Reverse Mortgages: How It Works

It really got me curious when I saw the star actor, Robert
Wagner, talking about Reverse Mortgage. In fact, Wagner has been
saying it on TV for almost a decade now and no wonder, Reverse
Mortgage is the ‘buzz’ word these days among homeowners in their
60’s.

For all the homeowners who are 62 and beyond, this sure sounds
very lucrative. A home is the biggest investment for most
people. And when they are old and run low on cash, their very
own home can pay the dividends of their years of investment.
Wagner is surely right on this, I feel. I mean what can be
better than retaining the ownership title of your home and also
be paid for living there!!

Several institutions including Wells Fargo and MetLife, among
the private sector banks, offer Reverse Mortgage solutions for
the all those who are seriously seeking counselling in this
regard. I too went in to find out the pros and cons of getting a
reverse mortgage loan. Is there any catch? But the more
information I gathered on reverse mortgage, the more convinced I
was that reverse mortgage really works! It really works if you
know what suits your needs and what’s right for you.

Reverse mortgages can be of three types: Single Purpose Reverse
Mortgage, Home Equity Conversion Mortgage and Private
Proprietary Reverse Mortgage. Of these, the single purpose
reverse mortgage is the cheapest but as the name suggests, they
can used for only one specific purpose like for home repairs or
paying property taxes. But if you want the freedom of using the
loan money for different purposes, the next feasible option
might be the Home Equity Conversion Mortgage or HECM. They are
comparatively more expensive than the Single Purpose Reverse
Mortgage but it is insured by Federal Housing Administration
(FHA), a wing of the U.S. Department of Housing and Urban
Development (HUD). An annual insurance fee of 1.25% is charged
on this type of Reverse Mortgage which eventually adds up to the
loan amount. As per the statistics, HECMs account for almost 99%
of the Reverse Mortgage loans sold in America. The last kind of
Reverse Mortgage, i.e., the Private Proprietary Reverse Mortgage
are classified only for the homes with high values, usually
$750,000 or more. These Reverse Mortgages are also not insured
by FHA and there is neither any restrictions on the fees that
can be charged nor any limit to the amount of loan. All you have
to do is analyze your own situation and work out the conditions
that suit you best.

For the senior members of our society, it’s time for them to sit
back and rejoice what they have earned in their hay day. They
can live in their homes, their most prized possession, until
their last day without worrying about repaying the loan or as
long as they want if they decide to sell the home later. And the
older you are, the more money you can get. Educate yourself on
Reverse Mortgage. You’ll be doing yourself a favor.




















































































By : Richard Racine

http://www.isnare.com