What is a reverse mortgage?

JUST WHAT IS A REVERSE MORTGAGE?

I will attempt to explain it in laymen's terms. A reverse mortgage is a government backed negative amatorzation loan ( backed by the department of HUD). When you enter into a reverse mortgage loan, you no longer have to make a payment on your home. If the home was owned free and clear, or you have around 40% equity or more into your home, you will have the option to either pull the equity out of your home in one lump sum, receive monthy payments, or a combination of both.

HOW DO THEY DETERMINE HOW MUCH MONEY I CAN ACCESS?

Reverse Mortgage Lenders determine the amount of money you can access by using an equation of your age, how much equity is in your home and what the current interest rates are. You must be at least 64 years old to qualify for a reverse mortgage.

HOW IS IT POSSIBLE THAT I DON'T HAVE TO MAKE PAYMENTS ON A REVERSE MORTGAGE?

Every month, interest is charged on your outstanding lien, that interest is then tacked back onto your principal balance. The interest rate is determined before you close on your reverse mortgage.

DO I EVER HAVE TO REPAY MY REVERSE MORTGAGE?

Yes, and No. You will never have to make a payment on your reverse mortgage as long as you live or until you decide to move. When that time comes, you will have one year to either sell the home, refinance it, or pay off the outstanding balance. If you sell the home for more than what you owe on the reverse mortgage, you keep the extra equity. If you fail to do the above within one year, the bank will take over the home and try to sell it. You still keep the extra equity in this situation as well.

CAN I GET A REVERSE MORTGAGE WITH BAD CREDIT, OR NO INCOME?

Yes, a reverse mortgage is secured soley from your home's equity. You can have bad credit, bankruptcy, or even be in forclosure! Since you don't have to repay the loan, you don't even have to have an income!

HOW DO I FIND OUT MORE ABOUT REVERSE MORTGAGES?

You can fill out an online application at www.fhalowrate.com or click on one of the ads to the left and right.