Shedding Some Light on Reverse Mortgages

Today, reverse mortgage lenders can offer a beneficial financial program to seniors. This program is not for everyone, though, so it is important seniors do their due diligence before moving forward with this plan.
A reverse mortgage is counterintuitive to many. To many of us, it is a common notion to purchase a home and over the next 15 or 30 years, we make payments until that wonderful day when we receive the deed and title paid-in-full. If you are like most Americans, it has taken 30 years to get to the point where the home you now live in is actually owned out right and clear of any debt. A reverse mortgage requires that you are 62 years or older, so not everyone can take advantage of this program.
The idea of a reverse mortgage is actually simple for seniors. If your home is paid off, it has a certain market value. If you were to die or sell that home for any reason, you would receive the current market value of your home. Supporters of a reverse mortgage argue that it makes sense to give seniors that money now, rather than wait until the home is sold at some time in the future. A reverse mortgage basically pays you that amount in a lump sum, a monthly payment or a line of credit.
Now many seniors assume that if they are receiving this sum of money for their home, they must be turning over the deed or title to reverse mortgage lenders. Actually, this isn’t the case. A better analogy is that they are taking out a new loan on the home that terminates when they leave the home or die, but like a normal loan, they retain the title and deed.
It is true; there are some scams unreputable reverse mortgage lenders may try to pull off. When applying for a Massachusetts reverse mortgage, seniors need to be well informed, but this is true for every state. In fact, the Federal Housing Authority (FHA) verifies qualified reverse mortgage lenders. So it’s up to the borrower to be educated. The FHA requires borrowers to complete counseling on a reverse mortgage before completing an application. If you are thinking about benefitting from a reverse mortgage New Hampshire offers counseling from Fannie Mae, FHA, and AARP for seniors.

This entry was posted on March 10, 2010 at March 10, 2010 and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed.