Reverse Mortgage Information: Upcoming Changes
By Daniel Duffield
The FHA’s reverse mortgage program is due to change over the next several weeks. Since the FHA fiscal year ended at the end of September, the final numbers should be released in the next few days. Here’s the reverse mortgage information you have been searching for: what are the possible upcoming changes and why are they needed?
Reverse Mortgages
Reverse mortgages are used as a means of financing for those aged 62 and over. The main principle behind reverse mortgages is that homeowners will utilize real estate equity to obtain a loan that can be used for anything. What makes reverse mortgages so attractive is that the homeowner will receive cash without any monthly principal and interest costs.
Another way in which homeowners use reverse mortgage money is to
pay their current mortgage payments. If an individual has a pension or is
receiving Social Security benefits, the monthly cost change could be
huge. What’s the catch? While borrowers don’t have to repay the loan
until they move, sell the house or pass away, they do have to pay for
property taxes and insurance. This just means that a monthly housing cost
of $1,500 before a reverse mortgage loan could be reduced to a monthly housing
cost of $300 after the loan. In this current economic environment, many
older homeowners haven’t been making these mandatory payments and have been
losing their homes to foreclosure despite the fact that they no longer have
monthly mortgage payments.
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