• Question
  • I have ONE question only, and I do not want to buy anything. My question is , "How does your

    Asked by a 72 year old man from Topeka, KS on 1/28/2013

    I have ONE question only, and I do not want to buy anything. My question is , "How does your reverse mortgage work?"

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  • Categories: How Does it Work?, Reverse Mortgages

Answers

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  • In a nutshell, a Reverse Mortgage converts a portion of the value of your house into cash, and the remaining portion is reserved to make the monthly payment. For example, if you were 62 and had a house worth $100,000.00, you'd receive approximately $55,000.00 in cash, and the other $45,000.00 would be your retained equity. Each month a portion of that $45,000.00 would be reserved for the Lender, to make the mortgage payment.

  • Login to rate this answer:   Answered on 1/29/2013
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    NewRetirement

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  • There are two main kinds of Reverse Mortgages:

    1) The HECM Saver Reverse Mortgage
    2) The tradition HECM Reverse Mortgage

    A Reverse Mortgage is a type of loan for homeowners over the age of 62 that turns the equity saved up in your home into cash.

    In some ways, a Reverse Mortgage is kind of like borrowing against your own retirement savings account or securing an advance on your own paycheck. Except that with a Reverse Mortgage you are borrowing your own home equity.

    However, with a Reverse Mortgage all interest and fees and loan payments are accrued against the home equity so there are no ongoing costs associated with this loan.

    How Reverse Mortgages Work
    When you secure a Reverse Mortgage, you are able to use the money from your own home equity while also living in and retaining ownership of your home.

    A Reverse Mortgage is a special type of home loan that lets a homeowner convert the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to the homeowner in a lump sum, in a stream of payments, or as line of credit. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrowers no longer use the home as their principal residence.

    The amount you are eligible to borrow is determined by your age, current interest rates, the appraised value of your home and the amount of any existing mortgages on your home.

    Reverse Mortgage borrowers are not required to make any payments on a Reverse Mortgage as long as they reside in the home and the taxes and insurance on the home remain current.

    When the borrowers move out of the home or pass away, they or their heirs generally have 6-12 months to sell the home to pay back the Reverse Mortgages.

    And, any proceeds from the sale of the home beyond the amount owed on the Reverse Mortgage may be kept by the borrowers or their heirs. If the home sells for less than the Reverse Mortgage is worth, the borrower isn’t personally responsible for the remainder of the money—the lender takes the loss.

    --> Get Matched to a Prescreened Reverse Mortgage lender:
    https://www.newretirement.com/reverse-mortgage-marketplace.aspx

    --> Estimate Your Reverse Mortgage loan amount:
    https://www.newretirement.com/Services/Reverse_Mortgage_Calculator.aspx

  • Login to rate this answer:   Answered on 1/28/2013
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.