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Reverse mortgages tap home equity without selling the home |
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Senior homeowners across the nation are now turning to a new source for cash income - their home. From paying for home repairs, home health care or medical expenses to paying off an existing mortgage or credit card debt, reverse mortgages are providing the means for seniors to move forward in life.
With a reverse mortgage, homeowners at least 62 years in age are now able to capitalize on equity built up in their homes. Unlike traditional home equity loans, a reverse mortgage does not have to be repaid until the borrower(s) no longer lives in the home as their primary residence.
The amount of money available to the borrower is typically determined by the value of their home, current interest rates and the age of the borrower(s). The older the borrower, the more money they will be able to receive.
Proceeds from the loan can be received in several ways: a lump sum payment, equal monthly payments, establish a line of credit, or a combination of these three options. Based on the homeowner’s specific needs, the borrower has the luxury of selecting how they will receive the funds. The most popular form of disbursement is the line of credit option. Under the reverse mortgage program, the unused funds in the line of credit actually increase over time via an annual growth rate.
There are many who question the safety of reverse mortgages. And while reverse mortgages are not for everyone, numerous consumer safeguards are built into the program. The homeowner always maintains ownership of the home and their name remains on the title.
Reverse mortgages are also non-recourse loans, which means that neither the borrower nor the heirs can ever owe more than the current market value of the property when the loan becomes due. No assets other than the home will be used to repay the loan, and any equity remaining after repayment belongs to the borrower or heirs.
According to statistics collected by the industry, more than 180,000 reverse mortgage loans have been originated to date with current fundings approaching over 50,000 per year.
If you are interested in learning more about a reverse mortgage, contact Scott Makay of Lakeland Mortgage. A donation will be given to the Minnesota Senior Federation for every reverse mortgage he writes for a member of the Minnesota Senior Federation. Makay can write mortgages for anyone in Minnesota. He can be reached at 800/873-1987.
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