Most of the elderly people, or retired persons have been undergoing a severe financial strain due to lack of more avenues for a regular stream of income to live their life peacefully. The reality is that while their expenses are on the increase the incomes are on the other way. Even for people who have some knowledge of Reverse Mortgage are seeking the help of financial experts for proper guidance. This article provides you with details on Reverse Mortgage so that you can even help guiding those who are seeking a financial support.
A Reverse Mortgage is a loan that allows seniors to boost their income by converting a portion of the equity they have built in their home into cash. This cash is not taxable and typically it doesn’t interfere with eligibility for Social Security or Medicare benefits. The exception is the federal Supplemental Security Income Program, where beneficiaries must keep their liquid resources under certain limits.
Title to the home and any appreciation in value remains the seniors property when the loan is paid off. The loan remains in affect until the last titleholder dies or permanently leaves or sells the home. The borrower can not be forced to move or sell the property. The loan can be paid off at any time. One of the benefits of a Reverse Mortgage over traditional loans is no monthly payment requirement. A Reverse Mortgage can free a senior of monthly mortgage payments and ease some of the money worries day to day living causes.The FHA insures and guarantees most Reverse Mortgages today so they are subject to FHA lending limits. Proprietary products have been developed to help homeowners in excess of these lending limits.
People who are more than 62 years of age and who hold the title of a home or some equity on the home are eligible for this Reverse Mortgage. By obtaining the Reverse Mortgage existing mortgages or liens need to be paid off immediately. Even if the current insurance or property taxes are on due they must be paid using the Reverse Mortgage money.
A reverse mortgage borrower has no restrictions on how the monies can be used. Here are common uses for these funds:
- Mortgage loans and credit cards
- Remodeling projects or other home improvements
- Day to day expenses
- Vacations and travel
- Health care costs or long term care
- Assisting children with financial obligations
- Education
- To fund hobbies
- To defray the rising cost of property taxes
The proceeds available from a Reverse Mortgage vary depending on FHA lending limit’s and other factors like borrower’s age, value of the home, and interest rates. Typically the older the borrow, the higher proceeds available. Proceeds from the loan can be paid in a lump sum, in monthly payments, or extended as a line of credit available when needed.
However the borrower has to meet certain expenses to get this reverse mortgage money such as origination fee, closing costs, insurance in case of HECM etc. Before obtaining a reverse mortgage the borrower need to sit with a Reverse Mortgage counselor to submit details of his financial situation and get a training to understand the Reverse Mortgage transactions.
Graham McKenzie is the content coordinator for a leading South African leading Homeloans and Bond Origination portal which provides access to ABSA Homeloans.
categories: Homeloans,Bonds,Mortgages,Loans,Property,Finance,Personal Finance,Money,Banking
