Suppose you were an elderly woman living at home, but you were running out of cash to pay for things like taxes or even utility bills. You had some trouble going up and down your steps to access the washer and dryer in the basement, and retreiving food from the lower level food pantry has become difficult. Your children have mentioned that you should look into some form of community senior home, but you really wnat to stay put. You’ve lived in your house for decades and can’t fathom leaving the house where you raised your children. What can you do?
A reverse mortage may begin to make sense. If you could access the equity in your home’s value to pay for your taxes and utilty bills, and even some in-home care to hlp you do your laundry and prepare some meals, wouldn’t it make sense?
The Department of Housing and Urban Developemnt has addressed some of the issues surrounding reverse mortages on thwir website, http://www.hud.gov/offices/hsg/sfh/hecm/hecmhome.cfm. The following is an excerpt from one of their pages that answers the biggest questions about reverse mortgages.
Reverse Mortgages are becoming popular in America. The U.S. Department of Housing and Urban Development (HUD) created one of the first. HUD’s Reverse Mortgage is a federally-insured private loan, and it’s a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements, and more. You can receive free information about reverse mortgages by calling AARP at: 1-800-209-8085, toll-free. Since your home is probably your largest single investment, it’s smart to know more about reverse mortgages, and decide if one is right for you!
1. What is a reverse mortgage?
A reverse mortgage is a special type of home loan that lets a homeowner convert a portion of the equity in his or her home into cash. The equity built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. HUD’s reverse mortgage provides these benefits, and it is federally-insured as well.
2. Can I qualify for a HUD reverse mortgage?
To be eligible for a HUD reverse mortgage, HUD’s Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own your home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. You can contact the Housing Counseling Clearinghouse on 1-800-569-4287 to obtain the name and telephone number of a HUD-approved counseling agency and a list of FHA approved lenders within your area. (more…)
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