A reverse mortgage is good or bad based on the financial condition or situation of the seniors. If the seniors are having financial difficulties, this might be a savior and cause less stress.
If they are in a good financial condition and have planned well for retirement there is no need for a reverse mortgage. The primary requirement to obtain a reverse mortgage is that one or both of the seniors must be a minimum of 62 years of age.
A reverse mortgage is sort of expensive to obtain, so one of the first things you would want to do is find out the cost of your getting this reverse mortgage. You would also be required to get and pay for an FHA appraisal. All repairs to the house found by the appraiser will have to be repaired prior to the reverse mortgage being approved and closing.
You might also want to know the amount of funds that would actually land in the seniors hand. We do know one thing all mortgages would be paid off, as well as any other liens found on the property, plus the expense of the reverse mortgage, so on a good day the seniors would wind up with approximately the difference of the appraised value minus any mortgages paid off, any liens and the closing cost in their hands.
They can receive this in one lump sum or monthly payments spread out over a period of time.
They no longer would be required to pay a monthly mortgage, they could payoff any debts that are owed, with the remainder of the funds being placed in a bank account of their choice.
The other part to this reverse mortgage is that the seniors will be able to stay in the house as long as they both are alive.
Once they are no longer with us the heirs of the seniors would have to decide if they wanted to keep the house or not. If the heirs decide they want to keep the house then they would be required to pay off the mortgage company that gave the seniors the reverse mortgage plus interest with a new mortgage loan or cash.
If the heirs decide they did not want or could not afford the house then the bank would take legal action to secure the property, such as foreclosure.
A reverse mortgage is an FHA mortgage product, therefore you simply have to locate a local FHA approved lender in your telephone book. You might also google reverse mortgage followed by the city in which you reside or where the property is located.
Before a reverse mortgage might be obtained the seniors would have to go through extensive FHA counseling concerning the reverse mortgage so they would understand exactly know the reverse mortgage work and the effect it would have on them either positively or negatively.
If there is substantial equity normally there are normally no problems with the reverse mortgage being approved.
I hope this has been of some benefit to you, good luck.
"FIGHT ON"
Reverse Mortgages work well only in special circumstances. You need to read the contract carefully so you will under all of the cost and restrictions involved before making a decision.
With ALL reverse mortgages you have the same requirements and situations. The only thing that changes is how you get the money and the interest rate on the money.
Option 1: lump sum
Option 2: monthly stipend
In my opinion, avoid reverse mortgages at all costs.
Reverse mortgages are to be avoided. Rather, sell the house, downsize to an apartment and invest the proceeds from the sale to suppliment your income. The only winner in a reverse mortgage is the bank.
