We've seen Robert Wagner on television, and if you are a senior, you are getting solicitations in the mail for a reverse mortgage.
Even with all of this information being thrown at us most sixty two plusers can't give a rudimentary explanation of how a reverse mortgage works.
That's why I'm here. I'm the answer man and I'm here to educate.
The reverse mortgage is no more than a mortgage on your home. A mortgage lender actually uses the equity you've built up in your home as security for the money they lend to you.
In this prior paragraph this definition could describe a traditional mortgage or a reverse mortgage. That is my point. I don't want people thinking the reverse mortgage is much different than a forward mortgage.
Although these loans have their differences they are fundamentally the same.
We get mortgages because we need the money for something? We have equity in the home either from a down payment or built up equity over time.
There is any number of things we can do with the money from our mortgage. If its a purchase those proceeds are used to pay the seller. If it's a refinance it's limitless.
The home's equity is essentially non-liquid money the owner of the property may use for his own purposes.
Why do people use a reverse mortgage? Because they can access this money and never be forced to make payments to the lender.
Well, if the lender isn't receiving payments how does it stay in business, and why would it do this?
Mortgage companies and more particularly their investors are in the reverse mortgage business for the long haul. Money is made by the accrual of interest on top of what is loaned to the borrower.
The bank is only repaid either when the borrower decides to make a full repayment or when the borrower dies and home is sold.
Important to note, because of all myths, is the borrower or it's family never loses ownership of the home during the mortgage.
The real hook to reverse mortgage, which is really helping many seniors in dire financial straights, is the lack of period payment to the lender.
Its not all a bowl of cherries for the reverse mortgage. High costs and possible negative equity positions for the borrower are just a couple of the downsides. - 16928
Even with all of this information being thrown at us most sixty two plusers can't give a rudimentary explanation of how a reverse mortgage works.
That's why I'm here. I'm the answer man and I'm here to educate.
The reverse mortgage is no more than a mortgage on your home. A mortgage lender actually uses the equity you've built up in your home as security for the money they lend to you.
In this prior paragraph this definition could describe a traditional mortgage or a reverse mortgage. That is my point. I don't want people thinking the reverse mortgage is much different than a forward mortgage.
Although these loans have their differences they are fundamentally the same.
We get mortgages because we need the money for something? We have equity in the home either from a down payment or built up equity over time.
There is any number of things we can do with the money from our mortgage. If its a purchase those proceeds are used to pay the seller. If it's a refinance it's limitless.
The home's equity is essentially non-liquid money the owner of the property may use for his own purposes.
Why do people use a reverse mortgage? Because they can access this money and never be forced to make payments to the lender.
Well, if the lender isn't receiving payments how does it stay in business, and why would it do this?
Mortgage companies and more particularly their investors are in the reverse mortgage business for the long haul. Money is made by the accrual of interest on top of what is loaned to the borrower.
The bank is only repaid either when the borrower decides to make a full repayment or when the borrower dies and home is sold.
Important to note, because of all myths, is the borrower or it's family never loses ownership of the home during the mortgage.
The real hook to reverse mortgage, which is really helping many seniors in dire financial straights, is the lack of period payment to the lender.
Its not all a bowl of cherries for the reverse mortgage. High costs and possible negative equity positions for the borrower are just a couple of the downsides. - 16928
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