How Reverse Mortgage Process Works

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What are common uses for reverse mortgages?

* Hospital/Healthcare Costs 67%

* Repay Existing Mortgages and Eliminating Payments 55%

* Maintaining Independence and Reducing Burden on Children 50%

* Home Improvement and Repair 50%

* Pay Property Taxes 38%

* Daily Expenses 29%

* Travel and Improve Retirement Lifestyle 14%

Here is a example how reverse mortgage works.

The reverse mortgage is based on the age of the youngest person on title and the value of your home. The examples below show the amount of cash that could be available with a reverse mortgage.

AGE HOME VALUE LUMP SUM (OR) MONTHLY INCOME

68 $300,000 $181,950 (Tax Free) $1,151 (Tax Free)

72 $400,000 $229,884 (Tax Free) $1,390 (Tax Free)

How Reverse Mortgage Works?

First of all, most of reverse mortgages are provided by the federal government through their HUD/FHA programs, and they are known as HECM's. This acronym stands for 'home equity conversion mortgage'. Reverse mortgage loans enable seniors to convert their home's equity into cash, tax free, while retaining the ownership of their home.

The reverse mortgage loan is more complex to conclude in comparison to a traditional mortgage. There are a number of different policy, terms and rules surrounding this reverse mortgage loan. One of the criteria is the age limit, and also the condition of the home itself. Before the bank make a consideration of the application, the home has to be in good shape and condition, with no major faults.

A reverse mortgage must be the first and only mortgage on the property. Therefore, if there is an existing mortgage, it must be paid off with some of the proceeds from the reverse mortgage. As the home appreciates and the borrower grows older they may qualify for more money, and the reverse mortgage may be refinanced to borrow more against the increased equity.