Video: The 5 W’s of a Reverse Mortgage

The 5 W’s of a Reverse Mortgage

Video text:

“5 W’s of a Reverse Mortgage

What is a Reverse Mortgage?
You may have heard about the Home Equity Conversion Mortgage (HECM) program, better known as a reverse mortgage, by friends and family.
A reverse mortgage allows senior homeowners (borrower) to use their home’s equity as collateral for a loan.
You retain ownership of your home and are required to keep your homeowners insurance and property taxes current.

Who qualifies for a Reverse Mortgage?
Homeowners who are at least 62 years old and occupy the home as their principal residence with substantial equity, it is advised to have at least 40%.
There are no income or credit score requirements to qualify for a reverse mortgage. (Update: Beginning January 2014, HUD will begin doing a “financial assessment” on all potential borrowers to protect the borrowers and to ensure they have the capacity to meet the obligations of their reverse mortgage loan.)

When is the Reverse Mortgage due?
Generally, the loan is due when one of the following occurs:
•The borrower sells the home.
•The borrower does not live in the house for more than 12 months consecutively.
•The borrower passes on.
•The borrower does not stay current on taxes and insurance.

Where are the Reverse Mortgage funds distributed?
The funds from a reverse mortgage are disbursed in one of four ways:
•The borrower can receive monthly disbursement over a certain term (ex. $500 a month for 60 months).
•The borrower can get a lump sum payment. (Update: Beginning Sept. 30, 2013, HUD is now limiting the amount a borrower can take out in closing. Most borrowers will be limited to 60% of total funds for the first year of the loan.)
•The borrower can have a combination of monthly disbursements, lump sum payment and a revolving line of credit. (ex. Lump sum payment of $20,000 and monthly disbursement of $250 for 60 months).
*It is important to note that money received from a loan is not considered taxable income, but it is best to consult a tax advisor.

Why get a Reverse Mortgage?
The money received from a reverse mortgage can be used in whatever way YOU choose. Pay for medical bills, home repairs or even buy a vacation home. You determine how the money is spent and you still own the home.  As long as it is your primary residence you do not have to repay the loan, just keep current on taxes and insurance.
A reverse mortgage can give you the cash you need to live comfortably in your golden years.

Thank you for watching the 5 W’s of Reverse Mortgages.
Visit our website at www.reversemortgage-blog.com or call 1-888-808-8486.”

Image courtesy of [rattigon] / FreeDigitalPhotos.net