Finance For Seniors : Reverse Mortgages
October 28, 2009 by Tucker
In a time of financial insecurity, reverse mortgages for seniors can provide some relief for an age group who are often living on a fixed income.
They can represent an ideal solution, and many people have already taken advantage of the benefits that they offer. That’s not to say that they are right for everyone though, which is why it is important to research the ins and outs of them before making a decision.
A reverse mortgage can be explained most simply as a type of home equity loan for which no repayment is necessary until the homeowner dies, sells the property, or no longer uses the property as a permanent residence.
Since the decision by the bank or finance company is not based on the homeowners income, these reverse mortgages are fairly easy to obtain for the more elderly members of our society, particularly so because they have most of their money tied up in their property, which is what these types of mortgages are leveraged on.
There are some non negotiable stipulations though, including…
- The age of the homeowner must be over 62
- The house must be either paid in full or with just a small balance left on the mortgage
- Taxes, homeowners insurance, mortgage insurance, and a hefty closing fee, must be paid by the homeowner
- The homeowner must attend a counseling session to ensure that they completely understand the reverse mortgage process
The method behind a reverse mortgage is simple. The homeowner is given a loan based on the equity in their home. The amounts of the loans will vary, depending on the value of the home and the equity therein.
This loan can be had in a single lump payment or as a series of monthly payments; it is up to the homeowner to decide which they prefer. The funds received by the homeowner can be used in any manner he/she desires; paying bills, making home improvements, taking a trip or any other purpose.
No repayments are made in reverse mortgages for seniors. Well, no repayments until certain conditions are met anyway. Full repayment of the mortgage is due when one of the following occurs:
- The homeowner dies
- Sale of the house by the homeowner
- The homeowner takes up long-term residence at the home of another family member or at a nursing home
In many cases, a reverse mortgage is a benefit for its recipients. When looking at the benefits though, still bear in mind the fact that a large closing fee may be due on the signing of the mortgage papers. This fee is typically larger than that of a traditional mortgage and it can vary significantly from place to place..
Reverse mortgages for seniors are not a decision to be taken lightly and, as with all financial decisions, all paperwork should be closely examined before making a commitment. Don’t let the paperwork put you off though as professional assistance and counseling is available.
As you or a member of your family reaches retirement you’ll want to read more about reverse mortgages pros and cons. You can also read more about reverse mortgages for seniors here.
The article explains why State Farm is refusing to renew more than 100,000 homeowners insurance policies in Florida and what this means for the rest of the USA.
Yeah, have you even watched the videos?
It is a kind of catch 22, you are right.
But in my area the property taxes are going to be about 2.8% or the purchase price per year. In an area just 20 miles away it might be 2.0% or 3.5%. The city, school and county all sit their own rates. I don't know how your area is. The insurance depends not only on how valuable the house is but how good your credit is and how large a deductible you can stand and a whole host of other variables.
I think these sites are trying their best to warn you that these costs might make up a quarter of your house payment or even more and you need to think about them when you are looking at houses.
RT Chris Vigil: Mortgage insurance premiums set to increase: This will increase the cost of an average …
no you have like 90 days in most cases but you go to long and you will be forced to take there insurance and it will be for a year then you can get others and that ins they get you is expensive !!!! Just get insurance on it now before they catch you ! Plus they will put that insurance into the house payment and you might loose your house if you cant pay it!
How To Procure The Lowest Rates For Florida Homeowners Insurance