New Reverse Mortgage Law Gives Home Buyers Another Option
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.
Of course the benefit to the borrower is she can purchase a home and is not obligated to make mortgage payments for the rest of her time in the home.
The reverse mortgage gained popularity because it allows seniors to tap into their homes equity and use this equity as a source of cash to relieve some financial issue. The mortgage company, in turn, funds the reverse mortgage and does not require monthy repayment of either principal or interest.
Reverse mortgage lenders make money from the accrual of interest over time. When the last surviving spouse dies or the borrower chooses to sell the property, the original loan plus accrued interest is repaid to the bank.
The following are a list of steps to purchasing a home with a reverse mortgage:
1. Borrower is to get a reverse mortgage approval letter from a HUD approved reverse mortgage lender. In conversation with the lender the senior will be advised as to the amount of funds necessary for down payment, closing costs, maximum purchase price, and reverse mortgage loan options.
2. Find a home and write a contract for sale.
3. At closing the borrower will be required to make a down payment between 25% to 55% of the value of the home.
4. At closing, the reverse mortgage company funds the remaining balance and closing costs if desired by the borrower.
5. Title company or attorney records transaction and borrower takes ownership of the home.
6. The borrower is stipulated to live in the home and not use it as an investment property. The borrowers obligations are as follows: Pay taxes and home owners insurance, and keep property above FHA physical standards.
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.
Of course the benefit to the borrower is she can purchase a home and is not obligated to make mortgage payments for the rest of her time in the home.
The reverse mortgage gained popularity because it allows seniors to tap into their homes equity and use this equity as a source of cash to relieve some financial issue. The mortgage company, in turn, funds the reverse mortgage and does not require monthy repayment of either principal or interest.
Reverse mortgage lenders make money from the accrual of interest over time. When the last surviving spouse dies or the borrower chooses to sell the property, the original loan plus accrued interest is repaid to the bank.
The following are a list of steps to purchasing a home with a reverse mortgage:
1. Borrower is to get a reverse mortgage approval letter from a HUD approved reverse mortgage lender. In conversation with the lender the senior will be advised as to the amount of funds necessary for down payment, closing costs, maximum purchase price, and reverse mortgage loan options.
2. Find a home and write a contract for sale.
3. At closing the borrower will be required to make a down payment between 25% to 55% of the value of the home.
4. At closing, the reverse mortgage company funds the remaining balance and closing costs if desired by the borrower.
5. Title company or attorney records transaction and borrower takes ownership of the home.
6. The borrower is stipulated to live in the home and not use it as an investment property. The borrowers obligations are as follows: Pay taxes and home owners insurance, and keep property above FHA physical standards.
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.
About the Author:
For more info on this subject go to Reverse Mortgage Guide in Texas Details Home Purchase. Another great site is Questions Answered - Texas Reverse Mortgage. If you aren't in Texas, don't sweat it. The info is good everywhere.
posted by Debt Consolidation Loan at
6:31 PM
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