| Before we get too deep into that amount that you can | | | | federal insurance that guarantees the payments. |
| expect out of a Reverse Mortgage on your home, | | | | However, each uses different factors to determine |
| let's first clarify that Federal law requires that before | | | | how much they're willing to lend. |
| signing anything, a person considering a reverse | | | | There is even a reverse mortgage for the wealthy, |
| mortgage must receive mandatory counseling at no | | | | but house-poor. They are called "Jumbo Reverse |
| charge provided by an independent third party so that | | | | Mortgages" for those who have homes valued at |
| you understand the ramifications of what you're doing. | | | | more than the standard limits (currently $400,000) of |
| Because of some problems in the 1990s, this is one of | | | | the FHA and HUD. These are called "Proprietary" |
| the federal safeguards have been put into place to | | | | reverse mortgages and the Lenders are commercial |
| that ensure seniors get a fair deal. For instance, the | | | | institutions and they use non government, commercial |
| fee to originate a reverse mortgage varies only slightly | | | | insurance to back the reverse mortgage. |
| because the maximum you can be charged is | | | | The National Reverse Mortgage Lender's homepage |
| 2-percent of the value of your home, up to the FHA | | | | has a nifty calculator that will let you run a side-by-side |
| mortgage limit in your area. There's no need to shop | | | | comparison. All you have to do is fill in the |
| interest rates because they are the same nationwide. | | | | homeowner's date of birth (you must be at least 62), |
| On Reverse Mortgages, It's important for seniors to | | | | value of the home, and zip code. In seconds it tells you |
| understand that while they are not making payments | | | | how much of a reverse mortgage each lender will |
| on the loan, interest is accruing and is being added to | | | | provide. |
| the principal. In other words, the outstanding loan value | | | | Taking a hypothetical home worth $120,000 in a zip |
| gets larger and their equity gets smaller over time -- | | | | code near where I live, but varied the age of the |
| just the opposite of a regular mortgage. Insurance is in | | | | applicant. H.U.D.'s "Home Equity Conversion Mortgage" |
| place on a reverse mortgage to ensure that you will | | | | (HECM) provides a bigger loan, mainly because it's |
| always receive your monthly payment and, when you | | | | based on lower interest rate projections than the ones |
| move out of the home or pass on, the amount owed | | | | used in Fannie Mae's "Homekeeper" product.. |
| will never exceed that equity in the home. Unlike a | | | | If you are 65, you could get a Lump Sum of $73,389 |
| traditional loan, with a Reverse Mortgage, It's also | | | | or $395 per month for life. |
| important to recognize how your estate will be | | | | If you are 75, you could get a Lump Sum of $81,881 or |
| affected. | | | | $503 per month for life. |
| You can only qualify for a reverse mortgage only on a | | | | If you are 85, you could get a lump sum of $91,606 or |
| property that is your primary residence. Just as with a | | | | $748 per month for life. |
| regular mortgage, you will be responsible for | | | | When you close on a Reverse Mortgage, there's lots |
| maintaining the property in good condition, as well as | | | | of flexibility to arrange payments the way you wish. |
| for paying property taxes and homeowner's insurance. | | | | For instance, instead of receiving monthly payments |
| The amount that can you actually pull out of your | | | | for a long as you live, you could choose to receive |
| home with a reverse mortgage depends upon three | | | | them for a certain period of years. Or use a |
| factors: your age, the value of your home and current | | | | combination of, say, 15 years or life, whichever is |
| interest rates. The older you are, the more money you | | | | longer. Alternatively, you can simply set up a line of |
| can borrow. Your shorter life expectancy means | | | | credit that you can tap into for varying amounts |
| fewer years for the loan value to build up. | | | | whenever you need the cash. |
| While you generally apply for a reverse mortgage | | | | If you are a senior citizen, you can be sure that your |
| through a local mortgage broker (some banks also | | | | children would not want you to 'do without'! You |
| offer them), they are generally all backed by one of | | | | worked hard all those years to build equity in your |
| two entities - Fannie Mae, a quasi-governmental buyer | | | | home, now it might be time for your home to pay you |
| of mortgages, and the federal Housing and Urban | | | | - for a change! Take the idea seriously and investigate |
| Development Agency, or H.U.D. Reverse mortgages | | | | it thoroughly. You will be glad you did! |
| backed by both Fannie Mae and H.U.D. come with | | | | |