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What is a Reverse Mortgage?
A reverse mortgage is a loan that is based upon the equity in
your home. This loan does not have to be repaid until you either
sell your home or permanently leave your primary residence. If
you or your spouse is 62 or older, you can qualify for this mortgage.
There is no income qualification and no monthly Mortgage payments.
What Types of Reverse Mortgages Are There?
There are two main types of Reverse Mortgages:
- Federal Housing Authority ( FHA)
- Fannie Mae
How Much Money Will I be Eligible For?
How much you (the borrower) will be eligible for depends primarily
upon three factors:
- The age of the youngest borrower
- Value of the home
- Current Interest Rates
How Can I Receive My Money?
- Cash Lump Sum
- Monthly Payments (for as long as you live in the home)
- Line of Credit
What Can I Use The Money For?
The proceeds from your Reverse Mortgage can be used for whatever
you wish. For example:
- Home Repairs / Maintenance
- Home Health Care
- Car Repairs or purchase of new one
- Pay off credit cards
- Taxes
- Pay off existing mortgage
- Grandchild's Education
- Travel
- Down payment on second Home
How Safe Are Reverse Mortgages?
Reverse Mortgages are very safe. Why?
- FHA and FannieMae guarantee the payments that are made to
you
- They also guarantee you can stay in your home as long as you
like AND
- You (the Borrower) will never owe more than your house is
worth
Reverse Mortgage Facts
- There is no repayment of any kind during the life of the
loan until the home is sold or you permanently leave the residence
- The Borrower does not have to income or credit qualify
- The proceeds are treated as tax-free income
- You pay the interest at the time the loan is repaid - not
during the loan
- At the time the loan becomes due the payable, your heirs can
either choose to repay the loan and keep the house, or sell
the home and repay. Heirs will also receive the remaining equity,
if any, after the sale of the home
- Loan does not become due and payable until the last surviving
borrower passes away, sells the home or permanently leaves the
residence
- Homeowner must continue to pay property taxes, homeowner's
insurance and maintain proper upkeep of the property. These
items may be paid from growing line of credit account within
the loan
Common Myths About The Reverse Mortgage
The lender will own your home.
*FALSE*
True: You retain the title to your house.
The lender does not take control of the title.
My heirs will be responsible for repayment of the loan.
*FALSE*
True: The Reverse Mortgage is a Non- Recourse Loan.
This means that the lender can only derive repayment of the loan
from the proceeds of the sale of the property. Your heirs, friends
or even your spouse will not be responsible for the repayment
of the loan.
Reverse Mortgage Interest Rates
Reverse Mortgages charge interest at an adjustable rate. That
means the interest rate you are charged can change periodically.
This does NOT affect the amount o money you receive: rather this
only affects the amount that you will be required to pay back
when the loan becomes due and payable. The loan amount is based
upon a percentage of your equity now plus future appreciation
of your property.
Reverse Mortgage Closing Costs
You will incur closing costs and fees when you close on your
Reverse Mortgage. Almost all of these can be financed in the amount
of the loan.
Hud Counseling
You (the borrower) will be required to attend a HUD (Dept. of
Housing and Urban Development) counseling session during your
Reverse Mortgage process. This counseling may also be available
be phone in some cases.
To learn more about Reverse Mortgages call 314-205-2900
and speak with one of our loan professionals
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