You've probably heard a little something here or there about reverse mortgages, but if you're like most Americans, you probably don't know too much about them. The reverse mortgage is a great financial tool for retirement because it offers the ability to eliminate mortgage payments and provide extra cash to pay off other bills, do home repairs, or provide extra income for retirement.
What is a Reverse Mortgage?
Though there have been a variety of reverse mortgage products available in recent years, the most common one is the Home Equity Conversion Mortgage, or HECM, which was signed into law by President Reagan in 1988 and is regulated and insured by the Federal Housing Administration.
If you know somebody who got a reverse mortgage in the past few years, chances are it was an HECM.
A reverse mortgage is a home loan, but it's better to think of it as a retirement planning tool because it creates a means to convert home equity - which is often the biggest source of wealth a retiree has - into cash that can be for extra income, paying bills, and getting rid of house payments.
How Does the HECM Work?
A HECM works exactly opposite a regular mortgage. Instead of the loan balance gradually going down over time as payments are made, with a HECM, payments are gone altogether and accrued finance charges are added to the loan balance over time. This is how home equity is gradually converted over time into cash that can be used for whatever you need.
With a reverse mortgage you can take monthly distributions for life, get rid of your mortgage payment, take a lump sum of cash, or establish a line of credit that you can access whenever your cash needs dictate.
The following are a few highlights of the HECM reverse mortgage:
1) No monthly payments required. 2) You can live in your home as long as you want regardless of how high the loan balance gets. 3) The loan doesn't need to be paid back until the last borrower passes away or moves out of the house. 4) You can never owe more than the value of the home. 5) The Federal Housing Administration regulates and insures the HECM reverse mortgage. 6) Loan proceeds are generally non-taxable. 7) You keep title to your house and are free to pass it on to your heirs. 8) You are free to repay the loan at any time with no prepayment penalty.
All that's required of you is that you maintain the property, live in it as your primary residence, and keep up on your property taxes and insurance. As long as you do this, the loan is not due and payable until the last borrower passes on or no longer lives in the home.
The following are the basic HECM eligibility requirements. You must:
1) Be 62 years of age or older. 2) Live in the home as your primary residence. 3) Not be delinquent on federal debts (like income taxes).
No credit or income qualification is required (though lenders may pull a credit report to check for tax liens, judgments, etc.). In fact, you can have terrible credit and be in foreclosure and still potentially get a HECM.
A Great Retirement Option
As we've explained, a reverse mortgage is a phenomenal retirement planning tool because it can be used to pay off other debts, eliminate mortgage payments, or provide extra retirement income. It's not necessarily the right mortgage for everybody, for the right person, it's a great mortgage option.
What is a Reverse Mortgage?
Though there have been a variety of reverse mortgage products available in recent years, the most common one is the Home Equity Conversion Mortgage, or HECM, which was signed into law by President Reagan in 1988 and is regulated and insured by the Federal Housing Administration.
If you know somebody who got a reverse mortgage in the past few years, chances are it was an HECM.
A reverse mortgage is a home loan, but it's better to think of it as a retirement planning tool because it creates a means to convert home equity - which is often the biggest source of wealth a retiree has - into cash that can be for extra income, paying bills, and getting rid of house payments.
How Does the HECM Work?
A HECM works exactly opposite a regular mortgage. Instead of the loan balance gradually going down over time as payments are made, with a HECM, payments are gone altogether and accrued finance charges are added to the loan balance over time. This is how home equity is gradually converted over time into cash that can be used for whatever you need.
With a reverse mortgage you can take monthly distributions for life, get rid of your mortgage payment, take a lump sum of cash, or establish a line of credit that you can access whenever your cash needs dictate.
The following are a few highlights of the HECM reverse mortgage:
1) No monthly payments required. 2) You can live in your home as long as you want regardless of how high the loan balance gets. 3) The loan doesn't need to be paid back until the last borrower passes away or moves out of the house. 4) You can never owe more than the value of the home. 5) The Federal Housing Administration regulates and insures the HECM reverse mortgage. 6) Loan proceeds are generally non-taxable. 7) You keep title to your house and are free to pass it on to your heirs. 8) You are free to repay the loan at any time with no prepayment penalty.
All that's required of you is that you maintain the property, live in it as your primary residence, and keep up on your property taxes and insurance. As long as you do this, the loan is not due and payable until the last borrower passes on or no longer lives in the home.
The following are the basic HECM eligibility requirements. You must:
1) Be 62 years of age or older. 2) Live in the home as your primary residence. 3) Not be delinquent on federal debts (like income taxes).
No credit or income qualification is required (though lenders may pull a credit report to check for tax liens, judgments, etc.). In fact, you can have terrible credit and be in foreclosure and still potentially get a HECM.
A Great Retirement Option
As we've explained, a reverse mortgage is a phenomenal retirement planning tool because it can be used to pay off other debts, eliminate mortgage payments, or provide extra retirement income. It's not necessarily the right mortgage for everybody, for the right person, it's a great mortgage option.
0 komentar:
Posting Komentar