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Here’s How to Live in Your Home Without Paying
June 13th, 2008 categories: Mortgage, Real Estate Tips
Do you own your own home? Are you at least 62 years young? Are costs today, interfering with the way you thought you would live out your life? There is no reason to scrimp and do without during the last half of your life.
You’ve worked hard, paid your bills and now it’s time to relax and not worry anymore. Let your house pay for you, now. Reverse Mortgage is the way to make this happen.
It is safe as long it is backed by FHA. Don’t be caught like Ed Mc Mann in your 80’s without a house or not have enough money for living the life you planned due to the high cost of fuel, food, medications and health care during your retirement.
This week I had the opportunity of speaking to Kimberly Keith who is handling the loan for one of my current home buyers in Cameron Park, CA. During our conversation, we discussed Reverse Mortgages and I asked Kimberly to be a guest author on Sacramento Real Estate Voice to bring her professional prospective on Reverse Mortgages. I hope that her article will help answer some of your questions about Reverse Mortgage. So, without further adieu, here’s Kimberly Keith.
Many people have heard about the Reverse Mortgage, however few really know how they work. The mystery and intrigue surrounding the reverse mortgage is being eliminated as many are becoming informed regarding the program and realize that a reverse mortgage can be a valuable tool to supplement fixed incomes and meet the dramatic increases in our ordinary, daily, living expenses.
Let me first try to dispel the rumors regarding the reverse mortgage. It is not true that you will no longer be on title to your home or that the bank will own your home in its entirety! The title and financial responsibility of the home, such as homeowner’s insurance and taxes, continue to be the homeowners’ responsibility.
Another vicious rumor is that you could actually owe more than the value of the home and that if you die you would be leaving a debt, not the asset of your home, to your heirs. Absolutely untrue!
The reverse mortgage is considered a “non-recourse loan”. What this means is that you will never owe more than the appraised value of the home at the point of sale or the time of a refinance.
The money from the reverse mortgage is also considered an alternative income and as such, is tax-free and will not affect regular Social Security or Medicare payments. It is always recommended that a homeowner consult their tax advisor or attorney regarding their specific situation. Payment of the reverse mortgage is deferred (not due) until the surviving spouse dies or sells the home. The money you receive from a reverse mortgage can be paid in a lump sum, monthly payment or a line of credit or a portion of all three. How you use the money is completely up to you!
The reverse mortgage requires owner occupancy so, in order to be in “violation” of this requirement one or both homeowners would have to be hospitalized or in assisted living for a complete 12 month timeframe. Additionally, if either came home for even one night, the 12 month timeframe would start again.
So, after explaining the truths regarding a reverse mortgage you may ask who is qualified for one? If you are 62 year or older and own your own home, you may qualify! Your age at the time of your application, current interest rates, the appraised value of the home and the type of reverse mortgage that you apply for can affect the amount of money you may obtain. Generally, the older you are and the more equity in your home, the larger the reverse mortgage may be.
The process of obtaining a reverse mortgage is easy. I can review the loan program with you and would welcome the participation of another family member, and/or financial advisor, lawyer or accountant. You are required to obtain government approved, independent and free counseling to ensure that all your questions are answered. An application is then taken and the file is sent to the investor. After credit approval, your home will be appraised and together we will meet any additional underwriting conditions. Finally, after the loan is approved and the documents are drawn, we will sign loan documents. Your loan will fund and shortly thereafter you will receive the funds agreed to and in whatever manner you have decided on.
Please know that a reverse mortgage may not be right for everyone. I promise to make sure the information regarding this program is presented to you in a clear, concise manner so you can determine if a reverse mortgage will help you be more financially secure. If you would like additional information regarding this or any other loan program, please call. I look forward to speaking with you!
Kimberly Keith Mortgage Planner
Ph: (888) 429-7714
Fax: (530) 252-1544
Thank you, Kimberly. I hope that some of the questions that you may have had about Reverse Mortgages have been addressed. If not, feel free to give Kimberly a call.
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