Reverse Mortgages

Turning your home equity into cash

Today, when seniors try to turn the equity of their home into spendable income, they look to a reverse mortgage. A reverse mortgage allows you to receive a one-time lump sum payment or it can be dispersed to you in monthly amounts. With a reverse mortgage, you can use your home equity without extending a line of credit.

Benefits of a Reverse Mortgage

The benefit of not having a monthly payment to make and the fact that the money is tax-free make this an offer that many seniors cannot resist. With the surge of baby boomers entering the retirement phase of their lives and a plummeting economy, many seniors are faced with realization that the money they have at retirement is not going to be enough. When you use a reverse mortgage there are no stipulations placed on how the money can be spent, and it is not affected by any other means of income that the person might have (nor does it affect any income).

An attractive benefit of the reverse mortgage is that it is very simple to get approved. Neither your credit history nor your income will be checked, and in most cases those are the biggest factors that cause people to not get approved for other loans. You do, however, have to prove that you are aged 62 or over and that there must be some equity built up in the property. The factors that the loan is contingent upon are age, the number of people that intend to borrow and the value of the home.

Risks of a Reverse Mortgage

Many seniors are afraid of reverse mortgages as they feel they will have to give someone the title to their home. This is not the case at all; the owner will keep the title at all times. The only factor that the lender is interested in is your outstanding balance on that home. Another common deterrent is that seniors are afraid they won’t qualify, but the process can be done in less than 30 minutes over the phone.

The U.S. Department of Housing and Urban Development regulates all reverse mortgages and the Federal Housing Administration insures them so that seniors feel a sense of protection. Part of that 30-minute phone conversation is a credit information session which ensures that seniors are well aware of what they are doing in advance and to answer any questions they might have. To safeguard the process a bit more, the credit session is set forth by a third party firm and done at no charge to the senior.