What Seniors Need to Know About Reverse Mortgage Foreclosures
by Ted Ricasa on Jan 2, 2014
For many senior citizens, reverse mortgages provide a valuable source of income. A revere mortgage involves using the equity in your home to obtain a line of credit or a lump sum for bills or other expenses. Unfortunately, in recent years many reverse mortgages have lead to foreclosure, leaving many vulnerable seniors in danger of losing their homes.
A Growing Problem
If you are 62 and older and own your home, you may qualify for a reverse mortgage. Instead of paying a monthly fee to cover a loan, as in a traditional mortgage, you use the equity in your home to receive payment, in a monthly amount, credit, or a lump sum of cash. The loan won’t be due until you pass away or in the event that you move or vacate the home for more then 365 consecutive days. In many cases, one person may be listed on the reverse mortgage, due to the signer being single at the time or the signer’s spouse being under 62. In the event of the signer’s passing, the bank requires payment on the loan, leaving the remaining spouse or partner to come up with the cash, often on a house worth significantly less than the original reverse mortgage amount. According to Consumer Financial Protection Bureau Director Richard Cordray, one out of every ten seniors with a reverse mortgage is in foreclosure.
Should You Obtain a Reverse Mortgage?
With the increasing rate of reverse mortgage-related foreclosures, many people are wondering whether a reverse mortgage is worthwhile. The fact is, a reverse mortgage can provide necessary cash or credit in your retirement years, but you need to be aware of the fine print. Your reverse mortgage should be a Home Equity Conversion Mortgage, or HECM, which is backed by the Federal Housing Authority. You should understand clearly the terms of your loan, including when the loan will be due and what interest and fees the reverse mortgage will accrue. Finally, have a plan in place for what your family will do with the home. Will they be able to sell it and pay off the loan? If you have any questions or concerns, feel free to contact Fast Home Help for more information today.
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