Is a reverse mortgage right for you?  

Reverse Mortgages are not for everyone, but everyone 62 years or older should know what a reverse mortgage can do for them. Reverse mortgages offer a unique way to move forward into your retirement with extra income. Reverse mortgages can help homeowners who are "house-rich-but-cash-poor" remain in their homes and still meet their financial obligations.

Seniors

Seniors who live on a fixed income may be concerned that their retirement savings and Social Security income may not be enough to keep up with the rate of inflation. Seniors Equity Loans & Reverse Mortgages are usually not repaid until the homeowner decides to sell their property or moves into care. Seniors who rely on public assistance need to research the impact reverse mortgage payouts may have on their benefits. The AARP Foundation provides assistance and information to seniors in need. Rising home values, larger sales forces, and increased consumer acceptance of these loans designed for senior citizens has fueled the growth, according to the National Reverse Mortgage Lenders Association.

HECM

HELOC interest rates are usually based on the prime lending rate and are therefore often higher than the FHA monthly HECM, which is based on the one-year constant maturity. As of February 2007 the federal cap of 275,000 HECM loan guarantees had been issued since the program's inception in 1989. New data from HUD reveals that more than 300,000 seniors have used the federally-insured Home Equity Conversion Mortgage (HECM) loan program to convert the equity in their home into cash without having to move. With a Home Equity Conversion Mortgage (HECM), federal law limits the maximum amount that can be paid out. The primary drawback to HECMs is that the maximum loan amount is limited.

FHA

The Federal Housing Administration developed the FHA HECM senior reverse mortgage program in 1989 to help keep senior homeowners right where they are, safe and secure, in their own homes for as long as possible. Senior homeowners age 62 and older can use FHA-insured reverse mortgages to convert the equity in their homes into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the homes. Homeowners who meet the eligibility criteria can complete a reverse mortgage application by contacting a FHA-approved lending institution such as a bank, mortgage company, or savings and loan association. Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining, and are currently living in the home are eligible to participate in FHA's reverse mortgage program.

Reverse mortgages do have upfront costs, just like a regular mortgage. Reverse mortgage lenders may require repayment if you do not pay your property taxes, keep the home in good repair, have homeowner's insurance on the property or if you rent out part of your home, add a new owner to the title of the property, the zoning of your home changes or you take out any new debt in which the home serves as collateral. Reverse mortgages are becoming more and more popular, and all senior citizens should understand how they work in order to make the right financial decisions.

About the Author

Who is John B Galt? John B Galt is an avid writer and frequent contributor to thefreshest.info for more info about reverse mortgages visit www.thefreshest.info/reverse_mortgage