Reverse Mortgage Loan Blog

Millions of Baby Boomers who are have either retired or are approaching retirement have had something of a rude awakening regarding their financial security. Even those who were careful about setting money aside in retirement accounts, or had worked for years in anticipation of having a pension there to fund their later years are not in the healthy financial condition they had expected.

But millions of them may also have one asset which they never even think about as a means of funding their retirements, because they don’t understand that it is a case of “having their cakes, and eating them too.” That asset is their homes, if those homes have been completely, or nearly, paid for.

Homeowners over the age of sixty-two who live in the same residence more than six moths of every year are eligible for a reverse mortgage, which will allow them to borrow a percentage of their home’s appraised value, receive the money as a single sum of cash, in monthly installments, or as advances against a line of credit.

But the genius of the reverse mortgage as a means of funding your retirement is that you are never in any danger of losing your home, because you do not have make payments on the reverse mortgage until you leave your home for good or sell it. At that time, a balloon payment of your principal and accrued interest becomes due.

If your home sells for more than the balloon payment, you keep the difference; if it does not, you only pay back what the home sold for and the lender gets the balance from insurance. A reverse mortgage, in other words, lets you stay in your home while giving you money to help fund your retirement.

You will be expected, under the terms of your reverse mortgage, to maintain your home to acceptable standards, pay your property taxes, and have homeowner’s insurance. You will simply behave as if it were your home, because it will be.

When you apply for a reverse mortgage, the amount of money which you can borrow will depend on a number of factors, including your age, how long you can expect to remain in your home, the originator of your reverse mortgage loan, and the appraised value of your house. You’ll have to pay an application fee to cover the costs of an appraisal and any required inspections. But your credit history is never considered.

The interest rates on .reverse mortgage loans are comparable to those of traditional mortgages, with The Freedom Financial Cash Account reverse mortgages, which are available for high-end homes appraised at $500,000 or more running min the spring of 2007, at a little over 6%.

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