Many retired persons are on a fixed income. As the costs of living slowly rise, they are faced with difficult choices. After cutting back all the living expenses possible, many are still behind covering their living expenses. Through research and referral of friends, seniors are choosing to stay in their homes and utilize a reverse mortgage.
According to the National Reverse Mortgage Lenders Association, “a reverse mortgage is a loan available to homeowners 62 years or older, that allows them to convert part of the equity in their homes into cash.” This type of loan is called a reverse mortgage, because instead of making monthly payments to a lender, the lender makes payments to the borrower. Under this program, the loan does not have to be paid back until the home is sold or the borrower leaves the home through death or other circumstances.
Reverse mortgages have been around since 1961 and since then the use of the reverse mortgage has continued to grow. Because of the program, many seniors who would have otherwise lost their homes, have been able to stay in their homes without the stress of trying to make payments on their fixed and limited incomes.They can use the accumulated equity in their homes to reduce or eliminate house payments; and, for example, use the cash to pay for their living expenses, the cost of their healthcare or for anything else they may need. Another plus is that the borrower retains title to their property.
Facts and Brief History On Reverse Mortgages
- The first reverse mortgage was written in 1961, created for a widow in Portland, Maine. It was designed by a local savings and loan to help the widow stay in her home after losing her husband.
- In 1988, President Ronald Reagan signed the reverse mortgage bill into law, giving HUD the authority to insure reverse mortgages through FHA.
- By 2005, the number of reverse mortgage loans increase to 50,000 per year.
- In 2008, the origination of reverse mortgages grow to over 100,000 per year. The SAFE Act is passed that states must have uniformity in their policies and methods for registering and licensing HECM loan offices.
How to Qualify for a Reverse Mortgage
- The borrower(s) shown on the title of the property must be at least 62 years old.
- The reverse mortgage must be the primary lien. If there is another mortgage on the home, it must be paid off with the funds coming from the reverse mortgage.
- The property must be a primary residence. Second homes or investment properties do not quality.
- Property taxes, homeowners insurance, and HOA fees must be kept current by the homeowner.
- Homeowner must complete necessary repairs and maintain the property in good condition.
How Much Money Is Available to You?
The amount you can receive on a reverse mortgage depends on a current appraisal of the home, the current interest rates and the youngest borrowers age. See your Country Bank for details. (link embedded).
Contact Country Bank for more information.
Disclosure: This information is not from HUD or FHA and have not been approved by HUD of government agency.
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