Reverse Mortgage Loans
Available Reverse Loans - Home Equity Conversion
Reverse mortgage loans, are being considered as a solution to reducing the amount required from state lenders to take care of those over 65. The amount spent is set to double in the next 30 years. A reverse mortgage is a unique home loan allowing elderly homeowners, aged 62 and over, the opportunity to convert part of the equity in the home into cash. This type of loan gets its name from the fact that the payment stream is “reversed”. Instead of the homeowner making a payment to the lender, the lender makes a payment to the homeowner. Hundreds of billions of dollars would be available for those who are eligible for a reverse mortgage loan, which would help enormously to pay for long term care.
Those who do take advantage of reverse mortgage information can receive their payment in several different ways: in a lump sum; a line of credit; monthly payments; or even a combination of all the payment methods. The funds received from the lender can help towards daily living expenses; health care; paying off debts; or even just to enrich their lifestyle. Lump sum payments are particularly useful for making homes of the more frail homeowners more secure and accessible.
The amount the homeowners receive is mainly dependent upon their age, the value of their home, current interest rates and sometimes the location of their home. The average amount that can be received by good candidates for the reverse mortgage is around $72,000. Although the homeowners do not make any payments to the lender, they still have a responsibility to pay fees, insurance, and property taxes. Of course, it is possible to use the payments received from the mortgage to pay for any fees that are then charged on the loan.
The lender of the reverse mortgage cannot take the home away from anyone who outlives the loan. Borrowers can continue to occupy the house as long as all insurance and taxes are paid and are up to date. Once the last surviving spouse leaves the house, the loan is paid back plus any fees and interest to the lender. Any equity remaining will belong to you or your estate.
Federal Housing Administration
There are several different types of reverse mortgage loans. The Home Equity Conversion Mortgage (HECM) is the oldest and probably the most popular reverse mortgage. This one has been running since 1989 and is backed by the Federal Housing Administration (FHA). In the mid nineties, Fannie Mae created its own reverse mortgage to supplement the government-backed Home Equity Conversion Mortgage. It is known as the Fannie Mae Home Keeper & Home Keeper for Home Purchase.
Other types of reverse mortgages include the Financial Freedom Cash Account, which was designed for those requiring loans that exceed the maximum loan limits of Fannie Mae and the FHA, and The CHIP Reverse Mortgage for Seniors, which was created for Canadians aged 62 and over.