Reverse Mortgage Loans

What is a Reverse Mortgage Loan? Well, there are a large portion of homeowners, especially the ones that owe nothing on their home, that are sitting on a secure form of income - and they probably do not know it. The question is, are you one? The wider question is; are you affected by rising health care, medical bills and the escalating cost prescription drugs?  A reverse mortgage loan is one extremely effective method of generating additional income. If you chose to go this route, you won't be the first, as this form of loan is gaining in acceptance and popularity. It's estimated that at least 200,000 seniors this year alone will go the route of a reverse mortgage loan to generate additional income from the $4 trillion in home equity that they hold. Part of the reason for this loans rise in acceptance is the fact that 90% of reverse mortgage loans are guaranteed by the U.S. Department of Housing and Urban Development (H.U.D). So, if you are interested in finding out if you qualify and what the benefits are then read on.

Qualification primarily hinges on:

1. Your age (and that of your spouse if a joint application). The minimum age to qualify is 65
2. Whether you own your own home. The statistics show that over 12.5 million senior citizens own their home with no liens or outstanding payments owed.

The amount available for the reverse mortgage loan relates to the inherent equity held in your home. As a reverse mortgage loan is exactly what it sounds like, the opposite of a traditional mortgage. For example, with a traditional mortgage, you borrow money from a lender to purchase a home and then repay this loan with interest over time, the amount you borrow is linked to your income and savings. A reverse mortgage loan is similar, except you are borrowing against the equity you have already built up in your home and repaying that amount with interest over a specific period of time. 

In addition, when applying for a conventional  mortgage loan, there are income thresholds to ensure that you can repay whatever you are borrowing, and as we have seen recently the qualification standards required to meet these thresholds have become tougher. Conversely, with a reverse mortgage, there are no income requirements, and the lender essentially pays you to live in your home.  Your income and savings are irrelevant

This means that the equity you have built up in your home can be paid back to you in one, or in a combination of, the following ways: a single lump sum of cash; a regular payout as long as you live in the home; a line of credit to be accessed when you need it.

Because the equity has been established and is almost bulletproof you will not have to repay any of this money until the last borrower dies, sells the home or moves away permanently (the repayment is recovered from the equity of the home at that time).

One huge benefit is that the money you receive from a reverse mortgage loan can be used for anything, including daily living expenses, medical bills, prescription costs and even home repairs.