Is A Reverse Mortgage A Good Choice For You?

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What if you might get a mortgage where the lender really pays you each month, instead of you paying them? Well, as silly as this sounds, this will actually be a reality if you're aged 62 or older. This is precisely what a reverse mortgage can offer you. There are several ways that a reverse mortgage can work, and this is only one example.

A reverse mortgage is just a loan which is secured against the equity in your house. The maximum amount that can be borrowed is 65% of the property price or an absolute maximum of $625,000 (Note: these maximums may change over a period of time so it is profitable you making contact with a professional mortgage adviser to see what the restrictions are at the time you are ready to take out your loan). Also the property being mortgaged has to be the candidate (s) primary residence.

Other influences which will come into effect when you're prepared to reverse mortgage your house include the age of the youngest borrower, as we claimed, the existing value of your home, and the existing IR. A good rough guide is that the older the the more youthful borrower is, the lower the rate is probably going to be.

No more than 3 folks can sign up for this type of mortgage on a single property and it's important to remember that the lending institution must be the first lien holder, otherwise you will be turned down for this kind of loan.

So what are major advantages of a reverse mortgage? The largest advantage is that the home owner has the opportunity of living in their home for the remainder of their lives, should they choose, while not having to pay a monthly home loan payment. The sum borrowed, and the interest, won't have to be repaid till one of 3 things happens:

  1. The home is sold
  2. The property owner buys another residence, and take that up as their first residence
  3. Or if the mortgage holder (s) pass away.

When a candidate takes out a reverse mortgage, they have the selection of having a lump sum paid to them, or having the money placed into a fiscal institution where they can draw down the cash as they wish, or the money can be paid to them on a once per month basis. There aren't any restrictions on the way the cash can be employed. So if the old homeowner wishes to employ the money to travel, to pay monthly bills or even to save their home from foreclosure then there are no rules to stop this.

What are the negatives of taking out a reverse mortgage? Well there are 1 or 2 to think about. Firstly the up-front charges and fees are considerably higher than a regular mortgage. And the borrow does have to take out a mandatory mortgage insurance. Obviously, if the home owner lives a considerable time then the accrued interest can be fairly high, and less money may be left to leave to heirs.

Secondly, depending on the state the borrower lives in, having a lump sum from a reverse mortgage might have an impact on Medicaid benefits. Taking into account the age and health of the borrow implies this is a significant consideration to bear in mind.

Overall a reverse mortgage can be a good thing, there is, however, no one package fits all solution. If you're over the age of 62 and are looking to take out a mortgage on Naples Florida real estate , then this should be the perfect solution for you, so don’t discount it without first getting all the info. So it is always smart to talk to an independent mortgage adviser to chat about your unique desires before entering into a contract or this, or any, sort of mortgage.

Neil Upshaw is a freelance writer and Naples Florida Real Estate Agent. If you are seeking homes for sale in Naples Florida then visit http://naplesfloridarealestate1.com/ today


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January 31, 2012 · Filed Under Mortgage Refinance

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