Reverse Mortgages for Rescue

2009-08-09T06:27:00.000-07:00

Reverse mortgages have been around for almost 20 years, but it was not until the current financial crisis has unmasked. Older people use loans to leverage the equity in your home and generate income tax-free to help them through difficult times.

You can take it with you. A reverse mortgage can be a good option for those who want to travel or move to a smaller house, but do not want to sink all your cash on a new house or may not be eligible for a traditional mortgage.

New rules that came into force in January to allow the elderly to use a mortgage to buy a new home. Let's say you own a home in Massachusetts of $ 500,000 and you want to buy a $ 400,000 house in Florida. If you sell your house and pay cash for their new home, you have $ 100,000 left to add to their savings. But if you had a $ 100,000 reverse mortgage on the house in Florida, has twice the amount left - $ 200,000 - to add to their savings.

How it works. You must be at least 62 years to get a reverse mortgage. In addition, your home (current or future) must be your principal residence, and your mortgage must be repaid or have a small balance. Unlike a loan, no income requirements or credit score, and in May to use the money as you want. The older they are, the greater the value of your home (up to the maximum federal loans) and falling interest rates, the more you can borrow.

Under the economic stimulus package, Congress raised the reverse mortgage limits to $ 625,500 in late 2009. After that, the credit limit to $ 417,000, unless Congress intervenes.

You can take your lump sum, cash payment, a credit line in reserve, or a combination. Repayment is not due until the last owner dies or leaves, like the house can be sold to repay the debt. Repayment of the loan may not exceed the market value of the house (even if it decreases), their heirs exempt from any liability.

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Reverse Mortgages for Rescue