How the housing slump can affect reverse mortgages
- Posted by admin on June 9th, 2008 filed in Reverse Mortgage Info
Question: What does the housing slump mean for all of those seniors who took out reverse mortgages? And what does it mean for their heirs? My mother is 78 and fortunately has not had to go down that path (yet). But many of her friends have. I just haven’t seen anything on any adverse effects and wondered.
Answer: Reverse mortgages allow people 62 and over to tap the equity in their homes without having to pay back the loan until they move out or die. Lenders can’t “call” or rescind the mortgage if the home’s value drops.
“Let’s say the home plunges in value . . . and the senior has actually pulled out more than the value of the home,” said real estate columnist Tom Kelly, author of “New Reverse Mortgage Formula: How to Convert Home Equity Into Tax-Free Income.” “If the owner dies, the lender can look only to the value of the home for repayment — nothing more.”
That’s the good news. The bad news is that in a poor real estate market, there may not be any equity after the loan is paid to be distributed to heirs.
Reverse mortgages aren’t for everyone, but if your mother expects to remain in her home at least five years and needs additional income, they’re worth investigating. If you’re interested in learning more, AARP has an excellent tutorial at www.aarp.org/revmort.
Found here.
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June 9th, 2008 at 1:34 pm
It is the priority of the people behind mortgage assistance companies to give mortgage clients the relief they greatly need when they are facing a foreclosure problem. A lot of people have already been given this opportunity to live comfortably although they are in a “problematic” loan.