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Understanding Reverse Mortgages
By Hilary Gibson, Staff Writer
No Penalty for Canceling the
Loan: After the loan closes, a senior has up to
three days to cancel the transaction, the so-called
“right of rescission,” for any reason whatsoever.
Asset Protection: The
HECM is a “non-recourse” loan. This means that the
amount due can never exceed what the home is worth.
Title to the home always remains with the borrower.
No Shared Appreciation:
No reverse mortgage product in the marketplace has
“equity-sharing” or “shared appreciation” features. In
some earlier reverse mortgage products, the senior could
obtain more money in exchange for giving up a percentage
of the future value of the home. Such products are no
longer offered.
Making the Decision
It’s highly advisable that seniors
considering a reverse mortgage should share this
information with family members so the loan won’t be a
“surprise” when dealing with inheritance issues. Joel
Sanders, Marketing Director/Loan Officer with United
Northern Mortgage Bankers, Ltd., also handles the
reverse mortgage program for seniors at his firm. He,
like Mr. Bell, wants not only seniors, but their family
members to become educated consumers. Mr. Sanders’
shares the following:
Family members generally support a
senior’s decision to seek a reverse mortgage, especially
upon being educated on the facts. Specifically, that
equity will remain to inherit since only a fraction is
being tapped; accrued interest will likely be offset and
home equity preserved since, over the long haul, the
home will likely appreciate in value; and a reverse
mortgage allows seniors to live independently without
need for help from their children or
risk of foreclosure.
Payment Options
Once you’ve decided what kind of reverse
mortgage to go with, there are three payment options to
choose from to receive your loan:
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