The Truth About Reverse Mortgage Information

If you've ever thought about financing a reverse mortgage but are scared because of all the negative information about reverse mortgages out there today, then you will want to read this article. As with anything on the web, there is a lot of misinformation. Whether it's from poor research or motivation to sell something, I can't be sure. What I can be sure of is the reverse mortgage facts.

One of the best things about reverse mortgages is their lack of requirements. Unlike a traditional mortgage, such as a 30-year fixed loan, a reverse mortgage has very few requirements. For a traditional mortgage, you must qualify based on your income, assets, employment, and credit. There are no income, asset, employment, or credit score requirements for a reverse mortgage.

To get a reverse mortgage, there are only four areas the bank will consider: your age, equity, location, and government loan history. You must be 62 or older to qualify for a reverse mortgage, no exceptions. This is why this loan is known as a "senior loan" because you must be a senior to get one.

The other important qualification is the equity in your home. You must have substantial equity to start the reverse mortgage info. If you have a mortgage and you only have a quarter of your home's equity, you cannot get this loan. Typically, you can only have a small lien on your home. Therefore, if your home is unpaid and you have a large existing lien, you will not qualify for a reverse mortgage.

The bank will also need to appraise the home and make sure it has not defaulted on a previous government loan. If you have defaulted on a government loan, your reverse mortgage application will be denied.

The benefits are many. Like all loans, the reverse mortgage was developed to meet a need in the marketplace. Upon retirement, many older people find themselves in an uncomfortable position with more time to spend but less income. Most have fixed income from pensions, investments and the government. They look for alternatives and the best is usually equity in their homes.

Unlike a traditional mortgage, when you get a reverse mortgage, you don't have to make monthly payments to the bank. This is great for homeowners who have limited income, but would like to take out some of their home's equity without having to pay it back every month.

A reverse mortgage allows the homeowner to obtain a lump sum or receive monthly payments for a specified period of time or for the life of the homeowner. It can also be configured as a line of credit. The loan does not need to be repaid to the bank until the owner moves in and sells the house or in the event of death. This is the biggest benefit of this type of loan.

When you finance a reverse loan, you continue to retain the title just as you did with your traditional mortgage. This is the biggest myth on the web; that the bank owns the house. These loans are made through HUD's Federal Housing Administration and have strict guidelines to protect the homeowner.