Reverse mortgages gained one of the worst reputations of all mortgage products until 1988 when FHA stepped in and provided guidelines to help protect elderly borrowers. To this day many people still think reverse mortgages are evil, but nothing could be further from the truth.
A reverse mortgage is a mortgage for people 62 years of age or older. The mortgage has a few different ways it can be structured. It can be used to pay off a mortgage balance with no payments due moving forward. It can pay off a first mortgage and provide for a monthly payment being made to the borrower and/or it can be set up as a line of credit. Besides doing these it can be done in combination with each other, if the borrower qualifies.
Reverse mortgages do have a few different features that make them different than a regular forward mortgage in that the loan officer does not consider income or assets to qualify a borrower in the same way as she would a forward mortgage. The lender is mostly concerned whether or not the borrower has and does keep current on their homeowner’s insurance and property taxes.
Borrowers are required to take a counseling class from a HUD approved instructor. The home should be in decent condition. The borrower also cannot have bad debt federal debt from student loans, federal debt or federal income tax debt.
After the loan closes the borrower still owns the home. Should the borrower die at any point during the loan, the property goes to the hiers exactly the same as it would with a forward mortgage. The borrower can pay the interest or any amount desired so that the loan balance does not increase. No payments are ever required to be made, although they can be.
This is a great loan that provides many options. Feel free to ask any question regarding this product and we would also be happy to send you a free packet explaining the loan and the easy process to obtain a reverse mortgage.
