As a SENIOR or Active Adult understanding the Advantages of using Reverse Mortgages and knowing if they are for YOU! To learn more go to www.yourfloridahaven.com under the Senior Resource tab and hit the link about Reverse Mortgage’s.
I am going to write about the advantages of using a Reverse Mortgage and will not write about the myths simply because most are not accurate and all are misleading!
REVERSE MORTGAGES ARE AS FOLLOWS:
NO Monthly Payment as long as you live in the home
Borrower always remains on Title
Bank will not take the home (It is a NO recourse loan)
Reverse Mortgages are known as a FHA Purchase Money Program or better yet a NO payment/NO Required Payment Mortgage. Once you execute an FHA Purchase Money Program you are NOT Required to make a Mortgage Payment and can live in the house for the rest of your life without making a Mortgage Payment. You are still responsible for the Real Estate Taxes, HOA/Condo Dues, Home Insurance and all Utility Bills. AGAIN YOU ARE NOT MAKING A MONTHLY MORTGAGE PAYMENT.
This program is only for individuals that are 62 of age or older. A part of the law has just changed 4/1/14 where if you are married or a common law couple only one of you needs to be 62 years of age or older.
The current rates are 2.41% adjustable that changes monthly or you can lock in a fixed rate which today is 5%. So if you lived 30 years in the home your loan expense will be 5% fixed for the entire time.
EXAMPLE OF PURCHASE: Let's say you purchase a home for $200,000. and you are required to put a down payment of $100,000 at closing. Now you have a mortgage that is for the other $100,000 which will accrue loan expenses and interest while you are living in the home for the rest of your life and NOT making any Monthly Mortgage Payments. Keep in mind that your home is appreciating at the $200,000 purchase price while your interest and loan expenses are based off the $100,000 loan. Therefore, the appreciation of the home should always outpace the annual expenses.
EXAMPLE OF RE-FINANCING: Let's say that you own your home outright and would like to travel, help the children out or purchase investment property to supplement your income all while not making any MORTGAGE PAYMENTS! You can get an FHA Purchase Money Program by re-financing. Using the same dollar examples as above you would be able to receive the $100,000 as one lump payment, receive monthly checks or use it as an Equity Line of Credit by tapping into the money when you need it most.
When the time comes that you and your loved one are NO longer able to stay in the home your heirs will have up to 1 year to decide if they want to pay off the FHA Purchase Money Program loan which will be the original amount plus annual loan expenses and interest. As the homes go up in value it would be a safe bet that your heirs will choose to purchase the home and then sell to insure an inheritance for them while all the time you, your spouse or partner lived in the home without making a MONTHLY MORTGAGE PAYMENT.
Bottom line is that you can live in an Active Adult Community, live in a newer home, keep your home, live in an area that offers a warmer climate, travel, help the children out and enjoy your Golden Years without making a MONTHLY MORTGAGE PAYMENT!
I look forward to any additional questions that one might have in regards to HAVING NO MONTHLY MORTGAGE PAYMENTS AND IF THEY ARE FOR YOU!