Types of Reverse Mortgages

It’s difficult for many retirees to determine the best options to financially secure not only themselves, but the ones they love. A reverse mortgage may be a great option, as it allows the borrower to access cash from their many years of making mortgage payments. It can be even more of a challenge to find the best plans, as everybody has a different budget. These are different types of reverse mortgages that may fit the bill:

Types Of Reverse Mortgages

• Deferred Payment Loan: These loans can be difficult to obtain. They are for people in need of home repairs, yet don’t have access to the funds. This loan also lets homeowners borrow against partial home equity or the value of the home.
• Proprietary Reverse Mortgages: Proprietary Reverse Mortgages are just that: proprietary. They are not in any way associated with the government, but offer higher loan values. It’s imperative that people who are receiving these loans be mindful, as they are usually more expensive.
• Property Tax Deferral: This loan is for those having trouble with payments. The loan is provided by the state, and can help people pay off property taxes.
• Home Equity Conversion Mortgage: This may be the most commonly known reverse mortgage loan. This loan can be used for any purpose and allows the borrower to get the best advantage: larger sums of money.

Reverse Mortgage Pros And Cons

Pro: Cash is disbursed to the borrower on a monthly basis, or lump sum credit. Con: As it is taken, the home’s worth may decrease.

Pro: Individuals may find great rates on the loan. Con: Rates can be higher depending on the lender, state, a person’s qualification, and fees.

Pro: The cash earned from a reverse mortgage is not taxed. Con: Utilizing a reverse mortgage, if qualified, may hinder access to other government funded options.

Reverse Mortgage Requirements

• Deferred Payment Loan: Borrower must be over sixty-two, and home repairs are needed.
• Proprietary Reverse Mortgage: Must be a higher valued home
• Property Tax Deferral: Must be sixty-five years or older, and have a low income
• Home Equity Conversion Mortgage: Must be sixty-two or older, and must not have an excessive amount owed on house
• It depends on the needs of the homeowner when it comes to the type of loan in this category to choose. Deferred payment loans are harder to come by, so it may be best to apply for Home Equity Conversion Mortgage.

Reverse Mortgage Calculator

There are multiple websites that provide reverse mortgage calculators for retirement planning. These calculators involve multiple factors to assure the homeowner what the value of a loan may be. These are a few direct links:

• http://rmc.ibisreverse.com/
• http://www.reversemortgage.org/about/reversemortgagecalculator.aspx
• http://www.mortgagecalculator.org/calcs/ReverseMortgage.html

Conclusion

Retirement planning can be difficult for older homeowners and mortgage loans can be a solution to sustain a great financial future.