Retirees need sufficient income to get them through their golden years. If your home is your largest asset, though, what do you do?
The FHA started the reverse mortgage program for seniors just like you. Unlike a traditional mortgage with required monthly payments, the reverse mortgage pays homeowners age 62 and older some of their home’s equity. You may choose from a lump sum payment, monthly payments, a line of credit, or a combination.
In the last few years, the media ran wild with horror stories of scam artists taking advantage of seniors with reverse mortgages, but they’ve come a long way. Today, the reverse mortgage program offers seniors access to their funds without selling their home.
How You Can Protect Yourself Financially on a Home Mortgage Loan
Many years ago, when looking for a home mortgage, it wasn’t a difficult task. You found the home that you liked, your realtor sent you into the bank or savings and loan association that they used, and you completed the application.
A few weeks later, the lender contacted you saying you were approved and quoted you their loan terms. This too was rather cut and dry – loan amount, interest rate, monthly payment, and the number of years. A settlement was done about a month later, and that was it.
Fast forward many years to today’s market. Wow, what a change. Instead of a small number of mortgage lenders, now there are thousands – some good and some not so good. Some of the terminology used today almost requires the borrower to be a finance person or one having a legal background.
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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