REO Proteams: Las Vegas Real Estate News

One of the hardest hit sectors by today’s economic difficulties are the senior population and retirees. Reverse mortgages aims to give older Americans better financial security. At a time when healthcare is still being debated finding ways to help senior Americans is of the utmost importance.

With traditional Second Mortgages or HELOC’s you should first pre-qualify with their requirements. Requirements include a sufficient income to debt ratio and making monthly mortgage payments. For senior and retired Americans the prospect of making payments is just not possible with their pension.

What are Reverse Mortgages?

Reverse mortgages or Lifetime mortgages are loans designed for seniors that let them convert a portion of their home equity into cash. The funds may be released as one lump sum or multiple payments. Equity built through years of mortgage payments can be paid back to you. Unlike Home Equity Loans, HELOC’s or Second Mortgages no repayment is required until the borrower no longer use the home as a residence. Other instances includes when the owner dies, the home is sold or the owner leaves into aged care.

Reverse Mortgage Versus HELOC’s

With traditional Second Mortgages or HELOC’s you should first pre-qualify with their requirements. Requirements include a sufficient income to debt ratio and making monthly mortgage payments. For senior and retired Americans the prospect of making payments is just not possible with their pension.

Reverse Mortgages however does not require you to pay monthly mortgages. This loan is available for seniors and retirees with or without a stable source of income. The amount available depends on your age, current interest rates and most of all the market value for your home.

To qualify for a Reverse Mortgage loan one must be eligible with the following requirements:

• Borrowers must be at least 62 years of age
• The properties must be occupied as a primary residence
• The Borrower must attend an information counseling session affiliated with the Federal Housing Association (FHA)
• Property must meet FHA standards, appraisal is done
• The owner must maintain the property and pay all taxes and insurance

Disadvantages of Reverse Mortgage Loans

The main drawback for reverse mortgage loans is its high interest rates. Interest is based on the market value of the home and not the amount loaned. Reverse mortgage loans are only available for seniors and not the general population. Accrued interest payments are not tax-deductible. Expenses can only be tax-deducted once the loan is paid in full. Leaving something for your heirs may prove difficult as loans grow larger with time.

Frequently Asked Questions:

What happens when the borrower dies?

When a borrower dies before maturity of a loan the residence is sold and all proceeds pay for the loans and fees. Any remaining equity left after the sale is distributed to your heirs. Your heirs may also have the option of getting a mortgage on the property but paying the interest rates and costs must first be cleared.

What happens when the borrower outlives the loan?

If the term for the loan matures and the borrower continues to reside in the home and pays all taxes and insurance, they cannot be forced to leave.

Many senior Americans are faced with rising costs of healthcare and prospect of foreclosures. With high unemployment rates and the economic downturn today, prospects of getting a job are difficult if not bleak. The rising cost of living has left many senior Americans little options with their pensions. Taking out a loan is certainly not the best alternative for helping the elder population. But the decision in making a reverse mortgage maybe the only option for many senior Americans to live life with grace.

Reported by REOProteams

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