Stephanie Asks… My parents are looking at a Reverse Mortgage… Im worried, is this a good idea for them?

Good Question, especially in today’s market. Don’t be worried – just make sure you have the facts! Most reverse mortgages are made by the Federal Housing Administration’s Home Equity Conversion Mortgage program. It provides insured protection of reverse mortgage loans made by private lenders and is available when the youngest homeowner is at least 62 years old and has substantial equity. FHA is part of the U.S. Department of Housing and Urban Development.

Reverse mortgages are great for seniors ( the youngest homeowner must be 62) as they will be relieved of making the payments… and might actually receive and income on a monthly basis –  it works similar to  an annuity. They can also obtain the money in a lump sum for home improvements, maintenance and repair.

This freedom allows the children of senior parents to help them stay in their homes, have their independence and not be financially dependent on their kids.  While homeowners with reverse mortgages are freed from mortgage payments after taking out the loans, they remain liable for property tax, home insurance and maintenance expenses.

The costs are higher on a reverse mortgage than a traditional mortgage and mortgage insurance is required. The homeowner never relinquishes ownership and title does not transfer. At the time the homeowner is no longer living in the property, the loan does become payable within 6 months. The heirs can sell the home at that time and receive any proceeds from the sale. If the loan balance is higher than the value of the home, then the heirs do not have to repay the bank the deficiency balance!

It’s a WIN / WIN for the right borrower and their families.

Meet Cheryl!

About Cheryl

As a successful business owner and community leader, Cheryl Braunschweiger is known and respected for getting things done with a degree of skill and enthusiasm that bring out the best in those around her - colleagues, clients and friends. The name of her business, ALMC Mortgage, reflects Cheryl's philosophy and personality. She says it stands for All Loans Must Close –a reflection of her determination to do whatever it takes to serve her clients. Cheryl has been in the mortgage lending business for 20 years. Read More About Cheryl
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