Reverse Mortgage Info
Reverse Mortgage Guide
Step 7: Overview of Reverse Mortgage Info
By: Meghan Carter
To help you when looking for a reverse mortgage, we've created a quick overview of all of the essential
reverse mortgage info you need to know. While we know it's important to understand the detailed information about reverse mortgages, we thought a short reverse mortgage info cheet sheat would help you remember what you have read.
Reverse Mortgage Eligibility Info- You must be 62 years old or older ("A New Kind of Loan in Reverse").
- You must own your home ("A New Kind of Loan in Reverse").
- The home you would like to get a reverse mortgage for must be your primary residence, which means you live in it at least six months out of the year ("Frequently Asked Questions").
- You cannot get a reverse mortgage if you live in a cooperative apartment or a mobile home; however, if you live in a manufactured home that is built on a permanent foundation you may be able to qualify for a reverse mortgage ("Frequently Asked Questions").
- While some loans have income requirements, there are no income requirements for a reverse mortgage ("A New Kind of Loan in Reverse").
Reverse Mortgage Disbursement Info You can receive the money you get from your reverse mortgage in a:
- Lump sum
- Monthly cash advances for the entire time you live in your home or for a set number of years
- A flat or growing creditline
- A combination of the above three options ("A New Kind of Loan in Reverse")
Reverse Mortgage Amount Info Your lender will use three main factors to determine how much money they will lend you through a reverse mortgage. Those factors are:
Your Age. The older you are the more money you will receive ("Basic Loan Features"). If you are married, your lender will use the age of the youngest spouse when determining how much money to lend you (Lerner 233).
Your Home's Value. The more your home is worth, the more money you will receive from a reverse mortgage ("Basic Loan Features").
Your Reverse Mortgage Interest Rate. The higher your interest rate, the less money you will be able to receive. Therefore, you should look for a reverse mortgage with a low interest rate.
The Type of Reverse Mortgage You Choose. Whether you want you cash in a lump sum, monthly cash advances or a credit line will affect how much money you receive. To see how much the type of reverse mortgage you choose will affect the total amount of cash you receive, look at a reverse mortgage calculator online. The calculator will show you the amount of money you could possibly receive based on your age, home's value and where you live.
Reverse Mortgage Repayment Info- When you have a reverse mortgage you do not need to repay your loan until you no longer permanently live in your home, which means you have not lived in your home for an entire year ("Frequently Asked Questions").
- When you no longer live in the home, you will be expected to repay all of the money you received from the reverse mortgage and the interest and closing costs you owe on the reverse mortgage ("Frequently Asked Questions"). However, if your home's value is less than what you owe on your reverse mortgage, you will only have to pay how much your home is worth. That is because most reverse mortgages have a nonrecourse clause which protects the borrower from having to pay more than they would receive from selling their home when it comes time to repay the reverse mortgage (Matthews 2-35).
- Remember that you will also have to repay your reverse mortgage if you are unable to pay your homeowner's insurance or property tax or if you let your home fall apart, which decreases its value ("Frequently Asked Questions").
Reverse Mortgage Application Info There are six simple steps to apply for a reverse mortgage
- Learn About Reverse Mortgages.
- Get Reverse Mortgage Counseling. It is required by law that a lender may not work with you until you have received reverse mortgage counseling ("Steps to Getting a Reverse Mortgage"). After you have received counseling you will be presented with a counseling certificate that you will need to give to your lender when you apply for your reverse mortgage (Whitley 110).
- Apply for a Reverse Mortgage.
- Your House will be Appraised. The lender will require you to pay for your home's appraisal (Whitley 107).
- Finalize Your Reverse Mortgage Terms with Your Lender.
- Close on Your Reverse Mortgage.
Reverse Mortgage Disadvantages Info
- Your heirs will receive less money because you will use the money from the sale of your home to repay the money you borrowed with a reverse mortgage (Lawson 30).
- Closing costs are higher than on some other loans, which makes a reverse mortgage a bad option for those who plan to move a short time after getting the reverse mortgage (Lawson 31).
- Interest rates can be higher than on some other types of loans (Masters 44).
- You may forfeit some of your government benefits because your liquid assets increase when you receive the cash from your reverse mortgage (Leonard 7-9).
- If times get tough, you will no longer be able to count on receiving money when you do sell your home, because you will need that money to repay your reverse mortgage.
- You must live in your home as a permanent resident (Lawson 31).
- You must check to make sure that your reverse mortgage offers good terms. For example you must make sure that your reverse mortgage has a nonrecourse clause and does not make you give your property title to someone else (Matthews 2-35).
The rest of our Reverse Mortgage Guide:
Sources:
"A New Kind of Loan in Reverse." Basics. AARP.
http://www.aarp.org/money/revmort/revmort_basics/a2003-03-21-newloan.html.
25 August 2006.
"Basic Loan Features." Basics. AARP.
http://www.aarp.org/money/revmort/revmort_basics/a2003-03-21-basicloanfeatures.html.
27 August 2006.
"Frequently Asked Questions." National Center For Home Equity
Conversion. 12 March 2001. http://www.reverse.org/faqs.htm. 25 August
2006.
Lawson, Steve. Reverse Mortgage Essentials. Victoria: Trafford Publishing, 2004.
Leonard, Robin. Solve Your Money Troubles. Berkeley: Nolo, 2005.
Lerner, Joel P. Financial Planning for the Utterly Confused. New York: McGraw-Hill, 1998.
Masters, Thomas K. How to Buy a Home with No or Poor Credit. New York: John Wiley and Sons, 1996.
Matthews, J L. Long-Term Care. Berkeley: Nolo, 2004.
"Steps to Getting a Reverse Mortgage." National Reverse Mortgage
Lenders Association.
http://www.reversemortgage.org/Default.aspx?tabid=236. 29 August 2006.
Whitley, R Earl. Senior Financial Guide. United States: Xlibris Corporation, 2003.
