Jasper Kline's Blog

First, what a reverse mortgage is NOT:

| * A reverse mortgage is not “a way for the bank to get your home
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| * It is not a traditional home equity mortgage
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| * It is not based on salary or credit levels
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| * It is not open to homeowners under the age of 62
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| * It is not free money
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| * It is not a cure-all
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| * It is not a decision to be taken lightly
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|What a reverse mortgage is: A helpful tool for financial planning and flexibility in the golden years. There are only a very few requirements for eligibility. The borrower should own and live in the household as a primary residence and be 62 years of age or older. If husband and wife are both on the title, both must be greater than the age of 62. However, visit the Reverse Mortgage Age Requirements to find out more information on this particular fact.
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|In addition, the domicile itself must be of a type that qualifies for the reverse mortgage program. The vast majority of single family homes qualify, as do most condominiums, townhomes, 2-4 unit owner-occupied dwellings and manufactured homes. Your income and credit levels, however, do NOT matter.
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|To go through the process of getting a reverse mortgage you will need to talk with a reverse mortgage originator or provider. This person will escort you through the preliminary steps, including therapy, residence appraisals, inspections, and variety of loan specifics. It is very important to feel comfortable with your lender. Feel free to speak with as many people as you need in order to get information and feel comfortable. Click here for reverse mortgage lenders.
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|There are a number of options for how to “structure” the money received.
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|1. Receive a one time lump sum.
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|2. Receive the money monthly.
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|3. Receive a credit line that provides flexibility. (Not in TX)
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|4. Use a combination of the above methods.
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|Once you receive the money, there are nearly no restrictions on the way in which it can be used.
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|You MUST:
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| * Repay existing debt, as well as the existing mortgage
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|You Can:
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| * Make Home Improvements
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| * Finance Regular Living Expenses
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| * alleviate Healthcare Costs
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| * Take a visit to Somewhere You’ve Always Wanted to Go
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| * Give Gifts to Your children and Friends
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|It almost seems too good to be true. There are, however, as with everything these days, outlay involved. There is an origination fee, final expenses, a servicing fee, mortgage insurance, and interest. These costs come from the proceeds of the loan. You pay very little directly out of your pocket.
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|You should also know that you cannot lose your home at any time during the life of the loan for failure to make payments. THERE ARE NO PAYMENTS TO MAKE. The loan does not come due until you permanently leave the residence or the last borrower dies. The domicile must be kept up to reasonable standards, it must be insured, and the property taxes must be paid.
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|Default jeopardy is one of the ways in which a reverse mortgage differs from a traditional mortgage or house equity loan. With those traditional products there is a risk of default and therefore a chance you could lose your home. On the other hand, there are no payments to make with a reverse mortgage. Therefore, as long as the property is kept to a reasonable standard, you will constantly have somewhere to live.
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|In addition, you can never owe more than the value of your home. Even if you have been paid more than your home is worth, you can only owe the value of your home. When the loan comes due, you or your heirs can either pay off the mortgage with existing funds or sell the house in order to comply with the loan. Leftover proceeds from the transaction go to your or your estate.}