I recently began to working on reservse mortgages...interesting and a great financial tool for those with equity, who need or want tax free money from their equity. Funds received from this loan DO NOT affect Social Security or Medicare benefits (However, certain benefits, might be affected). The homeowner is required to continue to pay the annual property taxes and homeowners insurance.
What is a reverse mortgage?
Well, it is a non-conventional loan that allows individuals 62 or older to convert some of their equity into tax free funds. No repayment is required until the property is no longer a residence. The loan can be obtained on owner occupied properties (up to 4 unit).
The amount of loan that an individual can receive from a reverse mortgage is based upon a HUD formula.
The loan can be received by the individual in a number of ways...lump sum, a line of credit that can be used or not used and can grow over time, or a monthly amount of funds, or a combination of the ways.
And guess what, no income, employment or credit requirements are applicable to those who apply. Fees in originating this loans are highly regulated and borrowers are required to obtain counseling before entering to a reverse mortgage so they understand the workings of a reverse mortgage.
Of course, I recommend consulting your attorney so make sure no benefits that the individual is receiving will not be affected. The determining factor is if these program take into consideration the amount of assets the individual holds.
In closing, the reverse mortgage is a useful financial planning tool that can allow older individuals to utilize the equity in their home without the hassles of making a substantial monthly housing payment on a monthly basis.
Michael Sally
http://www.mortgagesbymike.com
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