In 1989 HUD, The Department of Housing and Urban Development announced the reverse home mortgage initiative, which is also know as the home equity conversion mortgage. This initiative was created to help seniors liquefy over 4 trillion dollars of equity earned by paying off a first mortgage.
Seniors have recently shown great interest in obtaining these types of reverse loans. They are becoming more and more popular now for seniors who would like to plan for retirement but might not have the liquid capital to do so comfortably.
The reverse home mortgage is creating available funds to seniors who are able to spend the funds at their discretion. Essentially the reverse home mortgage is paying you to remain in your home and will keep paying you for as long as you live there as your primary residence.
Those who over 62 and are seeing their Social Security cut back or reduced find it more important than ever to access the equity in their homes. The rising cost of health care and prescriptions is also on the rise which adds to an already difficult situation seniors are facing today.
Over 12.5 million seniors now own their homes free and clean and now have the ability to tap into these funds and access them now, without limitation.
On a normal mortgage loan, the borrower would pay the mortgage company a monthly payment in which the interest is set over the life of the loan. With a reverse home mortgage that money is paid back to the homeowner by the bank if the form of a monthly payment, a single lump sum payment, or a line of credit.
You are not required to pay this back until the homeowner no longer resides in the home. If you move or sell the home, the funds you received through the reverse loan would come directly out of the homes equity upon the completed sale. The loan does not need to be paid back as long as you live in the home.
You can only be paid up to the homes appraised value and will never be responsible to pay back more that the original equity in the home.
Most seniors use these funds for living expenses, home improvement, medical payments or prescriptions, or to help make their retirement more comfortable.
With a reverse home mortgage you can feel comforted in the knowledge that all the hard work you put into paying of your first home mortgage can be accessed now. These funds can help provide security and comfort that will support you in your senior years ahead.
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