Featured Reverse Mortgage Article
Used to release home equity in the property as multiple payments or one lump
sum, a reverse mortgage is a loan accessible to individuals 62-years-old and
older in the United States. The obligation of the homeowner to repay the reverse
mortgage loan is deferred until the homeowner becomes deceased, the house is
sold or the owner goes into retirement aged-care.
While a typical mortgage for
the homeowner consists of a monthly amortized payment to the financial lender,
a reverse mortgage consists of no payments as all the interest is added to the
property lien. With the normal mortgage, usually the mortgage is fully paid after
30 years and the property is released from the financial lender. Whereas with
the reverse mortgage, the homeowner receives payments monthly, as the debt on
the property increases on a monthly basis. If a property has a value increase
subsequent to a reverse mortgage, it is likely to obtain a second or third reverse
mortgage over the enhanced home equity.
The Basic Requirements for a Reverse Mortgage
The Basic Requirements Reverse Mortgage The first qualification for a reverse
mortgage in America is the borrower has to be at least 62-years-old. Although
there are absolutely no credit requirements or minimum income, there are certainly
no other requirements and homeowners should ensure they qualify for the loan
prior to investing time and money into the entire process. The funds can be
used for any purpose for most reverse mortgages. However, the financial borrower
must pay off any mortgage which exists with the reverse mortgage proceeds and
personal additional funds if necessary. A pending bankruptcy normally slows
the whole process.
Applicants must seek free financial counseling from an approved
source by HUD (Department of Housing and Urban Development). The financial
counseling actually provides a safeguard for the financial borrower and the
family. This assures the borrower comprehensively understands the purpose of
the reverse mortgage and how it’s obtained. The AARP (American Association
of Retired Persons) has proposed a complete plan—which must be approved
by the federal US government—for maintaining closing costs low for senior
citizens that qualify for reverse mortgages.

Acquiring the Mortgage Program
Homeowners normally learn about reverse mortgages from an advertisement,
word-of-mouth, a news article or on the Internet. The owner usually contacts
a reverse mortgage lender or even the National Reverse Mortgage Lenders Association
for an upfront education. Financial counseling is a requirement for all reverse
mortgages as it may be conducted by telephone or face-to-face. By US federal
law, a financial counselor must completely review options which are available
to the prospective borrower—this includes social services, housing, financial
and health alternatives.
The homeowner completes a loan application and chooses
a payment plan—whether lump sum payment or fixed monthly payments, line
of credit or a combination. Once all pertinent data is received, the lender
finalizes parameters of the loan with the homeowner, which can take 4-8 weeks
to underwrite the loan package. If the loan package is fully approved, signing
of the loan is scheduled.
The homeowner has three business days subsequent
to the closing to cancel the loan. The reverse mortgage loan is repaid when
the homeowner ceases to be occupant of the principal residence. Of course,
the repayment obligation can’t be more than the sale’s price or
value of the home.