As of January 1, 2009 seniors, 62+, can purchase a home using a reverse mortgage. The reverse mortgage home purchase acts almost identically as a traditional forward mortgage home purchase. Acting similarly, the senior will bring in funds as a down payment from 25% to 55% of the value of the home. The mortgage company funds the balance of the loan.
This comes as a boon to some seniors as financial or credit restraints prohibit them from purchasing their next home. Now they can do so and are not obligated to make monthly payments the mortgage company.
Traditionally, the reverse mortgage acted as a safety net for seniors, allowing them to use the equity in their homes as a source of income to supplement their lifestyles. In return a reverse mortgage lender allows interest on borrowed moneys to accrue rather than being repaid to the lender on a monthly basis.
Eventually, when the home is sold voluntarily by the borrower, or the last surviving borrower passes away, the loan is paid back to the lender. The mortgage company makes money from the accumulation of interest over time. Those moneys are repaid to the lender when the home is sold.
The following are a list of steps to purchasing a home with a reverse mortgage:
1. Contact a reputable FHA approved reverse mortgage company. The borrower will be advised as to how much money will be necessary for the down payment. Additionally, closing costsm, purchase price limits and various loan programs will be discussed.
2. Write a contract on the home
3. At closing the borrower will be required to make a down payment between 25% to 55% of the value of the home.
4. The lender then funds the remaining balance, which now becomes the reverse mortgage, eventually to be repaid (plus interest) at the time of death or sale.
5. Title company or attorney records transaction and borrower takes ownership of the home.
6. Borrower lives in home as a primary residence. The borrower is then only obligated to pay property taxes and homeowners insurance until death or sale of property.
In the near future the typical reverse mortgage candidate will continue to be one in need of funds to relieve financial stress. The reverse mortgage purchase, however, will cater to a certain profile and offer a viable financial tool. - 16928
This comes as a boon to some seniors as financial or credit restraints prohibit them from purchasing their next home. Now they can do so and are not obligated to make monthly payments the mortgage company.
Traditionally, the reverse mortgage acted as a safety net for seniors, allowing them to use the equity in their homes as a source of income to supplement their lifestyles. In return a reverse mortgage lender allows interest on borrowed moneys to accrue rather than being repaid to the lender on a monthly basis.
Eventually, when the home is sold voluntarily by the borrower, or the last surviving borrower passes away, the loan is paid back to the lender. The mortgage company makes money from the accumulation of interest over time. Those moneys are repaid to the lender when the home is sold.
The following are a list of steps to purchasing a home with a reverse mortgage:
1. Contact a reputable FHA approved reverse mortgage company. The borrower will be advised as to how much money will be necessary for the down payment. Additionally, closing costsm, purchase price limits and various loan programs will be discussed.
2. Write a contract on the home
3. At closing the borrower will be required to make a down payment between 25% to 55% of the value of the home.
4. The lender then funds the remaining balance, which now becomes the reverse mortgage, eventually to be repaid (plus interest) at the time of death or sale.
5. Title company or attorney records transaction and borrower takes ownership of the home.
6. Borrower lives in home as a primary residence. The borrower is then only obligated to pay property taxes and homeowners insurance until death or sale of property.
In the near future the typical reverse mortgage candidate will continue to be one in need of funds to relieve financial stress. The reverse mortgage purchase, however, will cater to a certain profile and offer a viable financial tool. - 16928
About the Author:
Much more info about the reverse mortgage in Texas and everywhere else at The Quintessential Guide to the Reverse Mortgage in Texas. Everyday reverse mortgage queries answered at Everything You Need to Know About the Reverse Mortgage in Texas.
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