Reverse Mortgages

Article submitted by Rick Roode of Reverse Mortgages of Pennsylvania.
For more information, he can be reached at 1-888-748-9300.

How Are They Different?
There are no monthly payments and no credit or income requirements. A reverse mortgage removes the stress of not having enough money and does not add the pressure of monthly payments. Prior to reverse mortgages the only way you could gain access to the money invested in your home was to sell or obtain a home equity loan. But now you can own your home, have a substantial amount of its value available to use as you desire, and not have a monthly payment. With a forward mortgage or home equity loan you are paying money into your home, with a reverse mortgage you are taking it back out. If you want to put some or all of it in again, you can.

What Is The Purpose?
The main purpose of reverse mortgages is to allow older homeowners to maintain ownership, be free of financial worry, and enjoy their retirement years more fully. The money can be used in any way you desire. Some examples are:

To eliminate monthly payments by paying off mortgages, home equity loans, credit cards, etc.
To pay property taxes, school taxes, sewer and water bills, oil bills, judgments, etc.
To pay for home improvements, auto repairs, or to purchase a more dependable automobile
To pay for unexpected medical bills and prescription drugs
To take a vacation or purchase a vacation home, travel trailer, or motor home
As a line of credit to be used whenever and however you desire
To invest or to avoid removing the principal from existing investments

How Much Can I Receive?
From approximately 30% to 80% of your home's market value, depending upon how old you are and the interest rates available. The older you are, the higher the percentage. However HUD has limits in each county as to how much value can be used as a basis for the reverse mortgage.

Are They Safe?
Yes. The most popular reverse mortgage is insured by the United States government. The money is not taxable and does not effect Social Security or Medicare.

What Are the Negatives?
Because you will not be making payments (unless you desire to do so) or paying any of the set-up fees, your property will pay the money back, along with fees and interest, when you pass away or sell your home, or when your home is no longer your main place of residence.

How Do I Qualify?
The youngest person on the deed must be at least 62 years old and you cannot already owe more than is available from the reverse mortgage. If you owe $100,000 on a $110,00 home, you will probably not qualify. But it is still worth a telephone call to make sure.