What is a Reverse Mortgage?
The term reverse mortgage may have you wondering exactly what is different about this type of mortgage loan. It has a different structure than a standard mortgage, and the process of getting one is different from a traditional mortgage loan. There are guidelines for borrowers who wish to obtain a reverse mortgage in the state of Utah. Reverse mortgages are mortgage loans that make payments to the borrower, either monthly, in a lump sum or as a line of credit, rather than the borrower making payments to the lender. There are some important facts that potential borrowers should know before signing up for a reverse mortgage.
The Basics of a Reverse Mortgage
Some of the candidates that would consider a reverse mortgage include those who are retired or considering retirement, but feel the pinch of having bills and costly prescription medicines weighing them down. Many retirees are still working part-time jobs. Joblessness is on the rise along with inflation, so some who are of retirement age are looking for other ways to access cash, and using the equity in their home is often the easiest way to do it. There are regulations and guidelines put into place by HUD to ensure that these loans are structured properly, and that any borrower who is interested gets the proper counseling on reverse mortgages before signing their name.
Getting the Facts on Reverse Mortgages
Reverse mortgages were designed back in the late 80′s which was a very different time with different economic dynamics. At that time, the reverse mortgage was geared to help the homeowner stay in their home, without the concern of being upside down in their mortgage. This is exactly the opposite of what so many other homeowners are facing today, with only short sale or foreclosure as an option.
While there is plenty of information available on reverse mortgages, there are also many opinions. It is easy to see why there is so much confusion because it is a very unique concept. Again, homeowners can rest easy knowing that these mortgages come with limits to ensure that our seniors are not taken advantage of. Rates and fees are all watched closely in the state of Utah. Reverse mortgages also have certain lending limits; meaning no matter what the home is worth the loan amount cannot be more than a specified amount. The amount of equity that can be accessed out of the home will then be determined.
The Reverse Mortgage Solution
With that talk of privatizing social security and the uncertainty as to whether or not it will even be available for those who are planning to retire soon, a reverse mortgage can be a good option. The global economy is struggling, and there is no way to predict when it will sustain itself. Just think, with a reverse mortgage you stay in your home and access the cash tax free. The cash is there for the homeowner to decide what they need to do with it. The reverse mortgage also allows homeowners to decide if they wish to receive their money as a line of credit, monthly payments, one lump sum, or a combination of these. Homeowners only need to be age 62 or older in order to qualify. There are no income or credit requirements with a reverse mortgage, but homeowners will need a portion of equity in their home, which varies according to the age of the borrower.
