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Reverse Mortgages: Information You Need to Know
Reverse Mortgages are exploding in popularity and as the baby boomers reach age 62 and beyond they will become eligible to cash in on their home equity with a reverse mortgage.
A reverse mortgage is a home loan that you do not have to pay back for as long as you live in your home. It can be paid to you in one lump sum, as a regular monthly income, or at the times and in the amounts you want. The loan and interest are repaid only when you sell your home, permanently move away, or die.
Who is eligible for a Reverse Mortgage?
All homeowners must be at least 62 years old.
At least one owner must live in the house most of the year.
What kind of homes are eligible for a Reverse Mortgage?
Single family, one-unit dwellings.
Two-to-four unit, owner-occupied dwellings.
Some condominiums, planned unit developments or manufactured homes.
NOTE: Cooperatives and most mobile homes are not eligible.
How does a Reverse Mortgage work?
Most require no repayment for as long as you live in your home. They are repaid in full when the last living borrower dies, sells the home, or permanently moves away. Because you make no monthly payments, the amount you owe grows larger over time. By law, you can never owe more than your homes value at the time the loan is repaid. You continue to own the home, so you must pay the property taxes, insurance, and repairs. If you fail to pay these, the lender can use the loan to make payments or require you to pay the loan in full.
How do you receive money from a Reverse Mortgage and how much money can you get?
Reverse mortgages can be paid to you:
- All at once in cash;
- As a monthly income;
- As a credit line that lets you decide how much you want and when;
- In any combination of the above.
The amount you get usually depends on your age, your homes value and location, and the cost of the loan. The greatest amounts typically go to the oldest owners living in the most expensive homes getting loans with the lowest costs.
Most people get the most money from the Home Equity Conversion Mortgage (HELM), a federally insured program.
What are the different type of Reverse Mortgages available?
Loans offered by some states and local governments are generally for specific purposes, such as paying for home repairs or property taxes. These are the lowest cost reverse mortgages. Loans offered by some banks and mortgage companies can be used for any purpose.
How much does a Reverse Mortgage cost?
The costs for loans from banks and mortgage companies usually include the following:
- Application fee
- Insurance
- Origination fee
- Monthly service fee
- Closing costs
- Interest
These costs are usually added to the loan balance (what you owe). HECM loans are almost always the least expensive reverse mortgage you can get from a bank or mortgage company, and in many cases are significantly less costly than other reverse mortgages. Reverse mortgages are most expensive in the early years of the loan and generally become less costly over time. Before getting a reverse mortgage other than a government or HECM loan, carefully consider how much more it will cost you.
What else should I know about Reverse Mortgages?
The federal government requires you to see a federally-approved reverse mortgage counselor as part of getting a HECM reverse mortgage.
Mortgage Loan Leads
A mortgage lead is an exciting thing because you are filled with the thought of buying a house. Mortgage leads are listings of information dealing with how much a house will be. Although the thought of a mortgage lead can be kind of scary, the time when you are looking for a mortgage is one of the most exciting times of your life. Mortgage leads can be found through many different sources, but first you must look at your financial situation before even beginning the thought process of buying a house and looking for a mortgage.
A mortgage lead cannot be looked for until you sit and write down all of the expenses you have. Then you need to write down all of the money that is coming in. This will help you when you search for mortgage leads. After that you need to write down what your idea of a mortgage would look like and what kind of house you are looking for. A mortgage lead will be one of the last steps you do prior to actually purchasing and looking at housing. The important thing to remember when looking for mortgage leads is that you need to look for what you want, rather than settling for what a real estate agent wants.
Mortgage leads are also something that is crucial in letting you see your options. So many people buy without have ever gotten a mortgage lead. Sometimes it is easier to buy blindly without looking at the different mortgage leads that you have. A mortgage lead will help you narrow down your search and be aware of what you are looking for. Sometimes people need to make sure that they are aware of their spending habits and budget before even proceeding to look for mortgage leads. Therefore, it is good do the research of the kind of mortgage you want before even taking the steps to look for a lead.
The last thing with mortgage leads is to make sure you are dealing with honest, forthright people who will tell it like it is. Too many people get scammed when it comes to a mortgage lead because they have no idea what they are getting themselves into. Then it is really easy for them to be talked into doing things that they never wanted to do in the first place. The thing to be emphasized is to live in knowledge rather than ignorance when you are doing anything that affects your life in a big way.
Mortgage Prequalification
How do I get Prequalified mortgage and how much can I spend on a house mortgage?
Fill out one of the forms to get prequalified. You will be able to know how much you qualify for, or if you do not automatically mortgage prequalify, you will be given advice.
Prequalify Forms
Fill out this Prequalify mortgage forms to get prequalified for a loan. The form will take less than 5 minutes to fill out.
The first step in the mortgage process is usually prequalifying, which will determine how much money a lender will give you. Most mortgage brokers use national guidelines to determine the maximum amount of money that they will lend. Within the context of these standard, some home mortgage brokers choose to be lenient and flexible, while others are strict. To prequalify you,mortgage brokers look at the following information:
Credit history and scores can play a big role in the your prequalifying stage in the mortgage process.Mortgage brokers order mortgage credit reports from local credit bureaus, which gives individual all credit history and scores.Credit bureaus usually collect information from retailers, banks, finance companies, mortgage broker, and a variety of public sources on all consumers who use any type of all credit, including credit cards, car loans, mortgages,personal loans, and charge accounts. The credit score is always based on a statistical analysis of your credit history. Factors that determine your all credit score vary from company to company, but generally include:
The credit score many brokers use is the FICO score. FICO scores range from 500 to 800, with 900 being the best score. The higher the better chance to get mortgage. Therefore, the better the score, the easier it is to prequalify. These scores are get viewed as very accurate predictors of future delinquencies.
The size of the loan that can be afforded monthly, can estimated through two essential ratios:ratio and debt ratio.
Some home mortgage loan evaluating a credit application are not tied down by strict industry standards. They will look at your mortgage request and see if it makes sense. If further explanations of any situation that will make your application look better, then by all means do so. Document all claims and explanations in writing if possible.
If you would like to get additional information about prequalifying for a mortgage or see how much you can prequalify for, fill out the Short Form.
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