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Understanding Reverse Mortgages for Seniors in Reno Nevada and Northern Nevada
A reverse mortgage is a special type of real estate loan that is available only to seniors to converta portion of the equity in their home to cash. They were created by the Department of Housingand Urban Development (HUD) to provide seniors with the required financial security to helpthem enjoy life more fully. They are called reverse mortgages because the payment stream isreversed. Instead of the borrower making payments, they receive payments.The borrower continues to own the home and is free to pass the home to whomever they selecton their death. The money from a reverse mortgage can be used for any purpose: daily livingexpenses, home repairs, medical bills, prescription drugs, travel, and all other needs or desires. Areverse mortgage can even be used to avoid foreclosure.To qualify, all borrowers must be 62, on title, and reside in the home. There are no income,asset, or credit requirements. You can even use a reverse mortgage to retire your current homemortgage.There are many options available on how you receive loan proceeds. You can select a lump sum,a line of credit, a monthly income or a combination of these.How much is available to you will be determined by the value of your home, your age, andcurrent interest rates. The costs associated with a reverse mortgage include the HUD mortgageinsurance premium, the origination fee, an appraisal fee, and title and escrow charges, in additionto other fees that are similar to those charged with a traditional real estate loan. Generally, thecost of a reverse mortgage is greater than with a traditional real estate loan. However, all fees arefinanced as part of the reverse mortgage transaction and settlement is made at the end of theloan..The money provided to you as part of the reverse mortgage is tax free. However, the money youreceive from a reverse mortgage can affect eligibility for certain forms of government assistance,such as Medicaid. So, check with your tax preparer or Social Security office before securing areverse mortgage.All HUD sponsored reverse mortgages require HUD approved counseling prior to thecompletion of the appraisal. The mandatory counseling can be conducted prior to or after thecompletion of the application.I recommend that the first step to a successful reverse mortgage evaluation is a comprehensivediscussion with an experienced reverse mortgage professional. Seek the names of highlyqualified reverse mortgage professionals from your financial planner, CPA, or attorney. Work only with an experienced reverse mortgage professional. Request three names of seniors withwhom they have worked and be sure to make calls to each and secure their observations beforemoving forward.
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