of that, home repairs and maintenance, real estate taxes, and insurance.
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