New Reverse Mortgage Law Gives Home Buyers Another Option
Borrowers, aged 62 and older, now have an additional financial tool to help them purchase that home they formerly thought was out of the budget. As of january 1, 2009 the government is allowing the reverse mortgage to be used the fund the purchase of a home, rather than just as a refinancing tool. The program works almost identically to any other home purchase with a mortgage. The borrower brings in adequate downpayment, and the mortgage company funds the loan.
This comes as a boon to some seniors as financial or credit restraints prohibit them from purchasing their next home. Now they can do so and are not obligated to make monthly payments the mortgage company.
In recent years, due to general need and national marketing by major financial institutions such as Wells Fargo and Bank of America the reverse mortgage has come into its own. Its major benefit to seniors is to allow the senior borrower to convert the equity in the home into cash to be used at the borrower's discretion.
Eventually, when the home is sold voluntarily by the borrower, or the last surviving borrower passes away, the loan is paid back to the lender. The mortgage company makes money from the accumulation of interest over time. Those moneys are repaid to the lender when the home is sold.
These are the steps to the purchase program:
1. Consult with an FHA approved reverse mortgage lender. In the discussion the lender will determine down payment requirements, purchase price limits, and various reverse mortgage options. The lender should furnish borrower with a letter of approval.
2. Go home shopping and write contract based upon guidelines in the approval letter.
3. The approval letter will roughly outline down payment and closing costs. The borrower deposits this amount with the title company.
4. At closing, the reverse mortgage company funds the remaining balance and closing costs if desired by the borrower.
5. Borrower takes ownership of the home.
6. Borrower lives in home as a primary residence. The borrower is then only obligated to pay property taxes and homeowners insurance until death or sale of property.
Reverse mortgages have been and always will be primarily for those in need of funds to supplement lifestyle. The purchase program simply offers a new financial tool. Some seniors, as my phones have already started to ring, will definitely excercise this option.
This comes as a boon to some seniors as financial or credit restraints prohibit them from purchasing their next home. Now they can do so and are not obligated to make monthly payments the mortgage company.
In recent years, due to general need and national marketing by major financial institutions such as Wells Fargo and Bank of America the reverse mortgage has come into its own. Its major benefit to seniors is to allow the senior borrower to convert the equity in the home into cash to be used at the borrower's discretion.
Eventually, when the home is sold voluntarily by the borrower, or the last surviving borrower passes away, the loan is paid back to the lender. The mortgage company makes money from the accumulation of interest over time. Those moneys are repaid to the lender when the home is sold.
These are the steps to the purchase program:
1. Consult with an FHA approved reverse mortgage lender. In the discussion the lender will determine down payment requirements, purchase price limits, and various reverse mortgage options. The lender should furnish borrower with a letter of approval.
2. Go home shopping and write contract based upon guidelines in the approval letter.
3. The approval letter will roughly outline down payment and closing costs. The borrower deposits this amount with the title company.
4. At closing, the reverse mortgage company funds the remaining balance and closing costs if desired by the borrower.
5. Borrower takes ownership of the home.
6. Borrower lives in home as a primary residence. The borrower is then only obligated to pay property taxes and homeowners insurance until death or sale of property.
Reverse mortgages have been and always will be primarily for those in need of funds to supplement lifestyle. The purchase program simply offers a new financial tool. Some seniors, as my phones have already started to ring, will definitely excercise this option.
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For more info on this subject go to Reverse Mortgage Guide in Texas Details Home Purchase. Another good one is Questions Answered - Texas Reverse Mortgage. If you don't live in Texas, still give it a go. The info is good everywhere.
posted by Debt Consolidation Loan at
6:37 PM
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