How HUD Reverse Mortgages Work And How They Can Help You Stay In Your Home
HUD reverse mortgages amount for about 90% of all reverse mortgages being originated in the United States.
This type of reverse mortgage has become so popular because it protects the two parties in the transaction.
It's a win-win situation for everyone.
First, the homeowner benefits because the FHA (the Federal Housing Administration,) an agency within HUD (U.
S.
Department of Housing and Urban Development,) oversees this type of mortgages and set strict policies on how much a lender can charge and what kind of information the lender must disclose.
Also, it audits the reverse mortgage lender wanting to be FHA certified to ensure that they are solid companies.
In addition, it benefits the reverse mortgage lender because it limits the lender's liability.
By doing so, it also benefits you because lenders can offer you a better deal.
How a HUD Reverse Mortgage Functions A HUD reverse mortgage is a home mortgage for people over 62 years old and based on the equity on their homes.
The owner needs to have accumulated enough equity in the home to qualify for the loan.
A HUD reverse mortgage gives senior citizens the opportunity to savor their retirement age in a more at ease fashion as it provides tax-exempt "revenue" that does not have to be paid back for as long as the borrower remains residing in the home.
Once the borrower leaves or dies, the home may be sold to compensate for the funds due to the Lender.
Still, the borrower may never owe more funds than the home is valued at.
The most common kind of seniors revere mortgage is the one backed by the US Department of Housing and Urban Development (HUD.
) In order to be able to provide HUD reverse mortgages, the lender must be certified to do so.
In order to be certified, the reverse mortgage lender must meet some tough requirements.
In a HUD reverse mortgage, the Federal Government (through FHA) guarantees the lender that the loan will be paid off.
This is important when the value of the home is lower than what is owed to the lender.
It also ensures that you will keep receiving monthly payments (if that's the payment method you have chosen,) even after you have got paid more than the house is worth.
By choosing a HUD insured reverse mortgage, a lender is capable of offering you better terms knowing that their liability is limited.
FHA may provide such a warranty as it counts with an insurance policy pool paid for by every reverse home mortgage borrowers.
Each time somebody acquires a HUD reverse mortgage, 2 pct of the value of the home is committed in the pool.
Additionally, a different one-half point is contributed annually into the pool.
You could be interested in learning that these costs are already included in the price of the home loan and do not constitute an out-of-pocket disbursement for you.
Generally, the sole out-of-pocket expense is the cost of the assessment.
These added costs can make the loan expensive in some cases.
If you plan to stay in the house for under 5 years, you may consider choosing an alternative.
Talk to your reverse mortgage lender or counselor for advice on whether the reverse mortgage is good choice for your individual needs.
Although getting a reverse home mortgage is an important step, remember that hundreds of seniors are already applying for one on a daily basis.
Just make sure you educate yourself and choose a good reverse mortgage broker who'll be able to guide you throughout the whole process.
This type of reverse mortgage has become so popular because it protects the two parties in the transaction.
It's a win-win situation for everyone.
First, the homeowner benefits because the FHA (the Federal Housing Administration,) an agency within HUD (U.
S.
Department of Housing and Urban Development,) oversees this type of mortgages and set strict policies on how much a lender can charge and what kind of information the lender must disclose.
Also, it audits the reverse mortgage lender wanting to be FHA certified to ensure that they are solid companies.
In addition, it benefits the reverse mortgage lender because it limits the lender's liability.
By doing so, it also benefits you because lenders can offer you a better deal.
How a HUD Reverse Mortgage Functions A HUD reverse mortgage is a home mortgage for people over 62 years old and based on the equity on their homes.
The owner needs to have accumulated enough equity in the home to qualify for the loan.
A HUD reverse mortgage gives senior citizens the opportunity to savor their retirement age in a more at ease fashion as it provides tax-exempt "revenue" that does not have to be paid back for as long as the borrower remains residing in the home.
Once the borrower leaves or dies, the home may be sold to compensate for the funds due to the Lender.
Still, the borrower may never owe more funds than the home is valued at.
The most common kind of seniors revere mortgage is the one backed by the US Department of Housing and Urban Development (HUD.
) In order to be able to provide HUD reverse mortgages, the lender must be certified to do so.
In order to be certified, the reverse mortgage lender must meet some tough requirements.
In a HUD reverse mortgage, the Federal Government (through FHA) guarantees the lender that the loan will be paid off.
This is important when the value of the home is lower than what is owed to the lender.
It also ensures that you will keep receiving monthly payments (if that's the payment method you have chosen,) even after you have got paid more than the house is worth.
By choosing a HUD insured reverse mortgage, a lender is capable of offering you better terms knowing that their liability is limited.
FHA may provide such a warranty as it counts with an insurance policy pool paid for by every reverse home mortgage borrowers.
Each time somebody acquires a HUD reverse mortgage, 2 pct of the value of the home is committed in the pool.
Additionally, a different one-half point is contributed annually into the pool.
You could be interested in learning that these costs are already included in the price of the home loan and do not constitute an out-of-pocket disbursement for you.
Generally, the sole out-of-pocket expense is the cost of the assessment.
These added costs can make the loan expensive in some cases.
If you plan to stay in the house for under 5 years, you may consider choosing an alternative.
Talk to your reverse mortgage lender or counselor for advice on whether the reverse mortgage is good choice for your individual needs.
Although getting a reverse home mortgage is an important step, remember that hundreds of seniors are already applying for one on a daily basis.
Just make sure you educate yourself and choose a good reverse mortgage broker who'll be able to guide you throughout the whole process.
