How Do Reverse Mortgages Work

How Do Reverse Mortgages Work In Favor Of Seniors 
  by Juhani Tontti,  guest author


It is important for a senior to understand how do reverse mortgages work, before he or she can honestly determine, whether these products are useful and will solve the need for added monthly income. Nowadays many seniors can ask from their friends, because the senior reverse mortgage has been on the market since 1989.
When a senior asks how reverse mortgages work, a simple answer without details is, that it gives cash money every month, which comes from the equity of his or her home. So this loan type works in a reverse way compared to the traditional mortgage and there is no monthly payments.

1. Easy To Qualify.
The reverse mortgages work in the way, that almost everybody can qualify. Yes, the qualification rules are clear and easy to fulfil. A borrower must be at least 62 years old, own a home, where he has equity left and which he uses as a permanent home.
That is all! The reverse mortgages work in the way, that the loan is always taken against the equity of the home. That means, that the income nor credit information are not asked. And almost all house types are accepted, with some exceptions concerning the mobile homes.

2. Up To 3 Persons Can Make The Deal.
One person, a couple or 3 different persons can be borrowers. The reverse mortgages work in a flexible way and the borrowers must not be relatives to each other. The only requirement is, that they all are owners, are at least 62 and at least one of them uses the house as a permanent home.

3. The Ownership Will Stay.
When a senior or seniors take the reverse loan from the bank, the ownership of the home will remain unchanged. That means, that a lender can never take the ownership, not even in that case that a senior cannot pay all costs nor the capital, when the loan will be closed. There is one exception. The borrower must take care of all taxes, insurances and to keep the home in a good shape.

4. The Counselor Will Guide.
Every senior, who will apply for a reverse loan, must meet the federal counselor. Actually this compulsory meeting is very useful, because the counselor is not in the service of the lender but an independent expert. Only he can taylor make the loan for the senior needs and even to recommend lenders with good reputations.

5. What Is The Difference To The Traditional Mortgage?
The main difference is, that a senior does not pay back anything, when he has a reverse loan. There is no monthly payments. So, if a senior has a traditional mortgage left, he can first pay away that with the reverse loan.
This means that also the traditional monthly payments will be left away. So all costs and the loan capital will be paid away at once, when the loan will be closed. This happens, when the last owner will move away or die and the house will be sold.
The money comes from the selling price of the house. If the selling price does not cover the costs and the loan capital, the compulsory mortgage insurance will pay the missing part.

About the Author
Juhani Tontti, B.Sc., Marketing. The reverse mortgages workin that way, that you have to meet a counselor, who can explain how do reverse mortgages work in your particular case. Visit: reverse mortgages pros and cons at http://www.reversemortgageearnings.com/

Top 10 Reverse Mortgage Facts

Top 10 Reverse Mortgage Facts

Reverse mortgages are becoming popular in America. HUD's Federal Housing Administration (FHA) created one of the first. The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more. You can receive free information about reverse mortgages in general by calling AARP toll free at (800) 209-8085. Since your home is probably your largest single investment, it's smart to know more about reverse mortgages, and decide if one is right for you!

1. What is a reverse mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. FHA's HECM provides these benefits. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

2. Can I qualify for FHA's HECM reverse mortgage?

To be eligible for a FHA HECM, the FHA requires that you be a homeowner 62 years of age or older, own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home. You are further required to receive consumer information from an approved HECM counselor prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on (800) 569-4287 for the name and telephone number of a HUD-approved counseling agency and a list of FHA-approved lenders within your area.

3. Can I apply if I didn't buy my present house with FHA mortgage insurance?

Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new FHA HECM will be FHA-insured.

4. What types of homes are eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 1-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

5. What's the difference between a reverse mortgage and a bank home equity loan?

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.

You don't make payments, because the loan is not due as long as the house is your principal residence. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."




6. Can the lender take my home away if I outlive the loan?

No. You do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.

7. Will I still have an estate that I can leave to my heirs?

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs.

8. How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits for your area, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow. You can use an online calculator like the one on the AARP website to get an idea of what you may be able to borrow.

9. Should I use an estate planning service to find a reverse mortgage?

FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. FHA provides this information free, and HUD-approved housing counseling agencies are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders. Search online or call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing counseling agency near you.

10. How do I receive my payments?

You have five options:

Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
Term - equal monthly payments for a fixed period of months selected.
Line of Credit - unscheduled payments or installments, at times and in amounts of your choosing until the line of credit is exhausted.
Modified Tenure - combination of line of credit with monthly payments for as long as you remain in the home.
Modified Term - combination of line of credit plus monthly payments for a fixed period of months selected by the borrower.

Source HUD

How to Choose the Best House for Sale in Puerto Vallarta

How to Choose the Best House for Sale in Puerto Vallarta
  by Rahman Mehraby Guest Author

If you are nearing your retirement age, then it is quite normal for you to try and search for a vacation home. On the other hand, if you belong to the younger generation and would like to make a good investment in an area where there is a great scope for real estate development, then Puerto Vallarta is just the right place to go.
You can choose the best condo for sale in Puerto Vallarta depending on your requirements. But you can be assured that you will get the best of health, security and entertainment in this beautiful place.

Find out Your Requirements

The real estate market in PV is abounding with great developers who have a very good range of offerings for the visitors. When you make a choice for the best house for sale in Puerto Vallarta, make sure it satisfies your other goals other than a place for spending your vacation. You can buy a house near the bay where you will have plenty of opportunities for fishing, beach sports and all kinds of activities in the water. PV will give you unlimited attractions in whichever area you plan to invest and you will always find something new every time that you come here.

Make A Good Investment Option

The real estate scenario offers you residential alternatives which can satisfy your personal goals. At the same time, it is a very good investment for you. The choice of buying a condo for sale in Puerto Vallarta should be based on the fact that the house has to be strategically placed to attract the maximum number of tenants. In fact, this is a criterion which has to be given more importance than the style of the house. You should be able to leverage maximum gains from the place that you invest such a lot of money in.

Take Advantage of the Flexible Rules

While thinking about purchasing a house for sale in Puerto Vallarta, one thing surely comes to the mind. What about the laws of the land? Are they flexible enough to allow a foreigner to purchase land and property in PV? In fact, Mexico is well known throughout the world for providing the best facilities for any visitor to purchase property here.

The purchase can be brought about through a bank which will act on behalf of the visitor. When you choose a property, the thought foremost on your mind will be whether you can dispose of the property in an equally convenient way too. Property can safely be disposed in PV without any unnecessary hassles.

Employ A Real Estate Agency

A real estate agent from a well known company should be consulted before you buy a condo for sale in Puerto Vallarta. He is the best person to introduce you to the various condos and houses which suit your requirement. He will see to it that you have a fair deal and help you to go through all the routine arrangements necessary for purchasing the house. He will charge about 6-8% commission on the value of the property. But you will be in safe hands.

Make sure that the abbreviation AMPI is among the credentials of the real estate company that you hire. This will be helpful while completing the legal formalities.

Size Of The House

Now that you have set your priorities right and thought about all the criteria before choosing the condo for sale in Puerto Vallarta, you can pay some attention to the design aspect too. Choose a condo which will be big enough to house the number of people you want to bring along with you.

If you are only coming here with your spouse, then a small house will do. But if you are coming with your entire family, then you will need rooms for everybody. And once you buy your dream home, it will be a beautiful life in Paradise. So get ready to enjoy the best time of your life here.

About the Author
Neptune Realtors offers extraordinary Condo for Sale in Puerto Vallarta. Also you can choose to invest in a House for Sale in Puerto Vallarta. Check out for more at: http://www.neptunemx.com.