For years you spend your hard earned income paying down your mortgage loan, in hopes that one day it will be paid off. Along the way you do all you can to make your monthly payment, even if that meant working two jobs, or cutting out other expenses. After all those years of hard work why would you want to reverse the affects of those 30 or so years?
In this continuing 3 part series of Reverse Mortgages - Green Bay I will explain What is a Reverse Mortgage, The Reverse Mortgage Process, and What to Look for When Selecting a Reverse Mortgage (Benefits and Costs).
Part 1 - What is a Reverse Mortgage? 
Here is a definition of a reverse annuity mortgage from investorwords.com, an arrangement in which a homeowner borrows against the equity is his/her home and receives regular, monthly tax free payments from the lender. Also called reverse mortgage or home equity conversion mortgage.
So what does that mean? After all of the years of paying on your mortgage you are left with an asset you own nothing or very little on. A reverse mortgage is a type of loan, eligible to home owners 62 years old or older, which helps you to convert the equity in your home to cash, without having to sell your house. The money can then be used for anything from additions to the house, to supplementing your monthly income.
Unlike a traditional second mortgage or home equity loan you do not need to make any payments. Instead repayment is needed when you sell the home, move out permanently, or pass away. At that time the home can be sold and proceeds from the sale can payoff the loan, or it can be refinanced into a traditional mortgage.
In a reverse mortgage the lender will loan you money based on the value of your home, the amount of equity in your home, and your age at the time of application. You can then get the money in a one time payment or monthly payments.
This is a very nice program for those who have equity in their home and not enough 
money on hand for bills or any other need. Later in the series I will go in depth into more benefits and costs involved.
Some quick history of Reverse Mortgages
These are not new products that just came about. In fact the first reverse mortgage was done in 1961 to a widow of the local high school football coach in Portland, ME. Since then Wisconsin has been on the leading edge of research for reverse mortgages.
In 1978 the Wisconsin Bureau of Aging funded the Reverse Mortgage Study Project. Shortly thereafter the Wisconsin Department of Local Affairs and Development offered a deferred payment loan program.
The National Center for Home Equity Conversion is founded in Madison, WI 1981, and was directed by Ken Scholen. He then spoke before the U.S. Select Committee on Aging which afterward endorsed a proposal for FHA Reverse Mortgage insurance.
Since then the Reverse Mortgage loan has been accepted and approved by HUD and all other 
government programs. It has gotten a lot of publicity lately due to the stock market losses many retirees have taken on the retirement plans.
Conclusion
I know that this is a pretty basic introduction to reverse mortgages. I feel that this is a product that not many people are familiar with, although many could potentially benefit from. I hope this has helped you to understand the basics of the program.
On a final note always make sure you fully understand the mortgage program you are looking at before you sign on the dotted line. Many loan programs are designed for specific situations.
Please check back for Part 2 about The Reverse Mortgage Process and Part 3 What to Look for When Selecting a Reverse Mortgage (Benefits and Costs).
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Contact Nate Eckberg Green Bay Loan Officer for 1st Rate Mortgage in Green Bay, Wisconsin at 920-360-3483 to learn more about all of the different loan programs available or pre-qualify for a loan.
Call me today at 920-360-3483. Contact me by email if you prefer by clicking on email me on the right side of this page under my profile.
To view the company I work for, 1st Rate Mortgage, please go to http://www.1strate.com/.
Copyright © 2008 By Nathan Eckberg, All Rights Reserved
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