What is a Reverse Mortgage?
Simply stated, a reverse mortgage is a loan that enables homeowners (age 62 and older) to convert part of the equity in their home into a tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment. More and more homeowners are using this to supplement their retirement income, pay for health care, modify their home, or just get some cash for emergencies. Since this is a new product, some people have misconceptions of what a reverse mortgage is. The bank doesn’t give you money and take your house. Let’s look at some of the most common questions.
Are reverse mortgages for desperate people? No. It is an excellent financial planning tool used from people of all walks of life.
How do I qualify? You must be 62 or if both parties are on the mortgage, then you both must be at least 62. And, you must have equity in your home.
What if I still owe on my home? You may still qualify even if you have a balance on your first mortgage. The proceeds must be used to pay off the mortgage, first.
How much can I get? This depends on several factors such as, the age of your home, the value, your age at the time of closing, and interest rates.
Is it just monthly payments? No. You can get a lump sum, line of credit, monthly payments or a combination of monthly income and a line of credit.
But, won’t I have to pay taxes on these monthly payments to the government? No. The funds are tax-free. Its your money, not additional income.
Should I seek a lawyer or receive some counseling before I get a reverse mortgage. Yes. You must be counseled before receiving a reverse mortgage. You don’t have to talk to a lawyer or accountant, but it would be advised.
Who owns the title to my house? You still own the title.
What happens when I die? Once your home is passed on to your heirs, the mortgage becomes due. Your heirs may pay the mortgage and keep the home or sell the home and pay off the home. They may keep any excess sales proceeds.
What if I owe more than the house is worth? You can’t. Your repayment amount will never exceed the value of the home at the time the loan comes due. Also, there are no prepayment penalties.
What if I move? If you move, then the mortgage becomes due and must be repaid.
About the author: Stuart Simpson has a neat mortgage calculator FREE to use. Try it out at: Copyright © 2004 - 2008 Universal Wealth Creation |
| This article can be copied and reproduced only if left intact with the authors details below. |
Return to the previous index page: Wealth Creation and Financial Wealth >>
Return to the Main Investment Articles index page: Renting Shares >>
These stockmarket & business articles have been supplied in the interest of Universal Wealth Creation visitors who want to expand their knowledge in the wealth creation & investment fields such as the courses offered by Jamie McIntyre.
Other sites we recommend here at Universal Wealth Creation are: 21st Century Academy with Jamie McIntyre, Universal Trading Solutions which promotes great wealth creators like: Kim Reilly, Simon Martin, Justin Beeton, Louise Bedford, John Kaye, Daniel Kertcher & more. They run great wealth seminars across the country.
Additional speakers that appear at 21st Century Academy seminars are options & CFD gurus Nik Halik and Daniel Kertcher, motivational speakers Justin Herald and Tony Christiansen, Property investors Jason McGuiness, Rick Otton, Mark Rolton and Warren Borsje, Tax structure sprecialist Leigh Barker, Internet marketers Jenny Armato and Tom Hua, Trading Diary masters Bill Stacy and Andrew Dimitri from Planet Wealth, Kinetic Securities stockbroker Angus Knight and JB Global broker Justin Beeton, & Traders International and Eminis Global specialist Peter Elsworth.
To mention a great option book I highly recommend: Options by Guy Bower. Another great trading author is Louise Bedford who is particulary good at candlestick charting.
Meanwhile, there is a great opportunity to learn about the stock market through reading these kind of articles. Learn about share trading, options, futures, CFD's, derivatives, warrants, indices & more in the stock market. You will also learn plenty about business & finance through authors opinions in the marketplace. Enjoy your journey towards financial freedom.
