Is A Reverse Mortgage correct For you?

By: Robert Thomson

Lately, individuals everywhere have been touting the merits of a reverse mortgage. What they don't tell consumers is what a reverse mortgage actually is. So rather than make consumers run all over the internet looking for information on these newly popular types of mortgage, we wanted to give consumers a basic overview of what exactly a reverse mortgage is, as well as help consumers to decide whether one may be appropriate for consumers.

Comprehending Reverse mortgages -

The first thing consumers must understand about reverse mortgages is that they are exactly the opposite of traditional mortgages. Whereas a typical mortgage requires consumers to borrow a certain amount to purchase your House, which must then be repaid monthly; a reverse mortgage actually gives consumers money against the future value of your House, which consumers needn't pay back until consumers sell the House.

The traditional mortgage layout is what is known as a "rising equity, falling debt" situation; because, as consumers pay off your monthly balance, the equity consumers've accrued in your House rises and your actual debt decreases. With a reverse mortgage, the exact opposite is true. As consumers take money out of the equity in your House (what the loaner actually allows consumers to borrow against), your debt increases and your equity decreases.

Can consumers Qualify?

The greatest concerns to reverse mortgages is that not everyone qualifies. In fact, if consumers are not over the age of 62, and already own your own House, there aren't any lenders who will offer consumers a reverse mortgage. However, if consumers are over 62, and consumers either own your House outright, or owe very little on it, a reverse mortgage may be just the ticket.

The beautiful thing about reverse mortgages is that they allow consumers to spend the equity consumers've worked so hard to build up in your House while consumers are still living in it. This is fantastic news for anyone living on a fixed income who may need the extra cash to live off of today. Another great thing about qualifying for a reverse mortgage is the fact that, as long as consumers meet the other criteria of being the appropriate age and owning your House, consumers don't even have to have an income source at all to be considered.

The greatest concerns to a reverse mortgage is the fact that, should something happen to consumers before consumers sell the House consumers have borrowed against, your loved ones may be faced with a rather large lump-sum payment. The idea to get around this, is to sell your House for quite a bit more than consumers borrowed against it; thereby paying off your reverse mortgage, and allowing consumers to use the remaining balance to live on or to use as a down payment on another House.

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Rick is the writer of Flat Fee MLS Listing. You can find more information at Flat Fee MLS Listing.

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