What You Need to Know about Reverse Mortgages

KEY LARGO, Fla. - Dec. 30, 2014 - PRLog -- Per Sally Stribling top producing Real Estate Agent for Coldwell Banker Schmitt in the upper Fl Keys, "Retirees and soon-to-be retiree homeowners, needing extra cash in their post-working lives are looking at a relatively new home loan product, the reverse mortgage.

Literal in meaning, it is a debt instrument that uses equity in a home to pay the borrower owner a monthly income. Lenders offer different types of reverse mortgages, and rates can either be fixed or adjustable.

Lenders first created this financial resource in response to the downturn in the national economy. Fewer and fewer homeowners, with substantial equity in their properties, were taking out lines of credit against their residences. What’s more, a significant portion of mortgage borrowers over the age of 62, were missing monthly payments and struggling to meet living costs. Seeing the need to extend a helping hand and turn a small profit, the reverse mortgage was created.

More about Reverse Mortgages

Like with any type of real estate loan, there are advantages and disadvantages. Being aware of these can help senior homeowners make an informed decision whether or not a reverse mortgage is a good fit for their financial situations.

One key element in a reverse mortgage which cannot be overlooked is that it is a loan against your property, meaning that if not repaid, can be recovered through the foreclosure process. This means being sued by the lender to gain title to the property to sell it to cover the loan amount.

A traditional mortgage, as so many people are familiar with, is a debt instrument which allows a borrower to purchase a residence with a down payment and promise to repay, known as the promissory note. The lender makes the loan because of the points and interest it charges, which typically amounts to thousands and thousands of dollars on the transaction.

Here are some impottant points you ought to know about reverse mortgages:

1. A reverse mortgage requires the applicant to be at least 62 years of age.

2. The applicant borrower must live in the property against which the reverse mortgage was approved.

3. Reverse mortgages, unlike home equity loans or lines of credit, do not require a credit check.

4. Repayment is deferred for as long as the approved applicant borrower lives in their property.

5. Not all of the equity in the borrower’s home may be accessed by a reverse mortgage.

Reverse mortgage requirements are minimal and interest rates can be fixed or adjustable.

Last but not least, reverse mortgage payouts come in a variety of five different forms, two of which are monthly distributions and payouts, which automatically end after a preselected number of years.

Sally Stribling, REALTOR with Coldwell Banker Schmitt Real Estate company, specializes in the sale of fine Homes and Condos in The Florida Keys.

Sally provides buyers and sellers with in-depth professional assistance in the sale and purchase of residential property. If you are interested in buying or selling a home, and want the professional assistance of a seasoned expert, who will work diligently in an effort to satisfy your needs, please call Sally anytime at 305-453-7552 or see her website at http://www.keysbestproperty.com