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Reverse Mortgages: Understanding the BasicsArticle submitted by your local Wells Fargo Home Mortgage reverse mortgage Consultants. Visit their website for more information: www.wellsfargo.com. Reverse mortgages are about making the most of the equity that seniors have built into their homes. Today, more than ever before, there are new and innovative homeownership options for seniors that can help them optimize cash flow and promote peace of mind. A reverse mortgage enables seniors to borrow against the equity in their home without repaying the debt for as long as they live there. That's the "reverse" part of this kind of mortgage loan. Instead of making monthly payments, you can opt to receive them. The loan proceeds can be used for any purpose, and taken out as a lump sum payment, fixed monthly payment, line of credit or as a combination. "It's exactly what the name implies," said Dennis Hall, a reverse mortgage consultant for Wells Fargo Home Mortgage in Fort Myers. "Reverse mortgages give senior homeowners an opportunity to secure financial independence." The loans are popular in the United States. Created in 1989 by the U.S. Department of Housing and Urban Development, HUD's reverse mortgage program is a federally-insured private loan. With a reverse mortgage, you turn the value of your home into tax-free proceeds that can be used to supplement Social Security. The senior can use the money for any purpose, including paying for long-term healthcare insurance. The feature that distinguishes a reverse mortgage from other loans ? and makes it so valuable to many senior
homeowners ? is that no money has to be repaid until they die or move out of the home. When you take out a reverse mortgage, nothing happens to your home. You remain the owner for as long as you live there, and you will never be forced to move. If you decide to sell or move from your home, the outstanding balance of your reverse mortgage would become due, just as it would with a traditional mortgage. Unlike a traditional mortgage, however, your balance can never exceed the value of your home when you sell it. The maximum loan amount for a reverse mortgage is based primarily on four factors: the age of the youngest borrower, the location and value of the home and the current interest rate. You must occupy the home as your principal residence for a majority of the year. The property must be a single-family or two-to-four unit dwelling. Town homes, detached homes, condominium units, planned unit developments and some manufactured homes are eligible. The home doesn't have to be owned free and clear to qualify for a reverse mortgage. You may qualify for a reverse mortgage if the home has a low remaining mortgage that can be paid off at the closing with proceeds from the reverse loan. "For those baby boomers nearing retirement age, now is a good time to talk to a tax or an estate-planning advisor to see if a reverse mortgage is in their best interest," Hall said. To be eligible for a HUD reverse mortgage program, HUD requires that the homeowner live in the home as his or her primary residence, be at least 62 years of age or older and own the home free and clear, or only have a low remaining mortgage balance that can be paid off at the closing with proceeds from the reverse loan. As a key consumer protection, all borrowers are required to participate in a free educational session with a HUD-approved counselor in order to determine if a reverse mortgage is the best option. Wells Fargo Home Mortgage is the leading originator of reverse mortgages in the nation, helping senior homeowners capitalize on the equity they have built in their homes. In 2006, Wells Fargo Home Mortgage helped senior Americans secure nearly one-third of all reverse mortgages in the country. Your local consultants are: Cape Coral Fort Myers Naples Bonita Springs |
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