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--- simply_stated_a_reverse_mortgage_is_a_loan_that_enables_homeowners [2013/08/13 17:58] – created jan793
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-One very important point to remember when you are seriously considering going in for [[http://www.dailystrength.org/people/3083506/journal/6829220|reverse mortgage]] is that by taking out a reverse mortgage, the equity in your home will likely be eroding and there may be less equity available when the lender actually sells the property. You may thus be using up part or all of an asset, which might otherwise be left to children or other heirs. Therefore, it is advisable that before you make your decision, you evaluate all the pros and cons, consider all the available options and make the decision that's best for you and your specific needs.
-Reverse mortgages are very different from traditional mortgage loans. With a [[http://www.dailystrength.org/people/3083506/journal/6829220|reverse mortgage]], seniors convert a portion of their home equity into cash. If a borrower still owes money on an existing mortgage loan, this cash must be used to repay the balance of the original loan. Any leftover proceeds can be used however the borrower wishes.
-Reverse mortgages are an extremely well accepted finance product in the present day marketplace. Though, if you are making an allowance for a [[http://www.dailystrength.org/people/3083506/journal/6829220|reverse mortgage]], presently there are several options for you to take a look at. Here are some ordinary substitutes to reverse mortgages.
-The cost of getting a reverse mortgage from a private sector lender may exceed the costs of other types of mortgage or equity conversion loans. Exact costs depend on the particular reverse mortgage program the borrower acquires. For the most popular type of reverse mortgage in the U.S., the FHA-insured Home Equity Conversion Mortgage (HECM), there will be the following types of costs:
-Generally a home equity loan, a second mortgage, or a home equity line of credit (HELOC) have strict requirements for income and creditworthiness. Also, with other traditional loans the homeowner must still make monthly payments to repay the loans. A[[http://www.dailystrength.org/people/3083506/journal/6829220| reverse mortgage]] has no income or credit score requirements and instead of making monthly payments to the lender, the homeowner receives from the lender.
-The loan comes due when the borrower dies, sells the house, fails to keep the taxes or insurance current, or moves out of the house for more than 12 consecutive months. Once the mortgage comes due, the borrower or heirs of the estate have an option to refinance the home and keep it, sell the home and cash out any remaining equity, or turn the home over to the lender. Once a [[http://www.dailystrength.org/people/3083506/journal/6829220|reverse mortgage]] is called due and payable, the borrower (or their heirs) can possibly be granted time extensions by the lender to give them up to one year to make this decision.
-No-cost and low-cost mortgages are available for those homeowners who anticipate moving from the home in the near future. For example, they may select a home equity line of credit, commonly called a "HELOC", requiring interest-only payments for 10 years. These loans typically have very low (or zero) upfront costs, but the interest rates are usually slightly higher than those of a [[http://www.dailystrength.org/people/3083506/journal/6829220|reverse mortgage]]. Since monthly payments are required on a HELOC, borrowers need to qualify based on their incomes and credit scores. Often, seniors who may be on a limited fixed income can't get approved for a HELOC for this reason. Reverse mortgages do not require monthly payments and, as a result, income and credit score are not considered as part of the approval process.
-As with any mortgage, title to the property remains in the name of the homeowners, to be disposed of as they wish. As with a conventional mortgage, the title is encumbered by the security interest the bank has in the reverse mortgage. If a borrower does not make full monthly payments to cover the interest, that interest is capitalized (added to the principal), so that over time the amount of the security interest can grow to the full value of the house (or even more, leading to foreclosure). Even if the house increases in value, a reverse mortgage borrower can end up with the increased value of the home encumbered by a lien for an amount more than they ever received from the original [[http://www.dailystrength.org/people/3083506/journal/6829220|reverse mortgage]].

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