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Reverse mortgages can be a great solution for seniors who wish to remain in
their home but are having difficulty making their monthly payments and meeting
other financial obligations. If you are over age 62 and own your own home, the
bank will actually pay you money so you can stay in your home, rather than the
other way around. It is important to collect as much reverse mortgage
information as possible before deciding whether to take out the loan. Anyone is
eligible for a reverse mortgage loan, even if they have no income. Your home
must be a single family residence in a one to four unit dwelling, a condominium
or some type of manufactured home. Cooperatives and most mobile homes are not
eligible. The home must be at least one year old and you have to first meet with
an authorized counselor. You can obtain the loan as a lump sum payment, a fixed
monthly amount or as a line of credit that you use whenever you need it. The
money can be used for just about any purpose. This can include paying property
taxes or medical bills, home repairs and improvements, paying off credit cards
or just daily living expenses. The amount of money you receive depends upon your
age, the amount of equity in the home, its appraised value and current interest
rates. The reverse mortgage loan does not have to be repaid until you sell the
home, permanently move out, or pass away. Your loan could also become due if you
allow the property to deteriorate, you fail to pay property taxes or hazard
insurance, or if the last surviving borrower does not occupy the home for 12
months in a row due to illness. There are some fees involved with a reverse
mortgage loan, similar to those you would incur with a regular mortgage. These
include origination fees which cover the lenders operating expenses and are
currently capped at the greater of $2,000 or 2% of the maximum FHA loan limit.
In addition you will be required to take out mortgage insurance and pay an
appraisal fee which ranges between $300 - $400. Other closing costs include fees
for a credit report (usually under $20), flood certification, closing and title
search, document preparation, recording, courier, pest inspection and a land
survey. In addition, a monthly service set-aside fee of $30-35 per month will be
charged. When you meet with your counselor, you should be able to obtain all the
reverse mortgage information you require before you make your final decision. It
will be nice to have the option of staying in your own home if that is what you
desire.
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