Many people are unaware of exactly what a reverse mortgage is, and to find unbiased information is not easy, since most of the information comes from sellers of reverse mortgages. If you are thinking about one, make sure you fully understand what reverse mortgages are, and the impact they could have on your finances.
Here is what a reverse mortgage is. It is a special type of mortgage that was formulated by the United States Housing Department which would help homeowners over 62 take advantage of the equity in their homes. If a homeowner owns the home debt free, or has very little outstanding debt, they therefore have unused equity in the home. The difference is that no repayment is called for until the home is no longer the primary residence-usually when the home is sold.
Unlike a mortgage with a monthly payment, the loan is paid from the proceeds of the sale. This puts an automatic limitation on the mortgage in that the homeowner has to have little to no debt on the home in order to withdraw against the equity.
Since there are a lot of elderly homeowners who prefer to live in their home rather than sell it, they are effectively taking an advance on the sale of the home. Most older people, without a job, would not qualify for a traditional mortgage.
But there are some caveats to be aware of with reverse mortgages.
There are additional costs that need to be considered such as the non recourse insurance that is required in case excess funds are withdrawn and there is not sufficient funds in the sales price to cover the amount drawn out. There will also be the traditional closing fees.
Since they can be expensive, it is important to know how much they are. Additionally, the homeowner needs to live in the home for a good number years to make all of the additional costs of the mortgage worthwhile.
Do your homework and due diligence by checking with several companies that offer reverse mortgages prior to making your final decision.
Liz Voss writes articles for San Antonio Real Estate. Other articles
written by the author related to San Antonio Texas real estate and San Antonio Homes for Sale [http://www.lizvossrealestate.com/voss/index.php?mode=mls]
can be found on her website.
Here is what a reverse mortgage is. It is a special type of mortgage that was formulated by the United States Housing Department which would help homeowners over 62 take advantage of the equity in their homes. If a homeowner owns the home debt free, or has very little outstanding debt, they therefore have unused equity in the home. The difference is that no repayment is called for until the home is no longer the primary residence-usually when the home is sold.
Unlike a mortgage with a monthly payment, the loan is paid from the proceeds of the sale. This puts an automatic limitation on the mortgage in that the homeowner has to have little to no debt on the home in order to withdraw against the equity.
Since there are a lot of elderly homeowners who prefer to live in their home rather than sell it, they are effectively taking an advance on the sale of the home. Most older people, without a job, would not qualify for a traditional mortgage.
But there are some caveats to be aware of with reverse mortgages.
There are additional costs that need to be considered such as the non recourse insurance that is required in case excess funds are withdrawn and there is not sufficient funds in the sales price to cover the amount drawn out. There will also be the traditional closing fees.
Since they can be expensive, it is important to know how much they are. Additionally, the homeowner needs to live in the home for a good number years to make all of the additional costs of the mortgage worthwhile.
Do your homework and due diligence by checking with several companies that offer reverse mortgages prior to making your final decision.
Liz Voss writes articles for San Antonio Real Estate. Other articles
written by the author related to San Antonio Texas real estate and San Antonio Homes for Sale [http://www.lizvossrealestate.com/voss/index.php?mode=mls]
can be found on her website.
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