Unlike a conventional mortgage, where monthly payments are required, a reverse mortgage is a loan available to seniors (age 62 or above) which will be repaid when the homeowner dies or leaves or when the home is sold. A person can acquire more reverse mortgages if a property has increased in value after a reverse mortgage has been taken out. However, in the Unites States, a reverse mortgage must be the only one on the property.
So far, so good! But, how does the reverse mortgage really work? Well, people believe that the primary advantage of this type of mortgage is the fact that you get to spend the money on yourself, rather than giving it to others when you pass away. This type of mortgage is available for retired people and they see this as an opportunity for a peaceful living, with no cash or mortgage worries. It’s entirely up to you if want all the money at once or prefer to receive monthly payments.
Depending on the loaner, reverse mortgages may have some requirements, such as keeping your home in good condition. This can be a problem for people with physical problems as they can’t meet this condition and they will surely face foreclosure (the loaner can seize and sell the property if the homeowner does not make interest payments). If you intend to pass your house on to your children, you might also want to reconsider reverse mortgage as the property will be owned by the loaner after death or movement of the owner.
The amount of money you can get depends mostly on two factors: your age and your home’s values. The older you are, the more money you can get. The more your house is worth, the more you can get. You need to pay off any older debts you have on your home. You can do this before you get a reverse mortgage or you can do it with part of the money you get from the reverse mortgage. But how much are you supposed to pay back for such a loan? It’s simple. You owe the lender all the loan advances you receive plus all the interest added to your loan balance. If your home is worth more than the money you pay back, you get to keep the left over money. When you close a reverse mortgage, you have three days to reconsider your decision. Should you decide you do not want the loan, you can cancel the deal, in maximum three days after closing. You can only do this in written, filling out a special form given by the lender.
Even though reverse mortgages give you money without you making any payments, there are a series of disadvantages of reverse mortgages that you must take into consideration at all times. In most cases, you need a lot of equity to qualify for a reverse mortgage. The lender do not offer you the value of your entire house (normally, they give you between 30 and 80% of your home’s value). If you already have a mortgage on your house and the value exceeds that of the reverse mortgage, then you will have to pay the difference between the two sums using your own savings. You must always remember that reverse mortgage is a business transaction. The money you receive is not for free and it will have to be repaid at a certain point (those mentioned at the beginning of this article). Another disadvantage of reverse mortgage would be the fact that it is by far more expensive than a traditional loan. This is mainly because the lender must wait several years before receiving any payment unlike a regular mortgage where you must pay back a sum of money every month. You should carefully study the reverse mortgage pitfalls before choosing this option.
The reverse mortgage
Using a reverse mortgage calculator, you can check out just how much money you can obtain. The reverse mortgage calculator is available online and all you need to do is to type in your date of birth (and that of you co-borrower, if any), your property zip code and country, your estimated home value and the total property loans and liens. Then, press the CALCULATE button and there you go!
Reverse mortgage leads are details about potential costumers that are made available to reverse mortgage agencies. This way, the agencies are directed to individuals that are likely to become customers. But who gives out this kind of information. Mostly, these details come from internet, telemarketing and call centers but they can also come from individuals working in the field. These leads save the agencies lots of time and makes business a lot easier. It’s best to check out various lead sources and later on, choosing one reliable source.
Thanks to the global crisis, the reverse mortgage business keeps going better and better. Seniors may easily become victims of frauds as they may not pay attention to some details regarding this “excellent financial solution”. Reverse mortgages have increased more than 1,300 percent between 1999 and 2008 and fraud perpetrators have come up with ingenious plans to rip off senior citizens. According to the FBI, there have been scam reports where people were offered free homes with no payment, investment opportunities and foreclosure or refinance assistance. People are targeted using local churches, investment seminar, television, radio, billboard and even mailer advertisements. To avoid such frauds, seniors should not respond to unsolicited advertisements. They should also be suspicious of anyone “giving out” homes with no down payment. It’s important not to sign anything without fully understanding the term and conditions written in the contract. There were also same cases reported where seniors were tricked into paying for information about reverse mortgage, guidance and assistance, even though this information is absolutely free. People were contacted by phone or e-mail by financial consultants offering to help them find a reverse mortgage lender, in exchange for a fee or a percentage of the loan. Anyone can use the internet to find free information about reverse mortgages and there are even some books available on this matter. If you are a computer heavy-user and the internet is your primary source for obtaining information, you may also choose to purchase a reverse mortgage e-book which is available on Amazon for a small price.
If you are looking for a reverse mortgage job, know that it is not that easy to work in this field. Most companies will only hire financial specialist that have some background experience. This person must be aware of the importance of giving out only the best advice as they are dealing with the quality of life of several senior citizens.
The reverse mortgage
One of the largest companies that works in this field is Wells Fargo. They offer financial services, being the fourth largest bank in the United States by assets and the second largest in deposits, home mortgage servicing and debit card. Wells Fargo reverse mortgage offers a solution for comfortable retirement. Through their website, they give you access to information about how this type of mortgage works, they help you estimate your reverse mortgage potential and even let you contact a reverse mortgage consultant to find out more about your possibilities. You can also find a reverse mortgage guide which is available for download. Wells Fargo reverse mortgage is known for its transparency, helping senior to obtain full information about the services that suites them best.
Another company that offers this type of service is Florida Reverse Mortgage. Since most of the companies who offer reverse mortgage began providing these services in the last few years, Florida Reverse Mortgage has a strong point: all of their advisers have at least ten years experience working with reverse mortgage. Unfortunately, they are only available throughout the state of Florida. The company claims to be customer oriented, delivering high quality services to seniors interested in reverse mortgage. On their website, you can request more information about this service and even fill in a questionnaire that will be delivered to one of their advisers that can prepare a detailed analysis.
According to AARP (American Association of Retired Persons), there are five basic questions a senior should have in mind before considering a reverse mortgage:
1) Do you really need a reverse mortgage?
2) Can you afford a reverse mortgage?
3) Can you afford to start using up your home equity now?
4) Do you have less costly options?
5) Do you fully understand how this loan works?
By writing a booklet with all necessary information about reverse mortgage, AARP has gained the confidence of American seniors, as they are proving themselves worthy of customers’ confidence. Founded in 1958, AARP is “dedicated to enhancing quality of life as we all age”. They are committed to providing high-quality services, letting the customers in on all the details required. They even offer a glossary of reverse mortgage terms and give alternative solution to reverse mortgage.
In the end, be careful how you spend your reverse mortgage money. Seek for proper guidance and counseling before considering such a loan and be on the lookout for scams and frauds. Report anything that seems suspicious as there are a lot of people out there looking to rip you off.
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