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The Reversing Trend

By Valerie Thelen, Staff Writer

(Page 1 of 4)

With the housing market struggling, many homeowners are finding creative ways to make their current home as affordable as possible. This trend is no different for the senior population. A new movement has been toward reverse mortgages, a unique type of home loan that allows a homeowner to convert part of the accumulated equity into cash.

Instead of paying down debt, a homeowner actually accrues it while receiving mortgage checks. No repayment is required of the borrower until they no longer use the home as a primary residence or fail to meet the mortgage requirements.

A reverse mortgage could be a help to a caregiver looking to keep a loved one in their home for as long as possible, and pay for services such as home care, medications, etc.

Reverse mortgages have been gaining popularity because it has become more difficult to sell a home, and some elderly homeowners find themselves unable to refinance or qualify for a traditional home-equity loan because of the more stringent credit standards.

Fact Sheet

First of all, what is a reverse mortgage? Below are some quick information bits to know before proceeding.

Eligibility: All borrowers must be at least 62 years old and must occupy the residence (where they live for the majority of the year). They do not have to have an income since no payments are made in this program. Singe-family, one-unit dwellings are eligible for all reverse mortgages, while some programs accept other types.  These include two-to-four-unit properties, manufactured homes built after June 1976, condominiums and townhouses. Mobile homes are usually not accepted.

Ownership: The homeowner still retains ownership of their home within the parameters of a reverse mortgage. They must still pay taxes, repairs, insurance, etc. When the reverse mortgage ends, the owner owes all cash advances made, plus interest.

Amounts: Each homeowner is eligible for a different amount of money, depending on their age and the home’s value.  Interest rates and closing costs by area will also be factors in the equation. 


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