Reverse Mortgages News and Facts
As the popularity of reverse mortgages increases, so too does the importance of making sure you understand both the changes that occur with reverse mortgages on a regular basis as well as how exactly reverse mortgages even work.
These lending options are very new, and as with all new financial options, they are not well understood by the public. Here are a variety of pieces of news, facts and statistics about reverse mortgages that may be useful to you as you consider these as a possible option for you.
Information on Reverse Mortgages
- You will not lose either your social security or Medicaid if you decide to go with a reverse mortgage. However, it should be noted that if you receive a lump sum of money and keep it in your savings account above the maximum threshold (currently $2000), you will have to market it as an asset, which can cause you to lose your Medicaid. If you spend it before the month is over, it will not affect your Medicaid.
- The Federal Housing Authority has increased the maximum amount of reverse mortgages to $625,000. This means that the largest loan you can receive is $625,000, even if your home is worth more in total equity.
- Reverse mortgages do not come with any prepayment penalty. At any time, should you decide you want to pay back the entirety of the loan and have the means to do so, you can pay it back without incurring any fees.
- Repayment can never exceed the value of the home. If the home sells for less than the value of the loan, no additional money is owed regardless of whether the loan has an outstanding balance. Lenders also are not allowed to expect any payments from family members outside of those that received the reverse mortgage.
- Provided the recipient of a reversed mortgage is alive and living in the home they have reverse mortgaged, the lender cannot come to collect fees under any circumstances. Only upon passing is the lender allowed to request fees.
- The older you are, the greater your reverse mortgage tenure payments will be.
- Reverse mortgages can be used to pay for any expenses. They can be used for home repair, vacations, gifts, insurance, debt relief, and even on food and groceries. Reverse mortgage loans are designed to give you cash that can be used for any legal activity or item.
- These loans are not nearly as viable an option if you expect to not be living in your home 2 to 3 years after the date of receiving the loan. The fees are such that the value of the loan goes down dramatically when it is only used in the short term. These loans are far more useful when you plan on staying in your home the rest of your life and do not plan on giving the home to your family members upon your passing.
- Reverse mortgage financial counselors are not the same as psychological counselors. There have been recent reports of judges that have been cancelling reverse mortgage loans after competency was not proven. As such, it is a good idea to apply for these loans with a family member to ensure that everyone understands these loans and options.
Also, do not forget the value of the mandatory session with the financial counselor. Their job is to answer any questions you may have about your finances, your reverse mortgage, your alternative options and the likelihood that these loans will meet your needs. Again, these counselors are mandatory, so it is within your best interests to use them for all of their knowledge and to try to find out all you can about these loans and options.
Follow the News on Reverse Mortgages
Reverse mortgages are the newest type of loans, and as such as still going through many changes. It is within your best interests to stay informed of all of these changes and make sure that you are receiving the right information to help you make a good decision. Reverse mortgages may be right for you, but make sure you know all there is to know about them before coming to that conclusion.
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