How reverse mortgages can help older homeowners. Page 2

The principal on the loan increases with each payment received, this includes interest and other

Hot Topics

What is Family Income Benefit Insurance?: Family Income Benefit Insurance will provide a monthly payment to the family until the end of the policy’s term, following the death of the policyholder.
Will I get charged more as a smoker?: Yes you will. But first let us give you the usual Life Company’s definition of a smoker:
Are there any fees or extra costs to pay?: If you are purchasing life insurance through our product partner, Life Policies Direct, then there will are no fees or other costs to pay
The Financial Services Authority: Who is the Financial Services Authority? (FSA)........

charges accrued each month on the total funds advanced to you. You retain ownership of your home in all reverse mortgages, and many do not require repayment for as long as you occupy your home, pay your property taxes and hazard insurance charges, and continue to maintain the property.

When you leave your home permanently your loan balance becomes due. It is also important to note that your legal obligation to repay the loan cannot be more than the market value of your house at the time you leave the property. This means that your lender can never require repayment of the loan from your heirs or from any asset other than the property itself.

Today the 2 major reverse mortgage loan types provided by the Fannie Mae (Federal National Mortgage Association) are the HECM and Home Keeper. These loans assure the borrower that he or she will never owe more than the loan balance or the value of the property, whichever is less, and no assets other than the home must be used to repay the debt.

Also unlike conventional mortgages these loan types have neither a fixed maturity date nor a fixed mortgage amount. Many borrowers familiar with the home equity loan are often times skeptical about reverse mortgages and simply see it as a different type of home equity loan and sometimes even think it's a scam.

For this reason it is important to understand the difference between home equity loans and reverse mortgages. With a HELOC (Home Equity Line of Credit) you must make regular monthly payments to the lender in order to repay the loan, in fact, your repayments begin as soon as your loan is made. If you fail to make the monthly payments on a traditional home equity loan, a mortgage lender can foreclose on your home, putting you in a position where ( cheap life insurance ) you either have to sell your home to repay the loan or lose it to the lender.

Another notable difference is the fact that some home equity loans also require you to re-qualify for the loan each year, and if you fail to re-qualify, the lender may require you to pay the loan in full immediately. In addition, in order to qualify for a traditional home equity loan, you must have sufficient funds and debt-to-income ratio in order to be approved on the loan.

Reverse mortgages however, such as the HECM and the Home Keeper Mortgage, do not require monthly repayments, saving you from the need to qualify through the traditional and often times difficult loan process. In fact, repayment of these loans is not required as long as your ( life insurance ) property remains your primary residence and you stay current in paying your property taxes and hazard insurance charges. Another stipulation that makes the reverse mortgage so special is the fact that your income does not become a factor in qualifying for these loans, nor are you required to re-qualify each year.