To receive
your reverse mortgage proceeds, the FHA offers two loan types: an adjustable - rate mortgage and a fixed - rate mortgage.
The home must be owned free and clear or all existing liens and mandatory obligations would need to be satisfied through
the reverse mortgage proceeds.
You can use
reverse mortgage proceeds however you like; they're often used for expenses such as debt consolidation, living expenses, home improvements, helping adult children with college and buying another home that might better meet your needs as you age.
A «Repair Set - Aside» will be established from
the reverse mortgage proceeds to pay for the cost of the repairs.
Use if you only want to use
reverse mortgage proceeds for one expense.
If the company servicing the loan can no longer meet its obligations, FHA assumes responsibility for the loan, providing the borrower with uninterrupted access to any remaining
reverse mortgage proceeds.
However, if you are on Medicaid or Supplemental Security Income (SSI),
any reverse mortgage proceeds that you receive must be used immediately.
In short,
your reverse mortgage proceeds may provide the value of a comfortable retirement, especially if other options are not available.
The transaction is completed using funds from the sale of your old home, private savings, gift money and other sources of income, which are then combined with
the reverse mortgage proceeds.
If the lender is concerned with the borrower's ability or willingness to keep up with these expenses, a portion of
the reverse mortgage proceeds can be set aside for this purpose.
Although
reverse mortgage proceeds do not affect Social Security benefits or Medicare, if you are currently receiving any state - based financial assistance, it may affect eligibility.
If the home has a mortgage balance it must be paid in full at the close of the reverse mortgage either with
the reverse mortgage proceeds or if needed, cash can be brought to closing by the borrower to satisfy the existing balance.
Truth: Although
reverse mortgage proceeds seem like income to borrowers, money in the form of cash, income stream or a line of credit from a reverse mortgage is considered borrowed money and thus is not taxable income by the IRS.
The home in question must also be in reasonably good shape, and any urgent major repairs must be completed before the homeowner can receive the net
reverse mortgage proceeds.
You may have the option to set aside some of
your reverse mortgage proceeds in order to pay these continuing expenses.
Borrowers should seek professional tax advice regarding
reverse mortgage proceeds.)
The transaction is completed using funds from the sale of your old home, private savings, gift money and other sources of income, which are then combined with
the reverse mortgage proceeds.
Reverse mortgage proceeds are based in part on your age.
If the borrower has shortcomings, the lender must set aside part of
the reverse mortgage proceeds to pay the homeowner's property taxes and homeowners insurance for the life of the loan.
While new laws protect your non-borrowing spouse from losing the home if you die first, he or she can't receive any more
reverse mortgage proceeds after you're gone.
Homeowners can elect to have the costs subtracted from the available
reverse mortgage proceeds.
In some instances, your lender may establish a set - aside, which reserves a portion of
the reverse mortgage proceeds to pay for the insurance and taxes.
Some of the most common uses for
reverse mortgage proceeds are to cover every day expenses, home improvement, health care, major purchases and travel.
In short,
your reverse mortgage proceeds may provide the value of a comfortable retirement, especially if other options are not available.
However, it's also important to note that
reverse mortgage proceeds can be used however the borrower so chooses, including property maintenance.
Use if you only want to use
reverse mortgage proceeds for one expense.
So, if you can use
reverse mortgage proceeds to delay taking Social Security benefits for as long as possible, that provides you with greater monthly income.»
The surviving spouse can stay in the home and will have access to
the reverse mortgage proceeds.
Not exact matches
In one case Evans described, a real estate agent had suggested a woman in her 70s take out a
reverse mortgage and use the
proceeds to buy an annuity.
A
reverse mortgage allows homeowners age 62 or older the ability to convert their home equity into tax - free
proceeds, which can be used...
The amount owed must be paid off with part of the
proceeds from the FHA
reverse mortgage.
One of the most popular aspects for senior homeowners is that any funds you receive from your
reverse mortgage are recognized as loan
proceeds and not income.
In fact, many borrowers are attracted to
reverse mortgages because the
proceeds will pay off any existing
mortgages as part of the loan.
The good news is, if this is the case for you, then your
reverse mortgage lender can arrange to set aside some of your loan
proceeds to pay these recurring expenses so you can still get the loan and meet your financial obligations.
But, you can pay off your home at closing using the payment from the
reverse mortgage.4 You must have enough equity in your home to cover the balance on your existing
mortgage and eliminate your monthly
mortgage payment.5 Any remaining loan
proceeds may be used however you choose.
With a
reverse mortgage loan, as long as the homeowner continues to meet their loan obligations (including paying real estate taxes, insurance, and upkeep), they will remain in the home and collect all of the loan
proceeds.
The heirs can sell the home using the
proceeds from the sale of the home to extinguish the
reverse mortgage.
Lenders first use
reverse mortgage loan
proceeds to pay off existing
mortgages and liens on the property, after which borrowers may use the rest of the funds in almost any way they wish.
Even the most qualified homeowners can borrow only as much money as their house is worth, as
proceeds from the eventual sale of the home are used to pay off the
reverse mortgage debt.
Just respond to the questions above to get an estimate of the total
proceeds you may receive from a
reverse mortgage.
Borrowers may choose how they wish to receive
proceeds from a
reverse mortgage: as a lump sum, in periodic payments, as a line of credit, or a combination of these options.
Closing costs, like loan origination fees and
mortgage insurance premiums, are usually paid with
proceeds from the
reverse mortgage.
McGrath continues, «We're seeing an influx of senior consumers who are leveraging
reverse mortgage loan
proceeds during retirement so they can allow their investment portfolios to continue growing for when those funds are needed most.»
When
reverse mortgage lenders calculate the amount of loan
proceeds that borrowers may be eligible to receive (also known as the Principal Limit), they use what is called the Expected Interest Rate.
The most common method of repayment is by selling the home, where
proceeds from the sale are then used to repay the
reverse mortgage loan in full.
If you have passed on and your heirs have chosen to sell the home, they will have to pay off the
reverse mortgage balance out of the sale
proceeds.
While gains in short - term rates have a minimal effect on the amount of loan
proceeds reverse mortgage borrowers may be eligible to receive, hikes in longer - term rates can significantly reduce their borrowing power over time.
What this means for
reverse mortgage borrowers is that not only will rising rates impact the amount of loan
proceeds they might be eligible to receive, but rising rates will also affect the ability of lenders to quote loan amounts to prospective borrowers, since longer - term rates change each week.
Since fixed rate
reverse mortgages eliminate the risk that the interest rate will increase, they're an extremely popular choice among borrowers, but in some cases limit the amount of
proceeds you can receive.
In the same way a standard
reverse mortgage can help, this may enable one spouse to move to a new home through the
reverse mortgage while the other can assume some of the remaining cash
proceeds.