Tools to Help Seniors Understand Reverse Mortgages
By: Fabiola Grosshan
Submitted: 2010-06-03 06:26:27 | Word Count: 434
The number of lenders or reverse mortgage companies has declined over the last couple of years, as the risk to lenders has increased if they do not enter into FHA-backed reverse mortgages. Tested both in courts and in the halls of government, the rules protecting reverse mortgages have been proven to be strong enough to protect seniors that choose to take out an investment on their home.
A reverse mortgage is simple loan vehicle designed especially for seniors. Reverse mortgages have been around for 30 years and are offered by various reverse mortgage companies. Only seniors age 62 and older qualify for the program, which is intended for those seniors who own their homes. The basic principle is that seniors should be able to use the remaining equity in their primary residence before death. The loan amount is never repaid, and the senior can choose how to receive the money (as a monthly payment, lump sum or line of credit).
[ advertisement ]
Some seniors use the reverse mortgage like a home equity line of credit that does not need to be repaid; others repay it from time to time to keep the balance where they want it. This gives them a renewable nest egg to use for the things they feel are important. Because the rules of a reverse mortgage have changed, the FHA and other reputable lenders have developed a reverse mortgage video that includes the real facts about these mortgages, not the hype that exists to make reverse mortgage look like a cheap sales gimmick. The video is very straightforward and discusses the rules and process of securing a reverse mortgage, as well as how to find a certified FHA reverse mortgage lender.
Another aid in understanding and validating reverse mortgages is a reverse mortgages calculator. States like Massachusetts and California all advertise different reverse mortgage rates, and knowing the interest rate on a loan (adjustable or fixed) can make a big difference in the performance of the loan. Seniors should seek out these calculators (most of them are online) and enter in a few simple points about their homes. These reverse mortgage calculators should never ask for personal information or social security numbers; they should only request general information about your age, zip code and the value of your home. The calculator will do the rest to give you an idea of what you can expect in a loan amount.
