More retirees resort to reverse mortgages – Some FAQs on HUD’s reverse mortgages

More retirees resort to reverse mortgages – Some FAQs on HUD’s reverse mortgages
  • Opening Intro -

    According to some recent reports, it has been studied that an increasingly large number of older Americans are turning to reverse mortgages to finance their post-retirement years.

    A particular study commissioned by the reverse mortgage loans industry has said that $3.5 billion is now being borrowed against the family homes in reverse mortgages and this is an increase of more than 15% in a particular year.

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However, the reports suggest that the reverse mortgage loans are being taken out by most people as they’re trying to make up for their inadequate retirement planning, while they were young. Therefore, a reverse mortgage is a method of releasing equity from the home and utilizing the proceeds in paying off your other financial obligations.

The HECM or the Home Equity Conversion Mortgage is FHA’s reverse mortgage that enables the struggling seniors to withdraw money from the equity in their home. This is a safe financial life that can help the older Americans ensure financial security. Most seniors use the proceeds in supplementing social security, make home improvements and also meet their unexpected medical expenses. Though the system of taking out a reverse mortgage has been around for a long period of time, yet read on to educate yourself on some most frequently asked questions on HUD’s reverse mortgage program.

  • How can I qualify for a HECM mortgage from the FHA?

Well, are you on the other side of 62 and a citizen of the US? If answered yes, you can qualify for a reverse mortgage loan from the FHA or the Federal Housing Administration. However, not only the aforementioned options will be enough for qualification, you will also need to own a home outright and have a low home mortgage loan that can be paid off easily and you must also be staying in the home. You may receive reverse mortgage counseling prior to taking out the loan from a HECM counselor.

  • Can I apply for a reverse mortgage if I do not have FHA mortgage insurance?

Most people wonder whether or not they can get a reverse mortgage loan if their present house was not bought with FHA mortgage insurance. But you may be relieved to know that it is possible to take out a reverse mortgage even with the aforementioned conditions. The FHA HECM will be FHA-insured.

  • Is there any difference between a home equity loan and a reverse mortgage?

With a traditional second mortgage loan or a home equity loan, you must have enough income and a good debt-to-income ratio in order to qualify for the loan. You also have to make monthly mortgage payments to repay the loan. The reverse mortgage is slightly different as it pays you and you don’t need to make any kind of payments until you die, or leave the house or sell off your house. Instead of you making payments, the lender will pay you according to the payment plan that you have chosen.

  • At what circumstances does my loan become payable?

Usually, the thumb rule says that a reverse mortgage loan becomes payable when you die or sell off your home as already mentioned earlier. But the loan may also become repayable if:

  • You fail to pay the property taxes on the home and violate any other term
  • You do not live in that home for 12 months in a row
  • You make the property deteriorate and also do not make the required improvements
  • You permanently shift to a new residence

Taking out a reverse mortgage is rather a tricky way of pulling out money from your home and it is a good option for all the American seniors who have not managed their personal finances while they were young. If you too fall into his category and you have accumulated enough equity in your home, capitalize on the idea of reverse mortgage loans.

Money Management reference:

smart financing guides

SaleBestseller No. 1
Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement
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Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement
  • Wade D. Pfau Ph.D.
  • Publisher: McLean Asset Management Corporation
  • Edition no. 2 (02/06/2018)
Bestseller No. 2
Reverse Mortgages: How to use Reverse Mortgages to Secure Your Retirement (The Retirement Researcher's Guide Series)
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Bestseller No. 3
Housing Wealth: 3 Ways the New Reverse Mortgage is Changing Retirement Income Conversations (An Advisor’s Guide)
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Last update on 2019-06-08 / Affiliate links / Images from Amazon Product Advertising API

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Categories: Home Financing