Category Archives: Reverse Mortgage

Are Reverse Mortgages a Good or Bad Idea / Legal / Taxable / Only for Seniors / Safe? Loans (2012)

A reverse mortgage, also referred to as a Home Equity Conversion Loan, is a financial instrument that allows seniors to access the equity in their home without income or credit qualifications. Seniors must be a minimum age (country-specific), live in their own home, and have equity in it. The important distinction between a reverse mortgage and a conventional mortgage is that there are no principal or interest payments required on the home while the borrower occupies the property. In the case of two borrowers being on title, should one permanently leave the property due to a death or hospitalization, the other borrower continues to remain in the home. Repayment is only required if the borrower sells the home, or moves out of the property for more than 365 consecutive days.

In a conventional mortgage, the homeowner makes a monthly amortized payment to the lender; after each payment the equity increases by the amount of the principal included in the payment, and when the mortgage has been paid in full, the property is released from the mortgage. In a reverse mortgage, the home owner is under no obligation to make payments, but is free to do so with no pre-payment penalties. The line of credit portion operates like a revolving credit line, so a payment in reduction of a line of credit increases the available credit by the same amount. Interest that accrues is added to the mortgage balance. Additionally, with the line of credit option comes a feature known as the creditline growth rate, a particularly attractive feature not found in a traditional Home Equity Line of Credit. Funds left or returned to the line of credit are subject to the creditline growth rate which allows borrowers to gain on the unused funds. So, for example, if the borrower has been approved for 0,000 and uses ,000 of that amount, they will accrue growth on the ,000 balance. Assuming the interest rate is 6% the creditline will grow to ,500—a gain of ,500.

As with any mortgage, title to the property remains in the name of the homeowners, to be disposed of as they wish. As with a conventional mortgage, the title is encumbered by the security interest the bank has in the reverse mortgage. If a borrower does not make full monthly payments to cover the interest, that interest is capitalized (added to the principal). In the event that the interest accrues to a point that the amount owed is less than the home’s value the borrower may stay in the home and FHA will cover any loss to the lender or borrower.

A reverse mortgage may be refinanced if enough equity is present in the home and interest rates have reduced, or more proceeds will be available to the borrower.
A reverse mortgage lien is often recorded at a higher dollar amount than the amount of money actually disbursed at the loan closing. This recorded lien is at times misunderstood by some borrowers as being the payoff amount of the mortgage. The recorded lien works in similar fashion to a home equity line of credit where the lien represents the maximum lending limit, but the payoff is calculated based on actual disbursements plus interest owing.

A reverse mortgage lien is recorded twice. The first time it is recorded by the lender. It is recorded a second time by HUD. In the event that the lender should become unable to continue in its obligation to make disbursements to the borrower HUD will be able to immediately step in and ensure that the homeowner will continue to receive their reverse mortgage disbursements. It has been noted by some attorneys that while a reverse mortgage is not an asset protection vehicle it may operate similarly in the event of a personal injury lawsuit involving the borrower’s home. An attorney representing the plaintiff will first check to see the recorded home value so as to know if the homeowner has funds with which to settle such a claim. They will check to see the lien obligations on the home. The records will show a total debt of about twice the value of what the homeowner borrowed.

The cost of getting a reverse mortgage from a private sector lender may exceed the costs of other types of mortgage or equity conversion loans. Exact costs depend on the particular reverse mortgage program the borrower acquires. For the most popular type of reverse mortgage in the U.S., the FHA-insured Home Equity Conversion Mortgage (HECM), there will be the following types of costs:
Mortgage Insurance Premium (MIP) = 2% of the appraised value[23]
Origination fee, depending on the home’s appraised value[23]
appraised value under 5,000 = ,500
appraised value over 5,000 = 2% of the first 0,000 plus 1% of the value over 0,000, with a ,000 cap
Title insurance = varies by location
Title, attorney, and county recording fees = varies by location
Real estate appraisal = 0–0
Survey (may be required) = 0–0
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How Does a Reverse Mortgage Work

In this video, USA Reverse addresses how a reverse mortgage works. To learn more about reverse mortgages, and how they work, visit today.

How Does a Reverse Mortgage Work
Video Transcript:
A reverse mortgage can be a good way to supplement your retirement income. Let’s look at how it works.

First, think of how your home mortgage works. As you make monthly payments, the amount of equity you have in the home increases.

This equity is money that is tied to the value of your home.

A reverse mortgage allows you to borrow that money in payments made back to you.

As you receive cash payments the equity in your home is slowly reduced. Also, your loan balance slowly increases over time.

The reverse mortgage loan is repaid when the homeowners or borrowers leave the home.

A reverse mortgage thus allows you to access the cash in your home, while you still own it and live in it.

There are some rules to reverse mortgages.

The borrower must be at least 62 years old.

The home must be your primary residence.

You must own your home and have substantial equity in it.

You must be able to keep up with property taxes, insurance, and homeowner’s insurance fees.

Many other rules also apply. Make sure you understand them all, before you apply.

If you’re interested in a reverse mortgage? Here are five simple steps on how to get started .

Step 1 – A USA Reverse licensed representative will provide you a no-obligation review.

Step 2 – You are required to get counsel from a certified HUD counselor.

Step 3 – A USA Reverse licensed representative will walk you through the entire application process.

Step 4 – During processing, your home is appraised, documents are signed, reviewed, and the loan approval depends on this process.

Step 5 – After closing the loan you begin to receive funds either in monthly installments, a lump sum payment or a line of credit. You can use the funds as you desire.

If you would like to learn more about reverse mortgages, call USA Reverse today.
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Cash-Strapped Seniors Weighing Pros And Cons Of A Reverse Mortgage | CNBC

< object kind =" application/x-shockwave-flash" style =" width:425 px; elevation:355 px;" information ="//" >< param name =" film" value ="// "/ > Reverse home mortgages are coming to be a progressively popular and also useful item for Americans who require income in retired life.
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Cash-Strapped Seniors Considering Advantages and disadvantages Of A Reverse Home mortgage|CNBC
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3 Ways Reverse Mortgages Hurt Seniors|Pros and Cons|Disadvantages

Is a reverse mortgage a bad idea? Charles Guinn (310-616-6965), demonstrates how a reverse home loan can harm seniors and how a reverse mortgage works. Once you understand the disadvantages and benefits of a reverse mortgage, you could make an improved choice if it’s right for you.

Charles Guinn is a certified Aging set up specialist. Check out his web site at for more information. He’s a reverse mortgage lender in Southern California and works together seniors over 62 to pay for their homes and possess somewhere to live the others of these resides.
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How Does a Reverse Mortgage Work?

so how exactly does a Reverse Mortgage Work?

A quick narration and drawing for a reason of just how a reverse mortgage functions by structure. Describes different components of a reverse home loan generally speaking terms. Please be aware this can be for academic reasons only and you should talk to a realtor to assess your personal needs.

Thank you to Jeffrey Bangerter of WSB Mortgage providers for content of video. Please sign up to their station!
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Should I Get A Reverse Mortgage?

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Reverse Mortgage Nightmare

Reverse Mortgage Nightmare Weidner Law was featured on WFLA channel 8 news. Sandra Proulx was sued by Bank of America for her parents’ reverse mortgage.
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Check out The Rachel Cruze YouTube Channel for life and money tips!

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Download the FREE EveryDollar App and start telling your money where to go.

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Do you want to take control of your money? Get “The Total Money Makeover” book here.

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What Are The Advantages And Disadvantages Of A Reverse Mortgage?

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Michigan is under a fantastic monetary difficulty and also it is essential for seniors to be conscious of their choices. There has actually been a great deal of talk lately regarding Reverse Home loans in Michigan. This is a terrific solution that is offered for Michigan seniors and also offers a lots of benefits for property owner. These features could make all of the distinction between just hardly managing or having a terrific life.

As elders obtain along with age they will discover themselves looking for having actually enough money reserved to pay for lots of extras. These consist of things such as prescription medicine, treatment, house repair service, and emergency situation funds. Several senior citizens like the capacity to have this additional amount of earnings as it assists them extend out the monthly budget.

Of course it is always great to have money available to manage the unanticipated extras. Some senior citizens capitalize on being able to take a trip and also to visit see the globe. They additionally delight in being able to assist their family and loved ones. Others actually delight in being able to remain independent as well as to not be a concern on their children.

Independence Is What It’s All About

Several senior citizens truly like the idea of being absolutely independent. There are 2 sides to this wonderful prospect. On one hand you can be absolutely independent of depending on your household. This can come in the kind of having night and day care from health and wellness specialists. To numerous senior citizens this can be an excellent deluxe as well as include total tranquility of mind.

The other kind of self-reliance is having absolutely financial freedom from anxiety and worrying. It is like having a big weight removed of your shoulders. Having complete monetary freedom indicates having real freedom of choice. Not will certainly you have to bother with having to simply “get by”. Having a reverse home mortgage could actually work wonders by including a pillow of support in your day-to-day live.

So you see having genuine independence truly depends of two significant things – financial freedom as well as having the freedom of doing what you want – whenever you desire. That indicates that as an elderly you reach live your life by your criteria. You set the pace and make the regulations. Having even more loan on hand provides you the possibility making a significant distinction in your life as well as in the lives of others.

In order to take benefit of the wonderful attributes of a reverse mortgage you need to take in the advantages and disadvantages.


The cash payments you obtain are tax obligation cost given that they are financing profits and also not revenue, and also they usually do not affect Social Safety and security or Medicare advantages.

There are no minimal earnings demands to qualify and no credit score checks.

You can make use of the cash for any kind of purpose.

You could be able to produce a capital stream for the rest of your like.

Reverse Mortgages are complicated. You should obtain totally free, government-approved independent counseling. This is to guarantee that all of your questions have been attended to which a reverse mortgage is best for you as well as your family.

Mortgage Insurance policy Premium (MIP) is the insurance policy needed by HUD that protects you and your heirs from never owing even more compared to the house deserves.


Among the biggest drawbacks of a reverse mortgage are the high closing expenses. If you believe you could be removaling in the following couple of years a reverse mortgage may not be the ideal decision. This program makes the many sense for those that prepare to remain in their houses completely.

Reverse home mortgages are relatively expensive. The rate of interest is included to the funding balance monthly, and the overall passion you owe rises greatly over time as the rate of interest substances.

A reverse mortgage utilizes up the equity in your house, so it lowers just what you have actually entrusted to leave your heirs.

Kaye Opposite cares for Reverse Home mortgages for its several elderly customers in Michigan. To see if a reverse mortgage is best for you and also you are a Michigan home owner log onto: as well as get the FREE DVD.

Reverse Mortgage Articles