Reverse Mortgages
What are they and How do they work?
A Reverse Mortgage is a unique loan program that enables homeowners that are age 62 and older to use their equity without creating a monthly payment obligation. The benefits of a reverse mortgage program includes:
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paying off any outstanding mortgages against the property
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seniors being able to unlock the financial potential in their homes like retaining ownership of the home and even when selling a home the payoff amount belongs to the borrower.
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no income or credit requirements to qualify.
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Living in security of knowing that reverse mortgages are fully insured under the federal government’s Federal Housing Administration’s mortgage insurance program.
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the money being received from this loan is not taxable as income.
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no required payment until the senior homeowner no longer occupies the property as his/her primary residence.
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The outstanding principal and the accrued interest become due only when homeowner no longer occupies residence.
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They may keep the home until his/her death without ever making a payment back to the loan.
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Typically, the loan is paid off with the proceeds of the sale of the home from the borrower's estate.
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However, the borrower's estate/family may decide to refinance the loan and retain the property. Proceeds of the amount owed belong to the borrower's estate.
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As an additional safeguard, HUD requires that each potential reverse mortgage borrower be advised about the reverse mortgage program by an independent HUD-approved counseling agency. This counseling has to be paid by the borrower up front.
What Doesn't Matter
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Credit
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Income
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Loan to Value
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Liquid Assets
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Health
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Money to be used for....
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What Does Matter
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Age
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Value of Home
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Location of Homes
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The Borrower must occupy the property as his primary residence
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Existing Liens paid off in time of settlement
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Property Must Qualify
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WHAT CAN THE BORROWER DO WITH THE PROCEEDS OF THE REVERSE MORTGAGE?
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Free up monthly income.
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Do home improvements.
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Pay off credit card debts.
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Pay for in-home health care.
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Purchase long-term care insurance.
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Supplement income.
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Plan your estate.
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Do home improvements.
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Purchase a car.
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Travel
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Prepare for emergencies.
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Purchase a new home or condominium.
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Pay off your existing mortgage.
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And lastly, anything you want
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