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It can be. With a Reverse Mortgage you are using your home as security for a Debt that is increasing over time. When you want to sell it you have to come up with enough money to cover the outstanding Balance (up to the value of the home). If you do not, then you forfeit the Property.
A reverse mortgage is a loan against the equity in your home that you don't need to pay back for as long as you live in the home. However, the homeowner must have a good understanding of the possible consequences.
The mortgagor is not required to make any payments, rather the bank pays the homeowner. The home is owned by the bank upon the death of the mortgagor and the transaction is structured so that the loan amount will not exceed the value of the home at that time. That feature should raise a red flag. That means the homeowner isn't given the fair market value of the property initially because the bank must figure in the interest over the possible life of the loan.
This type of mortgage has higher up front fees than conventional mortgages (as high as $15,000) and a rapidly growing balance as the mortgage matures. This is an important factor to consider because the mortgage must be paid in full if the owner decides to sell the property or if their heirs desire to keep it after their death. Especially troublesome is the fact that many reverse mortgage lenders will send a loan officer to the senior's home to sign the loan documents and the senior has no benefit of having another pair of eyes and ears present at the transaction.
I recently encountered a reverse mortgage under which the borrower was given $60,000 and less than five years later the amount owed was $105,000. She answered one of those misleading "let your home pay you" ads and a loan officer visited with all the documents ready for signing.
There are an increasing number of stories of seniors losing their homes to reverse mortgage transactions because they cannot afford the taxes and upkeep, in spite of the reverse mortgage payments they receive, and they owe too much to the bank to pay off the reverse mortgage so they can sell the property.
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What is the Maximum LTV for a reverse mortgage Is it based on an appraisal can the current mortgage vbe wrapped around within the reverse mortgage and be paid off to the current lender?
The Maximum amount (called the principle limit) is based on 3 things. 1: age of the youngest applicant. The older you are the more you get from the proceeds. 2: Home Value- the more valuable the home (up to the lending limit of $625,500 the more proceeds are available) 3: Interest Rates - Anytime the expected rate is greater than 5.50% less proceeds will be made available What is a Reverse Mortgage? A Reverse Mortgage is a financial instrument available for seniors 62 years or older. A regular mortgage requires the borrower to make a monthly payment that generates equity; a reverse mortgage does the opposite by paying you either a monthly payments or one lump sum from your home's equity. The owner of the home retains title and full ownership of the home and repayments of the loan are deferred until after the senior permanently vacates the home. A Reverse Mortgage is a loan, but in reverse. You retain title, and ownership, with full control of your home. When you do a Reverse Mortgage you will never be forced from your home since there is no time limit with the loan. The Federal government guarantees all Reverse Mortgages. There are no personal liabilities to you or your heirs. Repayment is due after all homeowners permanently vacate the home. The money you receive from the lender with be tax free, and never required to pay any of it back, even if the home value drops below the loan payment. A Reverse Mortgage will not affect the appreciation of your home. Your home may or may not continue to increase in value. You receive the money from a Reverse Mortgage, by way monthly payments, lump sum or even a line of credit; or a combination of the three. The amount of money you receive from a Reverse Mortgage depends on few factors, your age, appraised home value, interest rates, and the location of the property. The older you the more money you get from a Reverse Mortgage. The funds you receive from a Reverse Mortgage can be used for anything you want, it's your money.
How do you buy a reverse mortgage home?
There are a few Reverse Mortgage products that can be used to buy homes. The FNMA Homekeeper is one of them. You have to put down a hefty downpayment, say 50% or more. Lenders have their own overlays on how much you have to use as a downpayment. From there you apply for the FNMA Homekeeper loan like any other real estate loan. The nice part is that you have no mortgage payments! Typically if a senior currently owns a home and wants to sell and buy elsewhere, if you have ample equity in your existing home, you can take out a home equity line of credit (cheaper than a new 1st mortgage) and use that equity for the downpayment for the new home. You than could use the large downpayment for the new home purchase using the FNMA Homekeeper reverse mortgage. Than sell your existing home after the new home purchase. Another way is to take a regular reverse mortgage out on your existing home, and use that money to plunk down on the new purchase and use the FNMA Homekeeper loan to purchase the new home, than sell your existing property. Make sure and check with individual lender rules on how many outstanding Reverse mortgages you can have at one time. Best of luck.
Where can one find a reverse mortgage calculator?
It may help to contact your bank, building society or money service provider. Another way of finding a reverse mortgage calculator is to visit "Reverse Money Calculator" website.
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What are pros and cons of reverse mortgage?
I know that it is a way for people who have built equity in their home when it is paid off to get money for living expenses etc. Like for elderly people with medical bills etc. If they have no other income and need the money. It is like taking out another mortgage again, because then the home isn't really paid off any more. When they decide to sell the home, money will be owed on it again.
How can I use the reverse mortgage formula to make more income?
If you do a reverse mortgage you should be able to refinance your home and have lower monthly payments that way you can have more money for the rest of your bills!
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And I long for you to appear After losing your way Across star-riddled skies To carry you home And I long for you to appear After losing your way Across star-riddled skies To carry you home I cherish my loss, A gentle reminder That life is unkind At the best of times (ouuuuuuu, ouhoouuuuuuu) And I long for you to appear After losing your way Across star riddled skies To carry you home I cherish my loss, A gentle reminder That life is unkind At the best of times (Brace yourself, 'cause I think I'm falling for you) (Wake up into the sky) Home can be anywhere When I am holding you (x8)
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How can one obtain financial freedom through a reverse mortgage?
A reverse mortgage is simply a loan on the house that the homeowner has to pay back once they leave the home. There really is no way to obtain financial freedom from one being that the person has to pay it back.
What is the Maximum LTV for a reverse mortgage Is it based on an appraisal can the current mortgage vbe wrapped around within the reverse mortgage and be paid off to the current lender?
The Maximum amount (called the principle limit) is based on 3 things. 1: age of the youngest applicant. The older you are the more you get from the proceeds. 2: Home Value- the more valuable the home (up to the lending limit of $625,500 the more proceeds are available) 3: Interest Rates - Anytime the expected rate is greater than 5.50% less proceeds will be made available What is a Reverse Mortgage? A Reverse Mortgage is a financial instrument available for seniors 62 years or older. A regular mortgage requires the borrower to make a monthly payment that generates equity; a reverse mortgage does the opposite by paying you either a monthly payments or one lump sum from your home's equity. The owner of the home retains title and full ownership of the home and repayments of the loan are deferred until after the senior permanently vacates the home. A Reverse Mortgage is a loan, but in reverse. You retain title, and ownership, with full control of your home. When you do a Reverse Mortgage you will never be forced from your home since there is no time limit with the loan. The Federal government guarantees all Reverse Mortgages. There are no personal liabilities to you or your heirs. Repayment is due after all homeowners permanently vacate the home. The money you receive from the lender with be tax free, and never required to pay any of it back, even if the home value drops below the loan payment. A Reverse Mortgage will not affect the appreciation of your home. Your home may or may not continue to increase in value. You receive the money from a Reverse Mortgage, by way monthly payments, lump sum or even a line of credit; or a combination of the three. The amount of money you receive from a Reverse Mortgage depends on few factors, your age, appraised home value, interest rates, and the location of the property. The older you the more money you get from a Reverse Mortgage. The funds you receive from a Reverse Mortgage can be used for anything you want, it's your money.
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