Saturday, April 22, 2006
Reverse Mortgages, continued from 3/25
What is a Reverse Mortgage? (continued from 3/25 post)
As the cost of living continues to rise here on Long Island, many senior homeowners are growing increasingly concerned. As they search for ways to bolster their financial security and maintain their lifestyles, seniors are increasingly focusing on the Reverse Mortgage as a possible solution for their needs.
Last month we explored some Reverse Mortgage basics. Lets pursue them a bit further.
Who Qualifies for a Reverse Mortgage? Qualification for a Reverse Mortgage is pretty simple.
· The age of the homeowner/s must be age 62 or greater.
· The home must be the primary residence. You have to live there.
· The home must be in good repair. The home will be appraised during the loan approval process.
· There can be no other liens on the home. (Current liens or mortgages can and must be satisfied from the proceeds of the Reverse Mortgage.)
· Again, there are no income, credit or medical qualification criteria for a Reverse Mortgage.
How do you access the cash?
You can access your cash in one of three ways. They are:
· Lump Sum – a single payment of cash.
· A Line of Credit – You can use or pay back as you like.
· Monthly payments, either term or tenure.
You can also access the cash in any combination of these options. You might take a Lump Sum to pay off debts or another mortgage, a Line of Credit for a defined amount and Monthly Payments for the balance. Note that Monthly Tenure payments will continue for as long as you reside in the home, even if you have take out more money than the home ends up being worth.
So how much money can you get?
The amount you are able to receive from your Reverse Mortgage is based on three factors. They are:
· The Age of the youngest homeowner.
· Current Interest Rates.
· The location and Appraised Value of the home.
For an analysis of how much money a Reverse Mortgage would provide, do-it-yourselfers can access the AARP website calculator at www.rmaarp.com/. Your Reverse Mortgage provider will also be happy to provide you with a more detailed analysis.
Next month we’ll take a look at who might benefit from a Reverse Mortgage the significant differences between a regular Home Equity Lind of Credit (a HELOC), and the Reverse Mortgage Line of Credit.
Francis Miller is a Reverse Mortgage Consultant with
the Senior Funding Group, Hicksville, New York.
He can be contacted directly at 1-631-312-3569