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Free Information On Reverse Mortgages
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Published: October 25, 2006
For senior citizen property owners, the option of a reverse mortgage may be feasible when considering home mortgages.
Rather than pay monthly mortgage payments, a reverse mortgage is paid in one lump sum at the end of the mortgage. In lieu of monthly payments, interest accrues on the home equity, or original value of the property.
Minimal requirements exist to be eligible for a reverse mortgage. Primarily, the homeowner must be a senior citizen at least 62 years old.
Reverse mortgages were created as a means for unemployed seniors to continue owning property without monthly payments. No minimum income or credit is required. As a safeguard, the U.S. Department of Housing and Urban Development offers free counseling to applicants considering a reverse mortgage. To determine the value of the home, the applicant's age, the Federal Housing Commission's appraised value of the home and the present interest rates are each taken into consideration.
Throughout the duration of the reverse mortgage, interest is added to the value of the home equity each month. Interest rates vary due to economic factors such as taxes and location. As interest accrues, the owner increases their debt. In many cases, the value of the home equity decreases, leaving the owner with less money than needed for the debt. If the property’s value increases, the homeowner may increase their equity. There is no fixed income rate since reverse mortgages have no fixed duration.
The home equity is paid to the homeowner in several ways: in a lump sum at the end of the mortgage, in monthly payments, as credit or as a combination of the three. Depending on the type of reverse mortgage, additional fees may be applied. These fees include opening and closing fees, service fees, insurance premiums and appreciation fees. Some companies offer options to include these fees in the overall reverse mortgage costs, applying them directly to the original equity and insurance rates of the mortgage.
Reverse mortgages end when the homeowner dies, moves out for at least a year or sells the home. If the mortgage is paid in full, the incurred debt will be removed from the total mortgage cost. If monthly payments were made, the homeowner covers the cost from the total received equity or sale of the house.
Aside from the U.S. Department of Home and Urban development reverse mortgage counseling, other organizations offer assistance to senior citizens. The American Association of Retired Peoples (AARP) provides information about reverse mortgage options and other financial alternatives.
Sources:
"Reverse Mortgage." Wikipedia: The Free Encyclopedia. October 2006. Wikipedia. 24 October 2006.
http://en.wikipedia.org/wiki/Reverse_mortgage
"A New Kind of Loan: In Reverse." American Association of Retired Peoples. 2006. AARP. 24 October 2006. http://en.wikipedia.org/wiki/AARP
Rather than pay monthly mortgage payments, a reverse mortgage is paid in one lump sum at the end of the mortgage. In lieu of monthly payments, interest accrues on the home equity, or original value of the property.
Minimal requirements exist to be eligible for a reverse mortgage. Primarily, the homeowner must be a senior citizen at least 62 years old.
Reverse mortgages were created as a means for unemployed seniors to continue owning property without monthly payments. No minimum income or credit is required. As a safeguard, the U.S. Department of Housing and Urban Development offers free counseling to applicants considering a reverse mortgage. To determine the value of the home, the applicant's age, the Federal Housing Commission's appraised value of the home and the present interest rates are each taken into consideration.
Throughout the duration of the reverse mortgage, interest is added to the value of the home equity each month. Interest rates vary due to economic factors such as taxes and location. As interest accrues, the owner increases their debt. In many cases, the value of the home equity decreases, leaving the owner with less money than needed for the debt. If the property’s value increases, the homeowner may increase their equity. There is no fixed income rate since reverse mortgages have no fixed duration.
The home equity is paid to the homeowner in several ways: in a lump sum at the end of the mortgage, in monthly payments, as credit or as a combination of the three. Depending on the type of reverse mortgage, additional fees may be applied. These fees include opening and closing fees, service fees, insurance premiums and appreciation fees. Some companies offer options to include these fees in the overall reverse mortgage costs, applying them directly to the original equity and insurance rates of the mortgage.
Reverse mortgages end when the homeowner dies, moves out for at least a year or sells the home. If the mortgage is paid in full, the incurred debt will be removed from the total mortgage cost. If monthly payments were made, the homeowner covers the cost from the total received equity or sale of the house.
Aside from the U.S. Department of Home and Urban development reverse mortgage counseling, other organizations offer assistance to senior citizens. The American Association of Retired Peoples (AARP) provides information about reverse mortgage options and other financial alternatives.
Sources:
"Reverse Mortgage." Wikipedia: The Free Encyclopedia. October 2006. Wikipedia. 24 October 2006.
http://en.wikipedia.org/wiki/Reverse_mortgage
"A New Kind of Loan: In Reverse." American Association of Retired Peoples. 2006. AARP. 24 October 2006. http://en.wikipedia.org/wiki/AARP
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