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The Reversing Trend
By
Valerie Thelen, Staff Writer
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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