Debt Consolidation - Loans & Credit Card Bill - Debt Consolidation

For Immediate help
Toll Free - 800 210-1172

Reverse Mortgage

A reverse mortgage presents an interesting aide for people who own their homes (have home equity accrued), are at least 62 years of age and find themselves in financial difficulty for one reason or another. A reverse mortgage is actually a loan against your home and as long as you are living in that home, you do not have to pay the loan back. This is a way for the homeowner to use the amount of money that their home is worth and turn it into an immediate liquid asset to help them finance their living expenses. As long as the homeowner lives and resides in this home, they are free to do so without repaying the loan. If they should die or choose to sell their home and move, paying back the loan comes into effect.

The homeowner can decide what would be the most beneficial way to receive the money from this loan to best suit their current situation. They can opt for one single payout or “lump sum” to be paid to them. Another method is to receive a regular monthly payout which helps to regulate monthly spending. The reverse mortgage can also be set up as a line of credit that allows you to decide when and how much money you will be using. Some people also decide to use a combination of these payout methods. It all depends on what will be the best approach for each individual situation. 

One of the advantages to securing a reverse mortgage is that the money received in whichever payment form is not taxable and should not affect the benefits of Medicare or Social Security. If, however, you should have money left over in your bank account after the month has ended, it will be counted as a liquid asset and therefore be liable to being taxed. This is not a good idea to let occur since it can jeopardize the person’s eligibility for the reverse mortgage program. Another no-no that could put a reverse mortgage borrower at risk is to let the payment of taxes and insurance on their property lapse. Some borrowers opt to have some of their money from the loan set aside in a type of escrow account that allows for future payment of necessary taxes or insurance.

Before a person becomes involved in the time and money spent on getting a reverse mortgage, it is a better idea to know what the qualifications are for such a loan. First, there is no minimum income required or credit limitations, but the borrower must pay off any existing mortgages with the money they receive with the reverse mortgage and if necessary, use personal funds as well to do so. It is also required that the potential borrower get financial counseling (free) from an approved source in order that all terms of the reverse mortgage are completely understood. 

After a reverse mortgage loan comes to an end (the homeowner dies or moves away), it is expected that the loan be paid off by the sale of the house. It is possible that the loan can be refinanced by the heirs of the homeowner’s estate, if they so choose. If the proceeds of the home sale are beyond what the loan requires for repayment, then the left over funds belong to either the heirs or the owner of the house.

Main Menu

Home Page

How We Help

Qualifications

Testimonials

FAQ

Payback

Free Quote

Tips

Reach Us

Articles

Debt & Credit