Alaska Reverse Mortgage

July 3, 2008 12:36 PM | Alaskan Photo Tours

Reverse Mortgages Help Older Adults Keep your home or buying a new home

For many seniors, home equity is approximately 30-40 percent of their net worth. They are often at poor and have no funds available to make repairs. If you and your spouse are both at least 62 years of age and have equity in your home, a reverse mortgage can turn that equity into tax free cash without forcing them to move or make a monthly payment. YOU DO NOT NEED A JOB AND YOU DO NOT NEED CREDIT! The age and equity are the only rating factors.

A reverse mortgage can be a financial tool if it's worth used correctly. At the same time, you could make some serious errors relating to your financial future. For example, you do not want to take your equity and run to down to the casino.

A reverse mortgage gets its name because of the way it works. Instead of the borrower's payments to the lender, the lender releases capital for the borrower in a number of ways:

A lump sum cash payment;

A monthly cash payment;

A line of credit

Some combination of the above. When the owner dies or moves away, the house can be sold, the loan paid and any surplus value can go to the equity owner live or designated heirs. The heirs do not have to sell the house. They can pay the reverse mortgage from their own funds or refinance the outstanding loan balance within six months with an option for two extensions of 90 days must be requested. Unfortunately, heirs often discourage people from getting a reverse mortgage because they are afraid of losing their heritage.

There are three basic types of reverse mortgages:

Single-purpose reverse mortgages, which are offered by some state agencies and local government and nonprofit organizations;

Home Equity Conversion Mortgages (HECMs) are insured mortgages backed by the U.S. invested Department of Housing and Urban Development (HUD);

Proprietary reverse mortgages are private loans that cover home values usually $ 600,000. Some loans are conventional loans, some are loans to property in the hands of some lenders and some are insured by the FHA. The size of a reverse mortgage is determined by the age of the borrower, the interest rate and the value of the house. The older a borrower, the more you can borrow, but the amounts are limited by the maximum FHA loan for each city and county. The amounts range from $ 200,160 in rural areas to $ 362,790 in major metropolitan areas. In Alaska, Guam, Hawaii and the U.S. Virgin Islands, the FHA mortgage limits may be adjusted up to 150 percent limit base than in the area. If the modernization of the FHA Act is passed, it may limit FHA loan will increase. This would be great as it seems that the FHA is the mortgage loan that generally provides more equity for the elderly.

Reverse mortgages have traditionally been elected by Americans who are unable to cover living expenses or who otherwise need cash for things like long-term care premiums, health services in the home, home improvements or to pay your current mortgage or credit cards than your income can support. More recently, however, have become popular with people see them as a better alternative to home equity lines. Some use the product to supplement monthly income, buying a car, travel funds and the latter residences. Evaluate with the assistance of a reverse mortgage funds financial advisor if you can use to restructure property taxes.

You will need to consult with a financial counselor before the loan is granted – which is one of the requirements. This step can be completed within the first days of the process. Closing basic loan now takes about 30-40 days from the date of application. Usually the only of-pocket cost is a commission of study ranging from $ 300 – $ 500. No advice is required to ensure that you are making the right decision for you.

Here are some other things to consider, some of these risks:

Cost: Reverse mortgages are generally more expensive than traditional mortgages in terms of origination fees, costs closing and other charges. The base of the FHA HECM loan backed by the finances of these rates in the initial loan balance, and can vary between $ 12,000 and $ 18,000. The Loans are based on early recognition value of the home of four percent per year, so if the housing market is healthy usually recover costs in a short period of time. But if the sour housing market, which will undoubtedly take longer to recover fees.

You will need to ensure that no is endangering their federal retirement benefits: The basic HECM FHA is designed as tax-free income upon receipt of their social superiors Security income. However, if your total liquid assets exceed the limits allowed by federal standards, which could jeopardize their benefits. This is another fundamental reason to work with a financial planner on this decision.

Rates: Reverse mortgages have rates that are typically higher than those charged on mortgages conventional. Interest is charged on the outstanding balance and added to the amount due each month. Again, check the total cost of annual lending.

Your mortgage can be called due and payable: The landlord or estate agent always retains ownership of the house, but if you do not pay your property taxes, maintain adequately house, pay your insurance premiums, or change your principal residence, the lender may declare the mortgage due or reduce the amount of monthly cash advances to pay the overdue amounts.

Did you know that you can use a reverse mortgage to buy a house? How do you do? Take an example: it is possible they sell you is an elderly person sells his house and 300K networks. Then you can go buy a new home for about 500K, 300K, putting down, and funding of 200 thousand with a reverse mortgage. Perhaps you would like to move a large older home of many years of a new condo or loft. This would be a great way to do it.

Talk to your children and their ignorance of this product may cause them to give bad advice. If your house is their main asset, participation in a reverse mortgage is not may leave much to the next generation – if you can see, there may be some difference that the children may have. That's why, in addition to discussing a reverse mortgage a financial adviser, older people need to talk to his family.

About the Author

Minnesota Mortgage Broker-Venture Development 952-285-4319 MN mortgage broker at my website at John Mazzara sells Minnesota real estate in the Twin Cities(Minneapolis/St Paul), MN with RE/MAX 952-887-1290 MN real estate at my website at We offer mortgage loans programs for First time buyers, investment property, refinancing & consolidation of debt

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