Anyone over the age of 62 with equity built up in their home may be able to supplement their income and establish an emergency fund with the help of the Department of Housing and Urban Development. The HUD reverse mortgage is a way to take out the equity in your property to help you with your monthly bills and set aside a fund to assist in case of an emergency. The concept of a reverse mortgage may be new to some so an explanation may be needed.
When applying for a reverse mortgage the usual forms and paperwork associated with a mortgage are required. An applicant has to meet certain requirements. Among these are that the home has to be occupied by the applicant and must be either a single family home or apartment building with not more than four units. One unit has to be occupied by the applicant as his or her primary residence. The home has to be owned outright, or have a very small mortgage pay off that will be paid from the proceeds of the reverse mortgage. Additionally HUD requires that the applicants go through a credit and debt counseling program. This is not a free program and the cost has to be paid by the applicant. If these guidelines are met the application can move forward.
Once approved for a reverse mortgage a property has to go through the usual process of appraisal involved in a standard mortgage. The mortgage will have interest accruing during its term and interest rate and valuation of the property become issues during the approval process.
When the mortgage is in place the homeowner has options of receiving a monthly payment for life or for a term of years. There is also an option of setting aside a fund that can be drawn down in case of emergencies, much like a home equity line of credit.
The mortgage is paid back at the time the owner no longer resides at the property. Payback is in full with all accrued interest. The HUD reverse mortgage may not be for everyone but does offer an opportunity for some homeowners to remain in their house while in retirement.
When applying for a reverse mortgage the usual forms and paperwork associated with a mortgage are required. An applicant has to meet certain requirements. Among these are that the home has to be occupied by the applicant and must be either a single family home or apartment building with not more than four units. One unit has to be occupied by the applicant as his or her primary residence. The home has to be owned outright, or have a very small mortgage pay off that will be paid from the proceeds of the reverse mortgage. Additionally HUD requires that the applicants go through a credit and debt counseling program. This is not a free program and the cost has to be paid by the applicant. If these guidelines are met the application can move forward.
Once approved for a reverse mortgage a property has to go through the usual process of appraisal involved in a standard mortgage. The mortgage will have interest accruing during its term and interest rate and valuation of the property become issues during the approval process.
When the mortgage is in place the homeowner has options of receiving a monthly payment for life or for a term of years. There is also an option of setting aside a fund that can be drawn down in case of emergencies, much like a home equity line of credit.
The mortgage is paid back at the time the owner no longer resides at the property. Payback is in full with all accrued interest. The HUD reverse mortgage may not be for everyone but does offer an opportunity for some homeowners to remain in their house while in retirement.
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