Financing in 30305>Question Details

drperezdn, Home Owner in Atlanta, GA

What is a reverse mortgage?

Asked by drperezdn, Atlanta, GA Fri Mar 8, 2013

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De Vonte Williamson’s answer
A reverse mortgage enables a person 62 years or older, to tap into the equity of their home, while remaining in the home and without making future mortgage payments. However, repayment of the mortgage (principal and interest) is required when the borrower dies OR the home is sold. After accounting for the initial mortgage amount, the rate at which interest accrues, the length of the loan and rate of home price appreciation, the transaction is structured so that the loan amount will not exceed the value of the home over the life of the loan.

Often, the lender will require that there can be no other liens against the home. Any existing liens must be paid off with the proceeds of the reverse mortgage.

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Wishing you all the best,

De Vonte Williamson , LSA
Proudly Serving Long Island
Coldwell Banker Residential
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0 votes Thank Flag Link Fri Mar 8, 2013
A reverse mortgage is a special program that is insured by the FHA for senior homeowners over 62 yrs old. It can help them access the hard earned equity in their home to do many things. Most commonly seniors do a reverse mortgage to get a lump sum of cash for living expenses and to eliminate a monthly mortgage payment. Many seniors are going to find More ---………
11 votes Thank Flag Link Tue Apr 30, 2013
Other aspects not mentioned below: Credit is not a factor in determining your approval. As stated below, no payment is required because the equity of your home is being eaten up by your payments. Once you meet or exceed the value of the property, the payments continue until either of the 2 occurs: You pass away or you are required to live in an assisted living facility or nursing home for more than 6 months.

Commission pays out up to 11% on a deal! Wow! The good news is that most lenders will deduct that amount from your equity. In most cases, the payments made to you increase using compound interest which means that your equity gets eaten up real fast. Can you tell I don't like this product?

Many times, the children of the senior adult will rely on the equity of the home to pay for funeral expenses or to fund the grand child's education. In using the reverse mortgage, I'm hoping that the person already set aside money for at least the funeral expenses so that the family doesn't have to carry the burden of paying for all that.

With the government in the red right now and more cuts on the way, the cost of doing these loans may go up in price. It's got to come from somewhere...You may want to wait a few months to see if the sequester goes through or if we'll be learning yet another foreign language to make it through this quarter.
0 votes Thank Flag Link Fri Mar 8, 2013
Dr. Perez,

A reverse mortgage is a government insured loan that enables people who are 62 and older to extract the equity in their home (must be primary residence) for any purpose, whether it be to reduce their monthly expenses, use it to purchase another property or to receive a lump sum of a portion of their equity.

The primary qualification for a reverse mortgage is that you must have sufficient equity in your home to borrower against it. Since the reverse mortgage will be in place until either you sell the property or pass away, lenders will use actuarial tables to determine how much money you would be eligible to receive. So a 80 year old person with no mortgage would receive a larger payout than a 63 year old with a $100,000 mortgage on a property worth $250,000.

Let me know if I can be of further assistance to you.

Timothy Brown | LPO Manager
Evolve Bank & Trust
11605 Haynes Bridge Road Suite 125 | Alpharetta, GA 30009
678.468.5626 x110 | fax 678.935.1156 | cell 678.467.9959
NMLS#: 168281
0 votes Thank Flag Link Fri Mar 8, 2013
A reverse mortgage is both a mortgage you can buy a house with allowing you to have no future payments and also a refinance mortgage where you are pulling out a bank calculated equity (calculated on borrowers age and other factors) of your home. It is usually for senior because it is based on life expectancy. The younger you are the less equity you would have in your house. The main benefit is that there is no mortgage payment due.

There are only a few companies doing this type of mortgage. Wells fargo and Met life got out of the busying.
0 votes Thank Flag Link Fri Mar 8, 2013
A reverse mortgage is a loan for senior homeowners that uses a portion of the home’s equity as collateral. The loan generally does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance.

All remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage.
0 votes Thank Flag Link Fri Mar 8, 2013
A Reverse mortgage is loan product where seniors are eligble to pull money out of there house with no monthly mortgage payment to make on that money and a reverse mortgage can also be used for anyone 62 and over to pirchase a home. Not all lenders offer this. If you need a loan officer who can do this type of loan let me know.
0 votes Thank Flag Link Fri Mar 8, 2013
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