A reverse mortgage is a kind of home loan that allows you to convert a portion of the equity you have in your home, into cash.
What is a Reverse Mortgage?
But, a reverse mortgage is different from a traditional home equity loan because it doesn’t have to be repaid. That is, not until the borrower no longer lives in the home. In addition, you may want to check out the FHA’s HECM when purchasing a home. This may be a viable option for those looking for another alternative when seeking a home.
Different Kinds of Reverse Mortgages and Are Reverse Mortgages Regulated and Safe?
First, there is the FHA Reverse Mortgage. This is the most common type of loan made and works well for homes that price up to $300,000.
Then, there is the Conventional Reverse Mortgage. This type of loan works best for homes in the price range: $300,000-$500,000 and borrowers 75 years old and older.
Next, is the Jumbo Loans—Jumbo loans work well for homes that are $500,000 or more.
More Information on Reverse Mortgages
Are reverse mortgages regulated and safe? Let’s take a look. Your monthly income check that comes as a result of a reverse mortgage, in most cases, is guaranteed by the FHA. The FHA also guarantees that you can stay in your home as long as you want. There is also a guarantee that those who inherit your estate will never owe more than the net proceeds of the sale of your home. All other assets are protected.
Other facts about reverse mortgages that you need to know are: the borrower is not required to have a good income or have acceptable credit. In addition, money that is received is considered to be loan proceeds; therefore this loan is not taxable. Also, benefits that are received from Social Security and Medicare are not affected by this loan.
Before signing up for any reverse mortgage, do some investiation and compare the plus and minus factors. However, when it comes right down to it, Reverse mortgages are safe and may be safer than a regular home mortgage. That is due in fact because safeguards for the reverse mortgage have been put in place by the National Reverse Mortgage Lenders—NRMLA. Visit their site for more information of lenders who meet their approval.
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